Visa Inc. (V)
Q4 2009 Earnings Call Transcript
October 27, 2009 5:00 p.m ET

Executives

Jack Carsky - Head of Global Investor Relations
Joe Saunders - Chairman and Chief Executive Officer
Byron Pollitt - Chief Financial Officer

Analysts

Jason Kupferberg - UBS
Craig Maurer - CLSA
David Hochstim - Buckingham Research
Tien-Tsin Huang - JPMorgan
Tom McCrohan - Janney Montgomery Scott
Bob Napoli - Piper Jaffray
Chris Brendler - Stifel Nicolaus
Moshe Orenbuch - Credit Suisse
Greg Smith - Duncan Williams
Chris Mammone - Deutsche Bank
Rick Shane - Jefferies
James Friedman - Susquehanna

Presentation

Operator

Welcome to Visa, Inc.''s fiscal fourth quarter 2009 earnings conference call. All participants are in a listen-only mode until the question-and-answer session. Today''s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host, Mr. Jack Carsky, Head of Global Investor Relations. Mr. Carsky, you may begin.

Jack Carsky

Thank you, Hosey . Good afternoon and welcome to Visa, Inc.''s fiscal fourth quarter and full year 2009 earnings conference call. With us today are Joe Saunders, Visa''s Chairman and Chief Executive Officer, and Byron Pollitt, Visa''s Chief Financial Officer.

This call is currently being web-cast over the Internet and can be accessed on the Investor Relations section of our website at investor.visa.com. A replay of the web-cast will also be archived on our site for 30 days. A PowerPoint deck containing highlights of today''s commentary was posted to our website prior this call.

Let me also remind you that this presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements are not guarantees of future performance, and as a result of a variety of factors, actual results could differ materially from such statements. Additional information concerning those factors is available in the company''s filings with the SEC which can be accessed through the SECs website in the Investor Relations section of the Visa website.

For historical non-GAAP pro-forma related financial information disclosed in this call the related GAAP measures and other information required by Regulation G of the SEC are available in the financial and statistical summary accompanying our fiscal fourth quarter earnings press release. This release can also be accessed through the Investor Relations section of our website.

For that I''ll turn the call over to Joe.

Joe Saunders

Thanks, Jack, and thank you, all, for joining us. I''m pleased to report the fiscal fourth quarter results were once again consistent with the guidance and expectations we provided during our last earnings call. Several metrics even exceeded our expectations. While the U.S. and the rest of world are still picking themselves up from the economic storm of the past year, we are beginning to see some very early signs of stabilization and some positive trends in aggregate [payment side].

Earnings for the fourth quarter on an adjusted basis were $0.74 per diluted share. For all of 2009 adjusted earnings were $3.23, and were positively impacted by the sale of our nearly 10% equity ownership in VisaNet Brazil last quarter. On our adjusted pro-forma basis that excludes this gain Visa earned $2.92 per diluted share, a 30% increase over 2008, and well above our stated earnings goal.

Net operating revenues in the fourth quarter were almost $1.9 billion, a 10% increase over the year ago period and above our guidance of mid-single-digit growth due to the better than expected process transaction growth, cross border volumes, and our previously announced pricing modification on domestic process transactions.

Net operating revenues for fiscal 2009 were $6.9 billion. A 10% increase over 2008 and moderately higher than we had reforecast earlier this year. Our adjusted operating margin was 49% for the fourth quarter, modestly dilutive due to the reorganization charges and marketing investments related to creative development for the Olympics, FIFA World Cup and our recently announced Courtesy of Progress campaign.

The full year 2009, our adjusted operating margin was 53% consistent with our guidance of low 50s. For fiscal 2010, we are increasing our margin guidance to the mid 50% range. Byron will speak to this further momentarily.