Visa Inc. (V)
Q3 2009 Earnings Call Transcript
July 29, 2009 5:00 p.m. ET

Executives

Jack Carsky - Head of Global Investor Relations
Joseph W. Saunders - Chairman of the Board & Chief Executive Officer
Byron H. Pollitt, Jr. - Chief Financial Officer

Analysts

Tien-Tsin Huang – JPMorgan
Bruce Harding - Barclays Capital
David Hochstim - Buckingham Research Group
Julio Quinteros - Goldman Sachs
Craig Maurer – Calyon Securities
Dan Perlin – RBC Capital Markets
Jason Kupferberg – UBS Securities
James Kissane - Bank of America/Merrill Lynch
Tim Willi - Wells Fargo
Donald Fandetti – Citigroup

Presentation

Operator

Welcome to Visa Inc.’s fiscal third quarter 2009 earnings conference call. All participants are in a listen-only mode until the question-and-answer session. This 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, Jose. Good afternoon and welcome to Visa Inc.’s fiscal third quarter 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 webcast over the Internet. It can be accessed on the Investor Relations section of our website at www.investor.visa.com. A replay of the webcast 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 to 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 SEC’s website and the Investor Relations section of the Visa website.

For historical non-GAAP or 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 third quarter earnings press release. This release can also be accessed through the Investor Relations section of our website.

With that, I’ll turn over the call to Joe.

Joseph W. Saunders

Thanks, Jack and thank you all for joining us. To begin, I am pleased to report that our fiscal third quarter results were once again consistent with the guidance and expectations we provided during our second quarter earnings call. Despite the ongoing challenges in the economy, Visa delivered a solid operational and financial performance as we continued to benefit from our diverse product set, our ongoing commitment to expense management, and of course the underlying worldwide secular shift from cash and checks to electronic forms of payment.

Earnings for the third quarter on an adjusted basis were $0.98 per diluted share, and were positively impacted by the sale of our 10% equity ownership in VisaNet Brasil. On an adjusted pro forma basis that excludes this gain, Visa earned $0.67 per diluted share, a 14% increase over the year-ago period. This puts us on target towards meeting our full-year adjusted EPS guidance of better than 20% growth.

Our net operating revenues in the third quarter were over $1.6 billion, a modest increase over the year-ago period and in line with our previous guidance for low single-digit growth.

Partly, we were able to achieve this result while incurring elevated volume and support incentives which were due to the successful resigning of numerous clients during the quarter, a situation we do not expect to repeat at these levels.

Our adjusted operating margin was 51% for the quarter as we continued to benefit from our ongoing efficiency drive.

Finally, adjusted third quarter net income was $744 million. Absent the gain from VisaNet Brasil sale, it was $507 million, an 11% increase over the year-ago period.