• Earnings per share of $1.30 at a very healthy clip of 21% year-on-year for the quarter, topping analyst expectations of $1.25/share by 4%.
  • Revenue grew 13% ($5.5 billion) in the quarter, while payments volume growth was 11%.
  • Adjusted free cash flow was $3.1 billion for the quarter.
  • On the conference call Visa warned that consumer spending will be light for the first three months of the year as a result of the U.S. government shutdown, Brexit, and the trade dispute with China.
  • Visa has reiterated its “low double-digits net revenue growth” outlook for revenue for the full fiscal year of 2019.
  • Visa has authorization for $9.8 billion for share repurchases, representing 3.3% of current market cap.


Our Take

  • The stock has traded down 2.3% in early trading after results on the back of the calendar Q1 revenue warning — we view this as a clear buying opportunity for long-term investors. This clearly falls into the category of ‘transitory’ as management has reiterated its full-year guidance.
  • Visa trades at an inexpensive forward price/earnings multiple of 21x given the long-term structural growth of digital payments and Visa’s dominant position.
  • Total shareholder yield is 4%, share buybacks of 3.3% and a dividend yield of 0.74%.
  • Visa is one of our favourite blue-chip plays in the technology sector and we view that it should be a core holding in long-term portfolios. A name that should be always bought on weakness.


Tailwinds: Structural Growth in Digital Transactions

Payment volumes are the engine that drive Visa’s business and growth was robust both geographically (U.S. and international) and by segment (credit and debit) — see chart below. Total payment volume growth of 11% missed analyst expectations of 12%.

In the U.S., holiday spending was relatively strong in the quarter and retail growth was driven by e-commerce. Management noted in the conference call that e-commerce continues to grow at rate 3x faster than non-e-commerce. Cyber Monday and Black Friday are the largest e-commerce shopping days.

Visa Payment Volume ($US in billions)

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