Welcome to Visa Inc. Fiscal Second Quarter 20 10 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 Karski, Head of Global Investor Relations. Mr. Karski, you may begin.
Thank you, Jose. Good afternoon and welcome to Visa Inc. Fiscal Q2 2010 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 for the Securities Litigation Reform Act of 1995. By their nature, forward looking statements are not guarantees of future performance. 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 form a related financial information disclosed in this call, related GAAP measures and other information required by Regulation G of the SEC are available in the financial and statistical summary accompanying our fiscal 2nd quarter earnings press release. This release can also be accessed through the IR section of our website. With that, I'll turn the call over to Chuck.
Thanks, Jack, and thank you all for joining us for the 2nd Earnings for our 2nd fiscal quarter on a GAAP basis were $0.96 per diluted share, a 0 point 2 $5 or 35 Increase over the year ago period. Net operating revenues in the quarter were just under $2,000,000,000 a 19% increase over The year ago period is a result of stronger than anticipated payments volume, cross border volume and process transaction growth coming from all areas of the globe. Byron will get into the details, but overall, we are very pleased with our results and we remain cautiously that we will continue to see solid trends going forward. Process transaction growth continued to accelerate over the quarter, This is up from the 12% growth rate we experienced last quarter and well ahead of the same period a year ago when Process transactions grew 6%. With these trends, we are increasingly optimistic that our net revenue growth will now come in at the high We are projecting modestly higher rebates and incentives in the back half of the year.
Byron will provide greater detail on this. As you know, last week we announced an agreement to acquire CyberSource. It's a strong fit with our long term Strategic view of e commerce and is complemented by its ability to deliver incremental benefits to our financial institutions, customers and Available in the forthcoming registration statement form S-four, which will be filed with the SEC in due course. All in all, we continue to execute well against our business plan. Our management team remains very focused On further expanding our payments network globally by growing issuance and acceptance locations, by expanding our processing capabilities, By adapting our products and services that fit the needs of individual markets and by driving transactions with effective market programs.
As we navigate through the current economic environment, we are generating solid earnings results and we'll continue to focus on returning Excess cash flow to our shareholders. While we temporarily curtailed our previously announced share buyback earlier in The Q2, it is our intention to resume share repurchases this fiscal year as conditions warrant. With that, Let me turn the call over to Byron, who will take you through the details of our financial results and then I'll be back to wrap up.
Thank you, Joe. As is customary, let me begin with the financial highlights for our fiscal 2nd quarter and then comment on the global payment volume trends for the current quarter followed by transaction results for April. As Joe already mentioned, it was a very strong quarter with better than anticipated revenue growth. Global payment volume growth for the December quarter in constant dollars rose from a positive 3% in the September quarter to 8%. In the U.
S, payment volume growth was a positive 7% in the December quarter, Up from a negative one in the September quarter. Debit continued to prove both its resiliency as a product ended secular appeal by delivering a positive 15% growth compared to 7% growth in the September quarter. Credit improved to negative 1 in the December quarter from a negative 9 in the September period. On a constant dollar basis, rest of world payment volume grew at 10% in the December quarter, Turning to the metrics that drive revenue on a current basis. Global cross border volume growth continued to improve in the Quarter, posting a positive 12% growth rate on a constant dollar basis from the positive 2% rate in the December period.
Transactions processed over Visa's network totaled $10,600,000,000 in the fiscal second quarter, an increase of 14% over the similar period a year ago and up from 12% growth we saw in the December quarter. Turning to the income statement. In our fiscal Q2, gross revenues of $2,300,000,000 were up 20% from the similar period in 2,009. Volume and support incentives as a percentage of gross revenues came in at 16%, up from the prior year's recession an influence level of 15% and in line with our expectations and guidance for fiscal 2010 as payment volume growth improved. Net operating revenues in the quarter were almost $2,000,000,000 A 19% increase over the operating revenues recorded for the 2nd fiscal quarter of 2,009, driven by better than anticipated global payment volume and process transaction growth in debit, in credit and cross border payments.
Moving to the individual revenue line items. Service revenue was $885,000,000 up 10% over the prior year period and reflective of accelerating payment volume growth in the quarter ending December, a trend which continued through the March quarter. Data processing revenue was $728,000,000 up 34% over International transaction revenues were up a solid 22% to $545,000,000 due to an improvement in cross border volumes during the period. The foreign exchange impact on revenue in the 2nd fiscal quarter was a positive 2% as a result of the weakening dollar against several key currencies. While the Balance of this year's revenue forecast is substantially hedged.
Some quarter to quarter volatility may be exhibited due to the timing of hedges and the underlying volatility of currencies. Overall, for the full fiscal year, we expect the foreign exchange impact on revenue to be neutral to slightly positive. Our operating margin was 57%, in line with our guidance of mid to high 50% range. Higher revenues in the period were offset by higher planned marketing and advertising spend in the quarter. We expect a similar dynamic in our fiscal Q3 as we ramp up ahead of the FIFA World Cup.
Total operating expenses for The Q2 were $837,000,000 representing a year over year increase of $71,000,000 or 9%, driven by anticipated increases in marketing and advertising spend. Our expectation continues to be That expenses on a full year basis will be relatively flat to the 2,009 level on a GAAP basis, Excluding any effect from our pending Cybersource acquisition, on a sequential quarter basis, We saw moderately higher expenses in marketing and advertising as well given higher spending on the Winter Olympics and upcoming World Cup events. We also saw elevated personnel expenses as we invest for future growth. Capital expenditures were $42,000,000 in the quarter And $79,000,000 year to date, representing ongoing investment in technology and our newer initiatives. For fiscal 2010, We expect capital expenditures to be around $200,000,000 Moving on to the balance sheet.
We ended the 1st quarter In strong shape excuse me, we ended the 2nd quarter in strong shape with negligible debt And cash, cash equivalents, restricted cash and available for sale investments of $6,300,000,000 Of this total, $1,600,000,000 is restricted cash, which represents amounts sufficient to fully pay out the American Express settlement with $1,000,000,000 that is currently uncommitted. The previously announced unlocking of 50% of the remaining locked up Class The shareholders commenced on March 1 and as anticipated had a little discernible effect on our trading activity. As of the end of March, there are a total of 100,000,000 Class C shares outstanding, of which 55,000,000 shares remain locked up. Now, let me comment on March's payment volume data and our early read on April. Then I'll cover our updated financial expectations for the balance of the year.
Global payment volume growth for the March quarter in constant dollars rose to 13% from a positive 8% in December. We experienced meaningful growth in every one of our global regions. In the U. S, payment volume Growth was a positive 13% in the March quarter, up from a positive 7% in the December quarter. Debit continued Long recent trend delivering a positive 21% growth compared to 15% growth in the December period.
Debit currently accounts for 57% of total U. S. Payment volume. Credit accelerated to a positive 3% growth in the March quarter from a negative 1% in the December period. More recently through the 20 1st April, U.
S. Payment volume grew at 15%, 2 percentage points ahead of the March quarter rate, but one point lower than the month of March growth rate of 16%. Further deconstructed, debit grew at 22%, while credit grew at 7%. On a constant dollar basis, rest of world payment volume grew at 14% in the March quarter, Up from a 10% rate in the December quarter. These results recognize continued secular growth and a Strong and healthy diversified country base outside the U.
S. Global cross border volume growth moderated considerably in the March quarter, posting a 12% growth rate on a constant dollar basis from the positive 2% rate in the December period. Growth in the month of March was an unexpectedly strong 16%. The strong growth rate we saw in March, posting a 17% rate of growth through the 21st of the call. Process transactions through the 21st grew at 15% over the prior year period, up slightly from the 14% growth posted for the second quarter, but down a point from the 16% growth rate delivered in the month of March.
Now let me comment on our expectations for remainder of the fiscal year for operating performance and the resulting impact on our full year guidance. As Joe mentioned, given our year to date results, we are now comfortable with a net revenue growth target at the high end of the 11% to 15% range. Despite our year to date growth of 16%, we Anticipate a couple of dynamics over the back half of the year. First, the data processing pricing action we took in April of will lap in our June quarter, making year over year growth comparisons in this line item Less favorable in the 4th quarter. 2nd, consistent with our guidance, we expect rebates and incentive It's tied to the higher volumes we're experiencing.
Remember, as discussed at our Investor Day, the level of incentives tied to payment volume growth declined in fiscal year 2009 due to economic conditions. Consistent with our internal operating plan and our guidance, the The level of incentives earned will naturally rise with volume in 2010 with the financial impact weighted more to the second half of the fiscal year. In addition, we also anticipate signing several new deals, some as soon as the 3rd quarter, which may have upfront payments that are directly expensed rather than amortized, resulting in Some lumpiness to our quarter to quarter incentive levels. That said, consistent with our Q1 guidance, We are still comfortable with full year rebates and incentives as a percentage of gross revenue in the range of 16% to 17%, potentially at the higher end. Our expectation for our full year Operating margin remains in the mid to high 50s.
As exhibited this quarter, increased marketing and advertising expenses as well as further investments in our newer initiatives offset the higher margin we reported in our 1st fiscal quarter. We expect similar dynamics in our fiscal 3rd and 4th quarters. We expect our full fiscal year target better than 20% earnings per share growth in 20.10 on a GAAP basis, excluding the VisaNet Brazil gain and a 2011 earnings per share growth goal of better than 20%. We expect capital expenditures to be around 200,000,000 And lastly, our projection for free cash flow for the year remains north of $2,000,000,000 which is net Of the $682,000,000 prepayment we made last quarter on the previously settled retailers. That concludes my comments.
So I'll turn the call back to Joe.
Thanks, Byron. In closing, let me say it's certainly A very busy and exciting time at Visa. We are fortunate to sit at the center of a dynamic and highly competitive industry. Not only are more consumers turning their backs on cash and checks, but more governments and businesses are embracing the speed, security And reliability of Visa Digital Currency in every part of the world. Inevitably, along with our success increased competition from companies large and small, both within and outside the United States.
However, As we have done in the past, we will continue to challenge ourselves to innovate and adapt to the ever changing competitive landscape. Importantly, we are taking concrete steps to achieve our strategic objectives and secure our long term growth To the benefit of Visa's shareholders and clients, we are also continuing to build our management team with key hires to Cash and checks. By way of example, at the end of calendar year 2,009, the number of Visa debit Prepaid cards issued globally surpassed $1,000,000,000 for the first time in our history. This represents not only further penetration of Debit globally, but the underlying growth and importance of prepaid cards, which are a key contributor of all of our debit business overall. And in the coming weeks, we will increase our marketing activation around our FIFA sponsorship on increasing awareness of the benefits of debit and premium credit products with the goal of driving everyday and cross border Particular emphasis will be given to markets with strong growth potential and a passion for soccer.
With this, we are ready to
It will be announced prior to asking your question. The first question comes from Adam Friesch, Morgan Stanley.
Thanks. Good afternoon, guys. Really solid and straightforward So I guess I'll focus on emerging markets and cyber sources kind of off the table for now. Turning to Brazil, 2 of the larger banks announced the JV This week certainly can be seen as a threat to you, but our industry context suggests you're going after the private label market and not your Core offerings. So any color you can provide there would be great and an update in other initiatives like India or Russia would also be appreciated with the if you could focus on the What you're getting from the big banks and government entities in these markets that would be really helpful?
Thanks.
Well, I mean as it relates to There's not much to report beyond what you just said. Every indication that we have from any conversations we've had With the individuals at those institutions would suggest exactly what you said, Adam. So We don't look at this as being threatening to us certainly in the near term. As it Relates to Russia, we're working well with the government and with Share Bank, which is, as you know, one of the Well, the largest institution as well as other banks. As a matter of fact, we signed an agreement The SherrBank, well, I signed an agreement with SherrBank.
Well, we were at the Olympics and it covered an agreement on how We were going to operate cooperatively at the Winter Olympics in Russia. ShareBank, who has actually traditionally been more of a Mastercard Bank than a Visa Bank is fully Nothing new to report on India other than what we've reported up to now.
The next question comes from David Hoxton, Buckingham Research.
Following up on that answer to Adam's question, is ShareBank just only issuing new Visa cards? Are they going to convert from Mastercard to Visa? And then my real question was Could you give us some color on what you see in the way of cross border spending improvement? And then have you seen Evidence in this last quarter of a pickup in discretionary spending in credit card, is there faster growth in Signature cards and other credit cards?
Well, I'll answer the first part of the question, which is the simple The answer is I don't believe, but they're converting anything that they have. I was speaking primarily of new issuance, although that's Over a multiyear period of time, I don't know that they'll issue 0 We are their principal partner by far.
What we can say on cross border is That we are seeing just strong cross border gains throughout the globe. If we were to To look at cross border for the Q2, for Visa transactions, while it was constant dollars, the
category was up 12%,
Category was up 12%, 11% in the U. S, 12% rest of world. So it is a it's a broad based Recovery on cross border. And then, what we with regards to discretionary versus non discretionary. The mix for us for the quarter just ended in the U.
S, which is what we have real time So in the spirit of your question, we would say that the pickup is still So very much debit, very much nondiscretionary, but with credit starting to show signs of life. But even within our credit portfolio, we're finding that the mix of non discretionary is continuing to rise modestly, But continuing to rise.
The
Can you give us any profile information on the types of wins you're expecting in terms of size or geography? And if you can comment on the basis for how you're winning these deals? And then also related to that, Brian, since you may have some unamortizable expenses attached to these wins, Should we expect this to be more of a new and common trend in terms of how you deal with the upfront expenses on new wins?
Thanks. So let me give you some perspective on that. When we guide at the beginning of the year by the way, let me first say that what is unfolding this year It's very consistent with how we planned the year and how we guided to it. And we have That is when those deals will actually renew or come to conclusion. And it's when you actually have agreement that you can then trigger the accounting.
And so there is no particular call out on wins, Losses, renewals here. This is for fiscal year 2010, this is just how the deal pipeline fell. And as a result, We're more second half weighted in the incentives that we would book in the first half. And you'll notice that we are still affirming that the level of incentives for the year are within the guidance we gave at the Q1 earnings call. With regards to amortized or expense, Again, I would say there is no call out here that we anticipated a certain amount
The next question comes from Moshe Orenbuch, Credit Suisse.
Thanks. Just in that same vein following up, could you talk about what Perhaps what percentage of the annual revenues in those contracts might be those incentives might comprise? Because it would seem that that should imply that fiscal 2011 should have some benefits relative to this year?
We don't guide or talk about the first part of your question. We don't break that part out In any detail, but the second but the conclusion you're drawing is fair. That And I think there are 2 phenomena here. And it's frankly, it's a bit it has Something to do with the deal flow, but frankly, it's more about the earn outs. 2,000 fiscal 2,000 29 was a depressed, a non normalized depressed incentive year because portfolios did not grow Substantively during that year.
Many of them didn't grow at all. And so what you have in 20 Growth in the credit portfolios, not just the debit portfolios. And then and so what is happening is you're starting to earn a level Of incentives can get back to a more normalized level, which then resets the base in fiscal year 'ten and hence, you would expect everything Anything else being equal, a more moderated level of incentives in the year that follows, a more moderated level of growth in incentives for
I think I'd add that as it relates to the number of transactions that we've consummated over the Last 2 years, it's partially been a result of the economy and the consolidation of the banking industry. And I think we're pretty much at the tail end That right now. So I'm not sure that you'll see as many deals in 2Q as you have in the last
The next question comes from David Long, William Blair. Hey,
guys. Mastercard is increasing prices from what we hear on merchant assessments as of April 1. And so my question is, have you guys raised merchant assessment pricing as well? And then also as a follow-up, are there any other pricing increases that we should be thinking about here For your fiscal Q3?
Well, we've already announced an increase in our acquirers' fees It's similar to the one that Mastercard did and ours is effective in July. But because The way that we book our service fees won't show up in our revenues until our 1st fiscal quarter,
The next question comes from Tien Tsin Huang, JPMorgan.
Hi, thanks. I wanted to ask about the cross border revenue, which was stronger than we expected. The difference between the 22% in Cross border revenue versus the 19% reported volume. Byron, is the delta there pricing or did mix contribute to the spread widening You follow my question.
We don't hedge Volumes, but we had revenue. And so I think there's no We'll call out here with regards to the international. It's tracking pretty close, but it will always
The next question comes from Jason Kupferberg, UBS.
Thanks. Good afternoon, guys. Just wanted to follow-up on a comment you had made at the analyst meeting about seeing a narrowing of the traditional gap Between Penn and sigdebit interchange rates, can you give us an update on what the impetus is for this movement? And does it also apply to your network fees? Or is it really just On the interchange side and is the goal here to more or less keep the average interchange rate about the same just by tweaking pin up and sig debit down?
Well, there are parts of that question that I can answer and parts of it that I can't Parts of it that I shouldn't. But what I would say to you is that I don't think the trend from And the Signature volume is considerably
more than
the PIN volume. It has always been a Act that a merchant can use PIN to any extent that they want. I mean, if they if a merchant wants to Put terminals in, pin terminals in, then they're more than welcome to do so. So what's going on Isn't in my opinion or from what we can see much different than what's been going on for quite some time. By the way, which means that it isn't narrowing anywhere near as rapidly
The next question comes from Chris Mamoney, Deutsche Bank.
Thanks. I guess similar question to Tien Tsin's. Just could you go into some more color on the service fee revenue growth? It looked like Growth in service fees lagged your payment volume growth, which is a reversal of the trend, at least from the past 4 quarters.
With regards to service fees, again, I would I think what we report is On service fees, on volume is unhedged. So it is a it's a gross number, Nominal unhedged. When you when we report it in our financial statements, It is hedged. And so there is always going to be a delta with regards to that. Now having said that, There will be I wouldn't get overly concerned about an individual quarter.
We're going to be looking at it over several quarters because there will be ins and outs for the quarter. And Having said all of that, there is
always
a Degree of variance that will occur simply because Because there is a difference in mix. We have one level of service fee yield in the United States, Which is where most of the it's the single largest source of service fees. As you move outside the United States, we have very different Rates are coming because if the yield is higher in the faster growing, then we will have everything else being equal, we'll have service Fee revenue is growing faster than payment volume, but if it's coming from areas that have Lower yields on service fees, then we will have the opposite. And then, of course, there is Then debit. And then within debit, Signature carries a different service fee yield than PIN Signature debit than PIN debit.
So in short, there are quite a few factors that go into the actual translation of Payment volume into revenue and what you see as the outcome of All of those in a given quarter. All in all, we feel it's a pretty healthy growth rate and It's growing at a rate that is, frankly, somewhat above our expectations at the beginning of the year.
The next question comes from Julio Quinteros, Goldman Sachs.
Hey, Byron. Can I just stay on that same point just to add another quick question about the delta on that card services fees? How much of that if any is attributable to tiering? In other words, people moving, so the volumes coming back Faster and some of the tiered pricing that you would see, maybe even a merchant mix situation. Just trying to get a sense if there's some of that that could also be another factor to Contemplating the delta there.
Yes. I think the answer that I gave earlier, Julio, there are a multitude of factors. I would say That the factor you just described has very little to do with the calculation. The added concentration Payment volume would be much more a driver than tiering.
I think the short answer to everything that Byron has said is that nothing has essentially changed in the way that we do business or the way that We generate revenue or what our yields are. I think that there will be some anomalies on a quarter to quarter basis. But as said earlier, look at the year, look at several quarters and you're not going to see any significant change. So there's nothing going That we're aware of and we've looked at it pretty carefully that is significantly changing or that you have to think of as being different than it has been in the past.
The next question comes from Sanjay Sakhrani, KBW.
Thank you. Byron, I
was wondering if you could just
talk about that personnel line. You mentioned some reinvestment there. And I was just wondering how we should think about it on an ongoing And maybe if you could split out the investment spend portion versus the core number there. And then Second question was just to your comments that the rebound in volume seems to be related to a broader cyclical trend versus I was wondering if you could just maybe talk about the specific items that kind of lead you to believe it, believe that that's the case. Thanks.
Okay. On the personnel I think just keep in mind that we are coming off a year, namely 2,000 and Where it was we had a combination of a very uncertain economic environment where It made sense to put a very close watch on expenses. But and at the same time, we were completing The rationalization of expenses associated with the merging of the various Visa companies at the time of the IPO. And so At the same time, we were then, as we completed the rationalization, we were then waiting for the right time to We start gearing up and recognizing that we have a lot of secular growth to capture. That means we need people And more people on the ground in countries calling and servicing clients and that It's time for us to start ramping that up.
And so we don't have a specific call out or breakout on the personnel, but The notion here is it's time to start investing in our cost structure to support the growth in revenue and capturing the secular. It's not a heavy investment, because we are basically a we're leveraging our But it is time to start growing that line, which is what you're beginning to see. With regards to the rebound, We're just remaining cautious on this front. There are very mixed views from an economic standpoint as to whether or not what As I referenced on the cross border transactions, that this we are in an environment where I say the world, we don't have Europe, but it seems everyone else is traveling. And we're starting to see a return of growth To in the credit portfolios, not just the debit.
And when we say positive growth in the credit portfolio, that's a global comment. We're Seeing positive growth in our portfolios, both debit and credit in the United States and across the Whether that will be sustained or at what level remains to be seen, but these back in December In January, it was just hard to know whether particularly on the cross border front, whether we were seeing Pan up demand. Well, here we are now in March, and we're continuing to see very strong
The next question comes from Craig Maurer, CLSA.
Good afternoon. I hate to go back to Chris' question, but I just wanted to be sure that none of the weakness we saw in the yield was driven by the JPMorgan and Washington Mutual resignings And possible concessions there. And follow-up, if you can comment on the composition of the rebound in U. S. Credit spending.
At American Express, we saw pretty extraordinary growth rates out of the co brand portfolio. And I was wondering if you were seeing Similar trend between that and your normal non co branded cards?
As Joe said on the in terms of however you look at it, yield growth rates, we are not seeing Any material change in our yield environment for the deals that been done over the past year. It's unfolding very consistently with in terms of a yield standpoint with We planned the year. What is proceeding faster is the rate of recovery. Again, I used the word recovery advisedly, but I assure you we did not expect to be generating 19% revenue growth at this time Almost a year ago when we were assembling budgets. With regards to credit portfolio, I'm afraid our credit It's being generated by categories that are a little less sexier.
It is we're starting to see, as It's Bill Pay. It's grocery stores. But these what is encouraging is that these are categories that have That are recurring and have a high degree of stability associated with them. I might also add that on the travel front, We are starting to see increases in airline in a hotel year over But what's really driving the gate is the earlier schedule, as I mentioned.
The next question comes from Robert Dodd, Morgan Kegan.
Hi, guys. A bit of a broader question, if I can. On Advertising, I mean, I know we've got the Winter Olympics and the World Cup this year, we've got the Rugby World Cup next year. I mean, you have a number obviously of Your premium partners in the sponsorship department, is it The plan to try and grow that number of sponsors that are going to be at the high end or are you happy with where you And with the particular portfolio of relationships you have right now?
We actually have reduced the number of sponsorships we Over the last couple of years and our primary focus is on the Olympics, FIFA and the NFL. Beyond that, We don't have any significant or major sponsorships that we leverage I think against in any substantial way, and nor do we intend
The next question
comes from I would like to go back and just clarify one thing That Byron talked about a little bit earlier just to make sure that nobody misunderstands. I think that we did see Potentially a low watermark in some of our personnel line maybe in the Q1 of this year. But let me They think that they should be refocused and our intention would be to end the year spending less on that line than we did last year, Modestly less, but less nonetheless.
The next question does come from Jim at Bank of America Merrill Lynch.
Thanks. Yes, quick question, Joe. Are the signings in the back half of these renewals or are they New business. And I guess going on to Byron, are the signing bonuses becoming more prevalent, especially the ones that don't have the clawbacks? Thanks.
No, I don't think so. There's a combination of things that may that could Come together under I mean the funny thing about this is that it would happily come together in the particularly in the Q3. So But they're not one thing. There are a number of things. They are in a number of parts of the world.
The real answer to the question is what's going on is that we continue to attract new business, Better business and that we continue to excel from a competitive point of view and it's very, very consistent with Plan and where we want to go and where fortunately we seem to be ending up. So I it would be wrong to say that everything is something new, but it would be just as wrong to say that A lot of it isn't very good. So I mean that's where we are. But you're not it's crippling our revenue growth by 10% or something. You're talking about amounts of money that may amount To somewhere between 1.5% or 2%, 2.5% of our revenue growth in a particular And that would be a great quarter.
The next question comes from Tim Willi, Wells Fargo.
Thanks and good afternoon. A question On yield, and just sort of tying it into maybe your thoughts around pricing where I know you've commented every quarter About what you expect there. But could you talk about how you think about on a multiyear basis impacting revenue yield by Value added products, whether that be around tools that give consumers more security around using the card or Accessibility or prompting, is there anything there to think about around revenue yield outside of just price increases That you would highlight.
I would say at this point nothing to It is very clearly an objective over time to introduce more services that not only will yield more, but that will differentiate Visa more Alternative Payment Forms. And of course, that is one of the strategic underpinnings of why we were interested in
The next question comes from Jamie Friedman, Susquehanna.
Hi, good evening. Thanks for taking my question. I just I wanted to ask about the Prepaid. And Joe, thanks for sharing the $1,000,000,000 debit prepaid number. That was helpful.
I'm wondering if the growth Within prepaid is noticeably different from some of your other products. And if as we had dialogued at the Analyst Day, you might contemplate breaking that out over time, how significant is that for the company? Thank you.
Never broken The absolute significance of it, but I think we suggested that of the new products that we're involved in or the new initiatives that we're involved This is the most mature and I think that we would certainly consider breaking it out when we as we go into 2011.
The next question comes from Moshe Katri, to Cowen
Group.
Hello? Can you
hear me now?
Yes, we can hear you. Great. Can we get
an update on the merchant lawsuit in terms of some of the pending deadlines? And then maybe looking at The recent volcano eruption and in term can you give us a feel on whether we should see an impact? Was there an impact on
I'm going to let Byron start off by telling you about The volcano and then I'll comment on it.
Notice how we all refer to it as the volcano eruption as opposed to Trying to pronounce the name of the volcano that erupted. What we can say is that for about 3 days, we saw A blip in the force, but it was not a blip of any substantive size and At the
if I can call it
a bounce back, things seem to have bounced back very, very quickly. And so We do not expect to have any call out in the quarter associated with the volcano eruption at this time. It's it was an event, but for revenue purposes, I think for us it's a non event.
As it relates to the litigation, there are motions that are pending. There is no trial date that's been set. There is a mediation that's Ongoing. But obviously, under those circumstances, I don't have anything else that I can report to you
The next question comes from Bruce Harding, Barclays.
Is there anything to read into the 1% slide in the April volume from March? And then is it Just my imagination or are you a little skimpy on the guidance for 2011 relative to this time last year? I don't see any revenue growth Guidance or volume and support incentives?
Let's just level set everything. We talked About the fact that we thought we'd see a little bit of pullback in the second half of the year as it related to our revenue growth Due to lapping the pricing increase in the 4th quarter and due to the Yes. As Byron said, the lumpiness in the incentive line. Having said that, Our projections for our guidance for the rest of this year and frankly, well for the rest of this year are not Predicated on a continued rapid ramp up of volume. I also mentioned earlier In my speaking points that while we're optimistic, I'm not betting on a continued recovery that This goes through the roof.
So that kind of sets where we are in 2010. Obviously, under those circumstances, as it relates to As it relates to 2011, we've talked about the 20 better than a 20% growth in Our earnings per share, but I'm really reluctant to try to pinpoint the things specifically pinpoint revenue or Some of the other categories until we get a little bit further in the year and I'm a little bit more comfortable with where the economy is and where it's going and Where our volume is going. I mean, we're poised to do well if the economy does well. Our success to some extent, we'll follow an economic recovery. We have Enjoy volume increases up to now by expanding categories and moving into new geographies.
We will continue to do that, but that would obviously be enhanced by any worldwide economic recovery or recovery in certain pockets of the world. So we're optimistic, but we're not going to go overboard and I'm going to continue to be reluctant to predict what's going to happen until I have some more certainty around
And I would just add to that, that by the time we give 2011 guidance, we'd like to be able Include, CyberSource into that guidance, assuming the transaction In the 4th fiscal quarter.
Jose, we probably have time for one more question.
The last question does come from Don Eddie, Citigroup.
Joe, in terms of the alternative payments in e commerce, I mean, are
you sort of where you think you need to
be With your pending acquisition at RightClick and then how do you think you stand versus some of the other networks?
I think that our recent acquisition is I mean, I think it's one of the things that we had wanted to do and had thought about doing as we were putting our E commerce strategy and our strategies for growth in the future together. I think we talked about that At Investor Day. And so what we've just done is consistent with what we talked about, but it's one part of it. It's not by any stretch The entire answer. But as it relates to whether I'm comfortable that where we need to be given what we need to Yes, I am comfortable or as comfortable as one should be in a rapidly changing environment.
I think Visa has done a good job Over the years in doing the research and the heavy lifting and moving that is As it relates to some of the things that went on in Visa, the Association Prior to our IPO. And we're the very fortunate recipients of a lot of structure and a lot of effort and testing and tests in the market That are the type of experience that you can't buy, you have to experience. So I think we're prepared and I'm As confident as ever that we're ready to move forward.
Well, that concludes our call everybody. Thank you as always for joining us today.