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07.21.17

Earnings Roundup: Amex, BofA, Blackhawk, Visa

It was a busy week for second- and fiscal third-quarter earnings reports, with American Express, Bank of America and Visa all beating Wall Street expectations, and Blackhawk Network, which also beat analyst predictions, talking international growth, double-digit digital gift card sales and new partner Target set to roll out in Q3.

First up this week was Bank of America, which on July 18, beat analyst expectations with earnings per share of 46 cents on revenue of $22.829 billion for the second quarter ended June 30. Analysts polled by Thomson Reuters expected earnings per share of 43 cents on sales of $21.781 billion, according to a CNBC report. BofA net income increased 10 percent to $5.3 billion, the bank said.

On July 19, American Express reported earnings per share of $1.47, which beat analyst expectations of $1.43, according to Thomson Reuters. The company results remain affected by its loss of Costco as co-brand partner, but loan volume was up 11 percent. Second-quarter consolidated total revenues net of interest expense were $8.3 billion, up 1 percent from $8.2 billion a year ago. Excluding business from the discontinued relationship and the impact of foreign exchange rates, adjusted revenues net of interest expense grew 8 percent, according to Amex. Increases primarily reflected higher net interest income and higher adjusted card member spending, the company said.

Blackhawk Network also reported its Q2 results on July 19, which CEO and president Talbott Roche said “exceeded expectations.” Analysts agreed and the stock reached a 1-year high of $46.10 at the end of closing on July 20, according to Stock News Times.

GAAP operating revenues totaled $463.1 million, an increase of 18 percent from $391.2 million for the quarter ended June 18, 2016, according to the release. Non-GAAP adjusted net income totaled $6.7 million, a decrease of 7 percent from $7.2 million for the quarter ended June 18, 2016. The decrease was driven primarily by increased interest expense, partially offset by a lower effective tax rate, Blackhawk Network said.

“We were pleased with the strong performance in both the international and incentives segments,” Roche continued. “Additionally, U.S. retail, transaction dollar volume (TDV) from closed- and open-loop gift products met expectations. Our grocery distribution partner locations impacted by EMV continue to show productivity improvement in line with expectations. Finally, we completed our preparations to launch Target as a new distribution partner at the beginning of the third quarter.”

The EMV impact refers to measures taken by some U.S. retail distribution partners that are not EMV-compliant to restrict or limit the purchase of prepaid cards by credit cards to reduce potential chargebacks from fraudulent card purchases.

Also of note, digital gift card sales continue to grow at “healthy double-digits” and represented 9 percent of U.S. gift card TDV for the quarter, Roche said during a conference call with investors, according to a Seeking Alpha transcript.

In the beginning of the third quarter, Blackhawk Network said it will launch closed-loop gift, gaming and telecom products in 1,800 Target locations and on the retailer’s website.

Finally, on July 20, Visa Inc. announced fiscal third-quarter results, reporting GAAP net income of $2.1 billion or $0.86 per share. The San Francisco-based payments network also reported net operating revenue of $4.6 billion, an increase of 26 percent, “driven by inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions.”

Payments volume growth, on a constant dollar basis, was 38 percent over the prior year at $1.9 trillion. Total Visa processed transactions were 28.5 billion, a 44 percent increase over the prior year, or 13 percent growth inclusive of Europe in prior year results.

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