Visa's Earnings Report Surpasses Expectations, but Stock Dips After Earnings

Visa Inc. released its quarterly results on Tuesday, which exceeded Wall Street expectations, but its stock price was heading lower in the after-hours trading session.

‍

The payment technology company also issued a forecast for low-double-digit revenue growth on an adjusted constant-dollar basis for the upcoming fiscal year, surpassing some of the concerns that preceded the report.

‍

However, analysts had mixed opinions about whether the forecast should be viewed as a relief or a challenging target for the future.

‍

Wolfe Research's Darrin Peller considered the guidance a positive development, stating, "Investors had concerns that Visa would project high-single-digit constant-currency growth, and we view this guidance as a clearing event."

‍

On the other hand, Mizuho's Dan Dolev expressed concerns that Visa might have set the bar too high for itself. He worried that achieving low-double-digit constant-currency growth might prove overly ambitious as fiscal year 2024 progresses, especially since the inflation benefits from the previous fiscal year may not materialize in the same manner.

‍

Visa's shares were down approximately 1% in after-hours trading following the earnings call.

‍

Visa's Chief Financial Officer, Chris Suh, described the company's outlook as "balanced." He emphasized that the fundamentals of Visa's business, such as payment volume and processed transactions, remain healthy and stable.

‍

In the September quarter, Visa experienced a 9% increase in payment volume and a 10% boost in processed transactions.

‍

Visa also provided information that U.S. debit and credit volumes each saw a 5% increase in the first three weeks of October. This represented a decline compared to September, which Suh attributed to a "days-mix" effect in September and decreasing gas prices in October. Excluding these factors, payment volume growth remained relatively stable from September to October.

‍

From the perspective of consumer spending, Suh noted that Visa has observed consistent trends, with continued strength in the purchase of services.

‍

For the fiscal fourth quarter, Visa reported net income of $4.7 billion, or $2.27 per share, compared to $3.9 billion, or $1.86 per share, in the same period the previous year. Visa's adjusted earnings per share were $2.33, exceeding analysts' expectations of $2.25.

‍

Visa's revenue increased by 11% to $8.61 billion, while analysts had anticipated $8.56 billion.

‍

In terms of cross-border volume, excluding intra-Europe transactions, Visa saw an 18% increase, and the company recorded a 16% rise in overall cross-border volume, which occurs when cardholders make purchases from merchants in countries different from where their cards were issued.

‍

Visa's peer, Mastercard Inc., will report earnings before Thursday's closing bell, and American Express Co. highlighted healthy spending in its own results posted last week.

‍