Visa earnings benefit from ‘resilient’ spending, though stock dips as growth slows

“The consumer is resilient and stable,” Chief Financial Officer Vasant Prabhu told MarketWatch. While people may have shifted their spending preferences since the pandemic days — allocating a greater portion of their budgets toward experiences rather than retail goods — aggregate spending is still growing at a healthy rate, he said.

Visa’s
V,
-0.85%
cross-border volume excluding intra-Europe transactions rose 22%, while overall cross-border volume was up 17%. Cross-border transactions occur when a cardholder spends with a merchant based in a country other than where their card was issued, and it is often viewed as a proxy for travel-related spending, though it also includes other elements such as cross-border e-commerce.

“The travel recovery still has legs,” Prabhu said, noting that there’s still plenty of room to rebound in Asia, which was slower to reopen after COVID-19 shutdowns. “We’re nowhere near the end of it.”

RBC Capital Markets analyst Daniel Perlin highlighted that Visa showed “a slight sequential deceleration across payment volumes, cross-border volumes and processed transactions” in the June quarter. The company saw 10% growth in payment volume during the March quarter, for instance, versus a 9% rise seen in the June period.

Visa shares were off about 0.4% in aftermarket action.

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Visa’s revenue for its fiscal third quarter rose to $8.12 billion from $7.28 billion, while analysts tracked by FactSet were expecting $8.06 billion.

The company reported fiscal third-quarter net income of $4.2 billion, or $2.00 a share, compared with $3.4 billion, or $1.60 a share, in the year-earlier period. On an adjusted basis, Visa earned $2.16 a share, while the FactSet consensus was for $2.11 a share.

Visa’s earnings offer a read on the consumer-spending landscape and they arrive after American Express Co.
AXP,
-0.77%
delivered its own results several days before. Amex executives highlighted healthy consumer activity among the company’s base of affluent cardholders, though spending growth slowed, indicative of potentially tougher comparisons going forward for payment-technology companies that benefited from last year’s post-pandemic economic reopening.

See also: American Express’s millennial-spending boom could cool amid student-debt repayments, says analyst

Read: Why American Express is feeling good about credit, even as it builds reserves

Mastercard Inc.
MA,
-0.87%
will follow with results of its own before Thursday’s opening bell.