Visa's stock gains after earnings, as one simple message resonates

By Emily Bary

CFO cheers stable trends: 'We haven't really seen changes in consumer-spending patterns between high spend and low spend'

Visa Inc.'s stock gained in after-hours trading Tuesday, after the payments company sported an earnings beat and showed off continued growth in spending.

Payments volume for the quarter increased by 8%, while processed transactions grew 11%. The company logged a 16% boost in cross-border volume, which occurs when transactions are made between merchants and customers based in different countries.

Visa's (V) message of spending stability seemed to resonate with investors, especially as some had been concerned prior to the report that the payments company might not maintain its full-year outlook.

"This is going to sound boring, but quite honestly, the trends have been very stable," Chief Financial Officer Chris Suh told MarketWatch in an interview. "We haven't really seen changes in consumer-spending patterns between high spend and low spend, so from our perspective, things are quite stable, which is good."

Visa reiterated its full-year revenue guidance, which calls for low-double-digit revenue growth on an adjusted constant-dollar basis. That offered a "sigh of relief" and was "a key positive" coming out of the earnings report released Tuesday afternoon, Mizuho analyst Dan Dolev wrote.

The company's fiscal second-quarter results benefited from lower-than-expected incentives, which - along with the upbeat performance of valued-added services - more than outweighed lower-than-anticipated currency volatility.

"We remain committed to delivering on the full-year [guidance] commitment," Suh said.

The company posted fiscal second-quarter net income of $4.7 billion, or $2.29 a share, compared with $4.3 billion, or $2.04 a share, in the year-earlier period.

On an adjusted basis, Visa earned $2.51 a share, while analysts tracked by FactSet were expecting $2.44 a share.

Revenue rose to $8.78 billion, up 10% from a year before, whereas the FactSet consensus was for $8.62 billion.

Visa shares rose 2% after hours Tuesday.

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"We see tremendous opportunity to tap into the multitrillion-dollar marketplace that will accelerate our growth ... in 2024 and beyond," Suh said.

Visa's results come after American Express Co. (AXP) also delivered upbeat earnings last week that showed healthy spending growth.

See also: American Express says cardholders are buying lots of 'front of cabin' plane tickets, as total spending grows 7%

Suh called out improvements in Asia, though post-pandemic travel-volume recovery there isn't necessarily coming as quickly as management had been expecting. That's been impacted by economic conditions in China and Australia, a weaker yen's effect on Japanese purchasing power and flight capacity in and out of China.

"In particular, it remains quite a bit below 2019 levels, which we think is stifling part of the growth in travel," Suh said.

-Emily Bary

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04-23-24 2046ET

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