By Prakhar Srivastava
July 28 (Reuters) – Visa beat Wall Street estimates for third-quarter revenue and profit on Tuesday, as resilient consumer spending and strong travel demand boosted transaction volumes at the world’s largest payment processor.
Consumer spending stayed steady despite inflationary pressures and uncertainty stemming from the conflict in the Middle East.
U.S. retail sales remained firm in June, while easing gasoline prices from their May highs provided some relief to stretched household budgets.
Payments volume, a gauge of consumer and business spending on the company’s network, rose 10% in the quarter, while processed transactions increased 10%.
“Visa’s quarter tells a pretty simple story: people kept spending, and spending more than Wall Street expected. The beat wasn’t a fluke or an accounting trick — it showed up in the parts of the business that actually reflect real transaction activity,” said David Wagner, head of equities and portfolio manager at Aptus Capital Advisors.
Visa, whose digital payments network spans more than 200 countries and territories, earns fees from transactions flowing through its system.
CROSS-BORDER VOLUME REMAINS STRONG
Visa’s cross-border volume in the third quarter rose 13% on a constant-dollar basis, up from the 12% it reported in the prior year.
Cross-border volumes are closely watched by investors because international travel-related transactions are among the highest-value flows across Visa’s network and can have an outsized impact on revenue.
The FIFA World Cup provided an additional lift during the quarter, as visitors spent on hotels, restaurants, transportation and entertainment.
Adjusted net income rose to $6.3 billion, or $3.32 per share, for the three months ended June 30, from a year earlier.
Analysts on average had expected earnings of $3.23 per share, according to data compiled by LSEG.
Net revenue rose 14% to $11.63 billion, compared with the average estimate of $11.39 billion.
Operating expenses rose 19% to $4.8 billion in the third quarter, driven primarily by higher personnel costs.
Shares of the company were down about 1% in after-hours trading.
JOB CUTS TO IMPROVE EFFICIENCY
Earlier in the day, a company spokesperson confirmed a report that Visa would eliminate about 7% of its workforce, primarily in its technology and product teams, as part of an effort to improve efficiency.
The move follows broader cost-cutting across the payments and fintech industry.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Sriraj Kalluvila)
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