Visa profit beats as payment volumes surge on travel demand
Reuters
Published Oct 25, 2022 04:18PM ET
Updated Oct 26, 2022 05:35AM ET
(This Oct. 25 story has been corrected to fix the day to Tuesday from Friday in paragraph 1.)
By Mehnaz Yasmin
(Reuters) - Visa Inc (NYSE:V) reported better-than-expected quarterly earnings on Tuesday as more Americans took advantage of a stronger dollar to fly to international destinations and splurge on shopping and entertainment.
Upbeat earnings from Visa and rival American Express (NYSE:AXP) further underscore the strength in U.S. consumer spending, which has largely managed to shrug off worries over inflation and rising interest rates.
However, Visa said the skyrocketing greenback does not bode well for the American tourism industry, which relies on a big portion of its revenue from international travelers.
"Travel outbound from the U.S. to all geographies continue to pick up steam," Chief Financial Officer Vasant Prabhu said on a post-earnings call.
"The strong dollar and delays in visa issuance from some countries appear to be impacting travel into the U.S," he added.
Transactions processed at the world's largest payments processor rose 12% on a constant dollar basis to 50.9 billion in the fourth quarter ended Sept. 30.
"The substantial growth in processed transactions is a good indication that inflation isn't the primary driver of increased spending," said Ted Rossman, senior industry analyst at Bankrate.com.
On a constant dollar basis, Visa's payment volumes surged 10%, while cross-border volumes - a key measure that tracks spending on cards beyond the country of issue - jumped 36%.
Excluding items, the world's largest payments processor reported a profit of $1.93 a share, beating estimates of $1.86, according to Refinitiv IBES data.
Visa's net income was $3.9 billion, or $1.86 per share, for the quarter, compared with $3.6 billion, or $1.65 a share, a year earlier.
Net revenue rose 19% to $7.79 billion, while operating expenses jumped 20% to $2.7 billion.
"We still plan to grow our expenses in high single digits next year," Prabhu said, adding that the company will scale costs back if a recession or a geopolitical shock arises.
Get The News You Want
American Express also reported a 19% jump in expenses on higher customer engagement and acquisition costs.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.