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Jan. 28, 2022, 8:19 a.m. EST

Visa stock gains as quarterly revenue tops $7 billion for the first time

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By Emily Bary

Visa Inc. topped $7 billion in quarterly revenue for the first time, buoyed by a quicker-than-expected resumption in travel spending and sustained growth in categories like e-commerce that had been strong throughout the pandemic.

The company generated fiscal first-quarter net income of $4.0 billion, or $1.83 a share, up from $3.1 billion, or $1.42 a share, a year earlier. On an adjusted basis, Visa /zigman2/quotes/203660239/composite V -2.38% earned $1.81 a share. Analysts tracked by FactSet were expecting $1.70 in both GAAP and adjusted earnings per share.

Visa’s net revenue rose to $7.06 billion from $5.69 billion, while the FactSet consensus was for $6.79 billion. Analysts surveyed by FactSet weren’t expecting Visa to cross the $7 billion revenue mark until the June quarter.

The company’s revenue upside was driven by lower-than-expected incentives and higher international performance, Wedbush analyst Moshe Katri told MarketWatch.

Payments volume rose 20%, while processed transactions increased 21%. The company saw a 51% increase in cross-border volume when excluding intra-Europe transactions and a 40% bump in overall cross-border volume.

Shares were up 5% in after-hours trading Thursday.

Chief Executive Al Kelly saw several drivers for Visa’s results, including continued growth in e-commerce and a faster-than-expected return of cross-border travel spending.

“As we look ahead, we do not believe the current surge in the pandemic will curtail the recovery,” he said in Visa’s earnings release. “We see economies around the world continuing to improve and, as restrictions are lifted, cross-border travel will continue to recover.”

Visa sees strong pent-up demand for travel that could help results as more countries ease pandemic-related restrictions. “You’re seeing that every time a border opens, there’s an extraordinary amount of travel,” Chief Financial Officer Vasant Prabhu told MarketWatch.

Cross-border spending takes place when people make purchases from merchants in in countries other than where their cards were issued, and it’s a highly profitable business for Visa. While cross-border travel spending has been depressed due to the COVID-19 crisis, cross-border e-commerce is “ahead of where it would be if the pandemic never happened,” Prabhu said.

The company remains upbeat looking forward, projecting accelerated revenue growth rates, relative to prepandemic levels, over the coming years.

“As new flows and value-added services become a larger part of our revenue mix, growing faster than consumer payments, the sustainable growth rate will continue to rise,” Prabhu said on the earnings call.

Prabhu was encouraged by trends in markets like Latin America, where consumers are newer to card payments and e-commerce. Latin America volumes were up 66% above 2019 levels in the December quarter, suggesting “massive shifts in adoption of debit and credit, especially debit,” he said in his conversation with MarketWatch.

“You can’t get 60% growth rates in those economies based on consumption expenditures growing,” he said, meaning that increased digital adoption is helping drive the momentum.

On the earnings call, Prabhu called for overall net-revenue growth “at the high end of high teens” in Visa’s fiscal second quarter, with an estimated drag of more than 1 percentage point from exchange rates.

Read: Fintech’s ugly month of losses may offer a ‘fantastic opportunity’ to bargain hunt, say analysts

Visa is the third big payments company to report results this week, after earnings from American Express Co. /zigman2/quotes/203805826/composite AXP -2.14% and Mastercard Inc. /zigman2/quotes/207581792/composite MA -2.22% were met with positive stock reactions .

Shares of Visa have lost 4.5% over the past three months as the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.15% has declined 3.8%.

/zigman2/quotes/203660239/composite
US : U.S.: NYSE
$ 202.63
-4.93 -2.38%
Volume: 7.46M
May 24, 2022 4:00p
P/E Ratio
32.58
Dividend Yield
0.74%
Market Cap
$432.17 billion
Rev. per Employee
$1.25M
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/zigman2/quotes/203805826/composite
US : U.S.: NYSE
$ 155.63
-3.41 -2.14%
Volume: 2.82M
May 24, 2022 4:03p
P/E Ratio
15.59
Dividend Yield
1.34%
Market Cap
$119.77 billion
Rev. per Employee
$723,328
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/zigman2/quotes/207581792/composite
US : U.S.: NYSE
$ 340.69
-7.74 -2.22%
Volume: 2.56M
May 24, 2022 4:00p
P/E Ratio
35.45
Dividend Yield
0.58%
Market Cap
$338.99 billion
Rev. per Employee
$828,667
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
31,928.62
+48.38 +0.15%
Volume: 382.95M
May 24, 2022 4:55p
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