By Prakhar Srivastava
July 28 (Reuters) – Visa on Tuesday beat estimates for quarterly profit as steady consumer spending and the World Cup-fueled travel demand boosted payment volumes, signaling resilience amid uncertainty stemming from the conflict in the Middle East.
Payments volume, a gauge of consumer and business spending on the company’s network, rose 10% in constant dollars to exceed $4 trillion for the first time in the company’s history, while processed transactions grew 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.
WORLD CUP LIFTS CROSS-BORDER SPENDING
“We had expected the company to be a key beneficiary within the space this quarter from the World Cup, and that appears to have been the case,” said Seaport analyst Jeff Cantwell.
The world’s largest payment processor said cross-border volume rose 13% in the quarter on a constant-dollar basis, up from the 12% it reported a year earlier.
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.
“Total card-present spend in the U.S. accelerated, with card-present transactions rising as much as 20% in select host cities on match days during the FIFA World Cup,” Chief Financial Officer Chris Suh said on a post-earnings call.
“By spend categories in host cities, entertainment and restaurants saw the highest growth in cross-border spend.”
Closest rival Mastercard is scheduled to report quarterly earnings later this week.
JOB CUTS TO IMPROVE EFFICIENCY
On the earnings call, CEO Ryan McInerney said the company was eliminating roles, primarily in its technology and product teams, as part of efforts to better prepare for the next phase of growth.
Earlier in the day, a spokesperson said that the company would eliminate about 7% of its workforce.
“Visa hired aggressively during growth periods. Now AI enables higher productivity per remaining employee, allowing the company to maintain or expand output in priority areas while trimming headcount,” said Brian Mulberry, chief market strategist at Zacks Investment.
Operating expenses rose 19% to $4.8 billion in the reported quarter, driven primarily by higher personnel costs.
Shares of the company were down about 1% in after-hours trading.
Adjusted profit rose to $6.3 billion, or $3.32 per share, for the quarter ended June 30, topping analysts’ average estimate of $3.23, according to LSEG data.
Net revenue rose 14% to $11.63 billion, compared with the average estimate of $11.39 billion.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Sriraj Kalluvila)
