LONDON: Visa's second-quarter results sailed past Wall Street estimates on Tuesday, as consumers shrugged off worries of a slowing economy to swipe cards on everything from travel to dining out, sending its shares up 2.7 per cent after the bell.
U.S. consumer spending has remained remarkably resilient despite higher-for-longer interest rates, with Americans still looking to spend on big-ticket purchases and international travel.
Visa executives in a call with analysts said international travel continues to be healthy, particularly out of the key markets of the U.S. and Europe, but flagged that Asia-Pacific travel has been weak as the post-pandemic recovery continues to be slower than expected.
But the world's largest payments processor said strong e-commerce trends have helped offset weakness in Asian markets.
"Certain markets are not yet at 2019 levels and Asia in particular stands out. We do think it will continue to recover through the year ... but the pace relative to our own expectations in Asia is a little bit slower than we anticipated," CFO Chris Suh said in an interview with Reuters.
Visa's payment volume climbed 8 per cent in the second quarter. Cross-border volume excluding intra-Europe, a gauge of international travel demand, jumped 16 per cent. Processed transactions rose 11 per cent in the period.
"Consumer spend across all segments from low-to-high spend has remained relatively stable. Our data does not indicate any meaningful behavior change across consumer segments," Suh said on a post-earnings conference call.
The summer season is also typically strong for travel volumes as people fly both internationally and within the U.S. for vacations.
Visa expects net revenue growth in "low double-digit" for the current quarter ending June 30. The company also reaffirmed its 2024 revenue and profit forecasts.
"There were a lot of investors who thought that they would have to cut the guidance, and the fact that they did not, is a positive for Visa," said Dan Dolev, senior analyst at Mizuho.
The upbeat earnings come after Visa and rival Mastercard reached an estimated US$30 billion landmark settlement in March to limit credit and debit card fees for merchants, with some savings likely to be passed on to consumers through lower prices. Analysts have said it would not be financially material to Visa and Mastercard.
Visa's second-quarter adjusted profit per share of US$2.51 beat LSEG estimates of US$2.44.
Its net revenue of US$8.8 billion also topped expectations of US$8.62 billion.
Credit card giant American Express also beat expectations for first-quarter profit last week. - Reuters