Visa’s outlook comes in better than feared, but stock dips after earnings

Visa Inc. reported quarterly results Tuesday that topped Wall Street views, but its shares were headed lower in the extended session.

The payment-technology company also called for low-double-digit revenue growth on an adjusted constant-dollar basis for the new fiscal year, coming in ahead of what some had been fearing from Visa

coming into the report.

Still, analysts couldn’t agree on whether the forecast was a relief or a high hurdle for the future.

“Investors had been expressing concerns that Visa would guide to [high-single-digit constant-currency] growth, and we see this…guide as a clearing event,” Wolfe Research’s Darrin Peller wrote in a note to clients.

But Mizuho’s Dan Dolev worried that the company may have set the bar too high for itself. “While results were strong, we worry that top-line guidance of low-double-digit [constant-currency] growth may prove overly ambitious as FY24 continues,” he wrote, noting that inflation benefits from last fiscal year might not manifest in the same way.

“We expect a muted stock reaction, as strong results are met with guide’s high bar and decelerating US payment volumes in October,” he wrote. Visa shares were off about 1% in after-hours trading following the call.

Chief Financial Officer Chris Suh, for his part, called Visa’s outlook “balanced.” The fundamentals of Visa’s business, as reflected in payment volume and processed transactions, “remain healthy and quite stable,” he told MarketWatch.

Visa saw a 9% increase in payments volume for the September quarter, along with a 10% boost in processed transactions.

Visa disclosed that U.S. debit and credit volumes were each up 5% in the first three weeks of October, marking a sequential drop from September that Suh attributed to a “days-mix” impact in September and falling October gas prices.

“Excluding those two items, payments volume growth was relatively stable from September to October,” he shared on the earnings call.

From a consumer-spending standpoint, Suh told MarketWatch that Visa has seen “pretty consistent trends,” with continued strength in the purchase of services.

The company posted fiscal fourth-quarter net income of $4.7 billion, or $2.27 a share, compared with $3.9 billion, or $1.86 a share, in the year-earlier period. Visa logged adjusted earnings per share of $2.33, whereas analysts tracked by FactSet were expecting $2.25.

Visa’s revenue increased 11% to $8.61 billion, while analysts were modeling $8.56 billion.

Cross-border volume excluding intra-Europe transactions rose 18%, while the company recorded a 16% bump in overall cross-border volume, which occurs when cardholders make purchases from a merchant based in a country other than their cards were issued.

Peer Mastercard Inc.

reports earnings before Thursday’s closing bell, while American Express Co.

called out healthy spending as it posted its own results last week.

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