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Earnings Results: Visa stock gains after earnings beat, return to growth for credit transactions


Shares of Visa Inc. were up more than 1% in after-hours trading Wednesday after its latest earnings showed some recovery in spending amid the pandemic.

The payments company posted fiscal second-quarter net income of $3.0 billion, or $1.38 a share, compared with $3.1 billion, or $1.38 a share, a year earlier. On an adjusted basis, Visa

also earned $1.38 a share, down from $1.39 a share a year prior. The FactSet consensus was for $1.27 a share in both GAAP and adjusted earnings.

Visa’s revenue for the quarter dropped to $5.73 billion from $5.85 billion a year prior, while analysts tracked by FactSet were modeling $5.56 billion.

While the headline financials were down relative to a year earlier, Visa saw payments volume grow 11% in the March quarter, with processed transactions rising 8%. Volume from cross-border transactions, or those made between parties from different countries, dropped 11% in the quarter, or 21% when excluding transactions within Europe.

Visa disclosed that fiscal second-quarter payment volume and processed transactions were up 16% compared to the same period in 2019, a data point that the company offered to provide cleaner comparisons to pre-pandemic levels, since part of last year’s March quarter was also impacted by COVID-19. “All business drivers were consistent or improved from the fiscal first-quarter’s results indexed to 2019,” the company said in an investor presentation.

The pandemic has impacted spending trends, especially with international travel largely stalled, but Chief Executive Al Kelly said in Visa’s filing that “the recovery is well underway in a number of key markets.” Visa saw positive growth in credit transactions during the March quarter, as well as positive growth for card-present transactions.

Debit transactions proved more resilient than credit ones throughout the pandemic as people focused more on spending their own money rather than borrowing. But growth for both debit transactions and e-commerce transactions, another hot area, “stayed at very healthy levels” in the latest quarter, Kelly said in his statement, even as credit and in-person spending turned positive.

Wedbush analyst Moshe Katri told MarketWatch in an email that he was “specifically encouraged by Visa emphasizing that the pandemic-driven structural volume shift to e-commerce has been sustainable this year” despite the reopening of physical stores.

Visa executives continued to maintain that COVID-19 is driving a shift away from cash that they expect to last beyond the pandemic.

“Debit has become the cash of the e-commerce world,” Kelly added on Visa’s earnings call.

He said that while he expects the gap between debit growth and credit growth to narrow, he’s “not sure that we get back to those two different card platforms growing at the same level going forward,” as “debit will continue to outpace the growth of credit” for as far out as he’s looking.

Visa declined to offer an outlook for the full fiscal year, citing uncertainties in forecasting brought on by the pandemic.

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