Visa's overall payments volume grew 8% during the first quarter of the year, with double-digit growth in cross-border payments volume, despite ongoing weakness in Asia, Visa announced Wednesday.
Revenue of $8.8 billion, up 10% year over year during Visa's second fiscal quarter ending March 31, 2024, slightly beat investor expectations. Net income was $4.7 billion, up 10% over the same period a year earlier.
"Consumer spend across all segments, from low to to high [spenders] has remained relatively stable," Christopher Suh, Visa's chief financial officer, told analysts in a conference call to discuss earnings.
Visa's overall cross-border travel volume was up 17% year over year, or 152% compared to 2019, despite Asia's sluggish activity and depressed travel to the region, Suh said. He attributed the slowdown in Asia to macroeconomic weakness in China.
"Asia-Pacific travel continues to recover, but the pace has been slower than we anticipated," he said.
Visa in recent months has made significant progress in shifting more small-ticket cash purchases to its cards, including by
Contactless payments now account for 79% of in-store transactions globally, with about 50% of U.S. merchant locations contactless-enabled, he said.
"New York City [is] at 75% [contactless penetration], the first U.S. city to reach this milestone, up from 50% two years ago, demonstrating the impact that transit and our focused issuance and acceptance have on accelerating growth," McInerney said.
Visa is also getting traction from diversifying its sources of income through value-added services, including fraud protection and acceptance tools, along with "new flows" in emerging payment niches, he said.
New-flows revenue growth rose 14% during the recent quarter, with Visa Direct transactions increasing 31%, to $2.3 billion. Visa expects to see continuing growth in Visa Direct this year, helped by multiple new deals including
Visa is also getting results outside the U.S. from efforts to convert local domestic debit network payments to its own rails, according to McInerney. Between 2018 and 2023, Visa converted more than 20 million local debit cards to Visa debit credentials, and there are millions more in the pipeline for conversion, he said.
In Kenya, Visa recently signed an agreement with Pesaflow to expand card payments on eCitizen, which serves 12 million local users.
A few years after
Visa is also bolstering its products to
Total processed transactions during the quarter rose 11%, to 55.5 billion, compared to the same period a year earlier. Credit transactions were nearly flat, while debit transactions rose 9%, powered in part by robust growth in Visa Direct.
Service revenue during the quarter rose 7%, to $4 billion, while data processing rose 12%, to $4 billion, and international transaction revenue rose 9%, to $3 billion, over the same period in 2023.
"Other" revenue categories grew by 37%, to $756 million. Client incentives were $3.3 billion, up 12% over the prior year.
Operating expenses were $3.4 billion, up 29% due to the firm setting $430 million aside for litigation and a 60% increase in general administrative expenses during the quarter.
Visa affirmed its forecast for revenue and expenses to grow in the low to double-digits for the full year, and revised its expectation for payments volume to high double-digit growth this year from a previous forecast in the lower double-digits.
Analysts were neutral to positive on Visa's results. "Our hold rating reflects our view that while secular growth drivers remain and healthy EPS growth is likely in the coming years, we see slowing volume and net revenue growth … and some secular drivers that could adversely impact long-term growth prospects," said HSBC Global Research in a Wednesday note to investors.
