Visa Q1 Profit Surpasses Expectations

By Jaiveer Shekhawat and Manya Saini
(Reuters) – Visa’s first-quarter profit exceeded Wall Street forecasts on Thursday, as reduced concerns about an economic downturn and discounts encouraged consumers to indulge during the holiday shopping season.

Retailers provided significant discounts on a wide array of products, including apparel, toys, and luxury items, to attract budget-conscious shoppers, while online sales thrived due to a surge in mobile shopping.

Payments volume—a measure of total consumer and business spending on Visa’s network—rose by 9%, and revenue increased by 10% to $9.5 billion for the quarter. Shares of the leading payments processor rose by 1.8% after hours.

Visa also saw strong demand from both domestic and international travelers, aided by better pricing and a lack of severe weather disruptions. The cross-border volume, excluding intra-Europe, climbed by 16%, while processed transactions increased by 11% in the quarter.

The San Francisco-based company reported an adjusted profit of $2.75 per share for the three months ending December 31, surpassing analysts’ average expectations of $2.66 per share.

Spending Outlook

Despite expectations of sustained higher interest rates dampening consumer spending, a robust labor market and ongoing wage growth continue to support it.
“Consumer spending in the U.S. and around the globe is quite resilient and strong,” said Chief Financial Officer Chris Suh in an interview with Reuters.

This trend is promising for Visa and its competitor Mastercard, as they earn small fees from each transaction made on their networks. Earlier in the day, Mastercard announced a fourth-quarter profit that also beat Wall Street forecasts as consumer spending surged during the holiday season.

Both companies’ shares had lagged behind broader market performance in 2024 due to fears that economic slowdowns in major global economies could impact the sector.