Viva la VisaVisa reaps the benefits of a reopening world with better than expected Q2 earnings.
- Visa shares swiped up 6.4% on Wednesday after beating on both ends with EPS of $1.79 on sales that climbed 25% to reach $7.19bn. This comes as a surprise to analysts, who predicted EPS of $1.65 on revenue of $6.8bn.
- The payment giant has been lovin’ the travel spending. Visa’s payment volume rose 17% YoY in Q1, while cross-border volume grew an impressive 38%, reflecting a healthy recovery to pre-pandemic levels in affluent customer spending.
- CFO Vasant Prabhu expects revenues to fly up to 20% for the rest of the year. Visa has already navigated pulling its business in Russia – worth 4% of its revenue, on top of supply chain issues that continue to hit global commerce. Now, it seems, peeps can’t stop spending.
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Visa’s va-va-voom earningsConsumers are breaking the bank, so Visa is breaking its quarterly earnings records.
- Revenue topped $7bn for the first time in Q4, which healthily beat expectations with EPS of $1.81 and sent the stock up 5% in after hours trading.
- Investors have the wanderlusters of the world to thank. There was a 51% increase in cross-border payments volume that buoyed revenue thanks to a rebound in traveling.
- It’s clearly a good time to be in the payments provider game. Higher consumer spending also spurred on rivals like Mastercard (MA) and American Express (AXP) as the industry enjoys sustained growth in e-commerce, which boomed during the pandemic.
Illustration by TradingView
Visa commits to cryptoVisa wants to help big banks get on board with blockchain as the industry continues to boom.
- It’s launching a new crypto consulting service to help its clients navigate the digital asset world.
- “Every bank should have a crypto strategy,” apparently. Over 40% of crypto owners Visa recently interviewed said they want to switch banks to one with crypto offerings.
- It’s trying to stay ahead of the game. De-Fi has the potential to overtake card companies like Visa and Mastercard, and the industry is scrambling to stay relevant.
Shubham Dhage / Unsplash
A cross-border spending spreeVisa beat both the top and bottom lines with its third quarter earnings release, reporting earnings per share of $1.62 on revenue of $6.56 billion, compared to expectations of $1.54 in earnings per share and $6.53 billion in revenue. The better-than-expected numbers were driven by an impressive rebound in post-pandemic spending, specifically in international credit card spending cross border spending volume – which increased 37% in the quarter to hit its highest levels since the pandemic began. Visa CEO Alfred Kelly said:
Our performance was driven by the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services. Looking ahead, Visa is even better positioned for the future as cross-border travel recovers and we continue to drive the rapid growth of digital payments and enable innovation in money movement globally.
International spending is a particularly lucrative area for Visa thanks to the high fees it’s able to charge. Going forward though, the payments company warned that border closures are still looming large, and spending may lose momentum if in-bound travel to the U.S. doesn’t resume soon. Chief Financial Officer Vasant Prabhu cautioned:
Cross-border travel is recovering well, but it’s still well below pre-Covid levels, with the pace of recovery depending on border openings. Covid variants are still with us and vaccination rates remain low in large parts of the globe. With these factors as the backdrop, forecasting the trajectory of the return to normalcy remains difficult.
Visa lost 4% in Wednesday morning trading.
Illustration by TradingView
Visa pushes crypto into the global mainstreamThe crypto market might be crashing, but Visa is bullish all the way. The leading card payment organization is partnering with over 50 cryptocurrency companies, making it super easy to convert and spend digital currencies around the world.
Visa is the second largest card payment organization in the world, and it's putting its weight behind the future of crypto adoption. Visa started making moves to get on the ride side of crypto history last year as a growing list of companies began to consider digital currencies as actual forms of payment; partnering with Goldman Sachs-backed blockchain company Circle to make its USD Coin stablecoin compatible with specific credit cards. Since then it has continued to affirm its commitment to aggressively pursuing crypto payments, and has invested in several crypto payments start-ups, like Zap.
We believe that we are uniquely positioned to help make cryptocurrencies more safe, useful and applicable for payments,
said CEO Al Kelly said during the company's Q1 earnings call.
In another bold move, Visa will further develop its crypto payments capability by partnering with over 50 cryptocurrency companies, including FTX and Coinbase (COIN), so that clients can spend and convert digital currencies through its card program. What that basically means is that people can use their digital assets to buy things at the 70 million worldwide merchants that Visa is connected to, even if those companies themselves do not accept digital assets – which is pretty huge for global mainstream crypto adoption.
We are doing a lot to create an ecosystem that makes crypto currency more usable and more like any other currency. People are exploring ways in which they can use cryptocurrencies for things they would use normal currencies for. There are lots of issues in terms of volatility, etc. But that’s up to the owners of cryptocurrencies to manage and track.
Visa CFO Vasant Prabhu said.
Visa also noted on Wednesday that over $1 billion worth of cryptocurrency was spent by consumers globally through crypto-linked cards in the first half of 2021, only a fraction of the amount spent in the first half of the last two years – so clearly there is more to unlock.