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Visa exceeds earnings expectations, but the travel type remains slow

Visa Inc. Tuesday exceeded fiscal third-quarter earnings and revenue expectations, but the company saw volume declines as the COVID-19 crisis continued to depress spending growth, particularly in the travel category.

Shares V,
-0.08%
were 1% cheaper in the hours after trading.

The company posted net income of $ 2.4 billion, or $ 1.07 per share, down from $ 3.1 billion or $ 1.37 per share in the previous quarter. Adjusted earnings came in at $ 1.06 per share, while analysts surveyed by FactSet expected $ 1.03 per share.

Visa’s sales fell from $ 5.84 billion to $ 4.84 billion, while FactSet’s consensus was $ 4.82 billion. Payment volume declined by 10% for the quarter, while cross-border volume decreased by 37%. Excluding intra-European transactions, cross-border volume decreased by 47%.

The company said in its earnings report that it saw spending improve in each fiscal third quarter as more countries began easing coronavirus-related restrictions on economic activity. The volume of payments that “significantly improved” in the US during the quarter, boosting current card spending as e-commerce spending remained “consistently high”, supporting travel-related spending.

Processed transactions decreased by 13% worldwide in the quarter. Visa said this measure lagged volume growth “because the mix of expenses shifted from smaller transactions.” Cross-border volume “has only marginally improved during the quarter”, given the continuing restrictions on travel, which is a major source of this type of expenditure.

Due to the uncertainties surrounding COVID-19, management does not provide prospects for the full fiscal year.

Visa started a busy week of payment income, with PayPal Holdings Inc. PYPL,
-0.96%
set to report after Wednesday’s closing bell and Mastercard Inc. MA,
-0.81%
follow on Thursday morning.

Visa Shares have risen 15% over the past three months as the Dow Jones Industrial Average DJIA,
-0.77%
, of which Visa is a part, increased by approximately 9%.

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