Visa Inc. (NYSE:V) faced a decline in its shares by 3% in extended trading following a cautious forecast for current-quarter revenue growth, despite a robust earnings report fueled by increased card usage for significant purchases during the holiday season and resilient travel activity.
Visa, the world’s largest payments processor, reported adjusted earnings of $2.41 per share for the first quarter, surpassing analysts’ expectations of $2.34. However, the company’s projection of “upper mid- to high single-digit” growth in second-quarter net revenue fell short of market expectations, compared to the 11% growth observed in the corresponding period in 2023.
While Visa’s executives expressed optimism about spending throughout the year, concerns arose over the impact of severe winter storms in the U.S. during the early part of the year. CFO Chris Suh acknowledged the weather-related impact on volumes but emphasized that the company expects the situation to normalize over the quarter. Suh mentioned that the adverse weather conditions deterred consumer outings in certain areas but had no significant impact in regions with favorable weather.
The outlook for payment firms has been clouded by concerns about a slowing economy and higher interest rates affecting consumer spending, particularly among lower-income individuals. Analysts noted that while the results indicated robust consumer spending, there were signs of a slowdown.
In terms of travel, Visa reported ongoing improvements, particularly in key markets such as China. Although travel in China has not yet fully returned to pre-pandemic levels, it is steadily recovering on a sequential basis.
Payments volume increased by 8% in the first quarter on a constant-dollar basis, and cross-border volume excluding intra-Europe, a measure of international travel demand, surged by 16%. Despite the positive performance, the cautious revenue outlook and concerns about slowing transactions contributed to a decline in Visa’s shares in after-hours trading.
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