Visa, the credit-card giant, reported impressive earnings for the fiscal third quarter, driven by a robust recovery in international travel and consumer spending. Despite a slight dip in after-hours trading, Visa’s performance surpassed Wall Street estimates.
In Q3, Visa generated $8.1 billion in revenue, a 12% increase compared to the same period last year. This aligns with industry analysts’ projections and represents a slight acceleration from the Q2 growth rate of 11%. Net income rose by 7% to $4.5 billion, exceeding the consensus estimate by $100 million. With a net profit margin of 56%, Visa exhibited a strong financial standing. Adjusted earnings per share reached $2.16, a 9% year-over-year improvement that outperformed the estimated $2.11.
According to CEO Ryan McInerney, the resilience of consumer spending fueled the growth in payments volume and processed transactions. Furthermore, the recovery of international travel and summer tourism contributed to a significant increase in cross-border volume. As a result, Visa experienced a 9% YoY growth in quarterly payments volume. Notably, cross-border transaction volumes grew by 17%, matching analyst expectations. Although this figure fell slightly from the previous quarter’s 24% surge, cross-border transactions remain lucrative for Visa.
The fiscal third quarter’s volume growth will have a notable impact on Visa’s financial performance in the upcoming period. As the company recognizes revenue based on payments processed in the previous quarter, strong growth in volume is expected to translate into positive financial results moving forward.
Although Visa stock has returned approximately 16% thus far in 2023, slightly trailing behind the S&P 500 index, it remains an attractive investment opportunity. Experts have praised Visa stock for being undervalued relative to its historical performance and the current market.
Investors will closely monitor Mastercard’s quarterly results, which are set to be released on Thursday morning.
