Visa Inc. (V.N) exceeded Wall Street's fourth-quarter profit expectations on Tuesday as consumers, undeterred by economic concerns, spent on travel and dining, boosting Visa’s shares by 2% in after-hours trading.
Despite high interest rates, U.S. consumer spending has largely held steady, with analysts forecasting a soft economic landing to potentially boost consumer confidence and spending. Visa’s payments volume rose by 8% for the quarter on a constant-dollar basis, while cross-border volume, excluding intra-Europe transactions (an indicator of international travel demand), surged 13%.
Chief Financial Officer Chris Suh noted that consumer spending across segments remained stable from the third quarter, adding that Visa anticipates this resilience to persist into 2025.
However, in the Asia-Pacific region, payments volume growth underperformed, mainly due to economic challenges in China, which faces weak business sentiment and an ongoing property crisis.
For 2025, Visa projects adjusted net revenue growth in the high single digits to low double digits, slightly below Wall Street's 10.8% growth expectation (LSEG data). The company also expects adjusted profit per share growth at the high end of the low double-digit range, against the 11.7% anticipated by analysts.
In regulatory news, the U.S. Justice Department recently sued Visa, alleging monopolistic practices in the debit card market, a claim Visa disputes as "meritless." This follows a setback in June when a judge rejected a $30 billion antitrust settlement that Visa and Mastercard had proposed to cap merchant fees.
CEO Ryan McInerney defended Visa’s competitive stance, stating the company will “vigorously defend” its position.
Visa also plans to lay off approximately 1,400 employees and contractors by year-end, though it currently employs over 30,000 people.
For the fourth quarter, Visa reported net revenue of $9.62 billion, topping the $9.49 billion forecast. On an adjusted basis, the company earned $2.71 per share, beating expectations of $2.58. Visa's stock has gained 8.3% in 2024, slightly trailing the S&P 500's 22% increase.
0 Comments