Updated January 26th, 2024 at 08:49 IST
Visa's cautious revenue outlook dampens earnings beat, shares fall
CFO Chris Suh expressed confidence that any effects would be temporary & smoothed out over the quarter, attributing volume decline to extreme weather conditions
Visa revenue outlook: Visa's subdued projection for current-quarter revenue growth overshadowed its market-beating earnings report on Thursday, driven by robust consumer spending during the holiday season and a resurgence in travel.
Despite the optimistic outlook for spending throughout the year, Visa executives acknowledged the impact of severe winter storms in the US, which dampened volumes at the beginning of the year.
However, CFO Chris Suh expressed confidence that any effects would be temporary and smoothed out over the quarter, attributing the volume decline to extreme weather conditions.
Shares of Visa, the world's largest payments processor, dropped 3 per cent in after-hours trading following the company's forecast of "upper mid- to high single-digit" growth in second-quarter net revenue. This outlook contrasts with an 11 per cent growth recorded in the corresponding period in 2023.
Concerns about a slowing economy and high-interest rates have clouded the outlook for payments firms, particularly impacting consumers in lower-income brackets, adding to market uncertainty.
Edward Jones analyst Logan Purk observed that while consumer spending remains robust, there are signs of a slowdown. He anticipates that the mixed guidance and decelerating transactions could weigh on the stock.
On a positive note, US consumers exhibited resilience during the holiday season, with adjusted profit of $2.41 per share surpassing analysts' expectations of $2.34.
Suh highlighted improvements in travel, particularly in key markets like China, which although has yet to return to pre-pandemic levels, is experiencing steady sequential recovery.
In the first quarter, payments volume rose by 8 per cent on a constant-dollar basis, while cross-border volume excluding intra-Europe, a key indicator of international travel demand, surged by 16 per cent.
(With Reuters Inputs)
Published January 26th, 2024 at 08:49 IST