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© Reuters. Smartphone with Visa logo is placed near toy shopping cart in this illustration taken, July 15, 2021. REUTERS/Dado Ruvic/Illustration
By Manya Saini
(Reuters) -Visa’s tepid forecast for current-quarter revenue growth on Thursday overshadowed a market-beating earnings report that was fueled by customers swiping their cards for big purchases during the holiday shopping period and robust travel.
Despite this, executives at Visa (NYSE:) struck an upbeat tone regarding spending for the year.
Severe winter storms that hit the U.S. have affected volumes at the beginning of the year, CFO Chris Suh said in an interview with Reuters, but he also mentioned that the company is not concerned about any broader impact and expects the situation to improve over the quarter.
“As it turns out, no one goes out in negative 10 degree weather … Conversely, in cities where the weather has been good, there’s been no change in volume,” Suh said.
Shares of Visa, the world’s largest payments processor, were down 3% in extended trading after the company forecast a rise of “upper mid- to high single-digit” in second-quarter net revenue. The outlook compares with an 11% growth in the corresponding period in 2023.
The outlook for payments firms has been marred by concerns that a slowing economy and high-interest rates will continue to pressure the wallets of consumers, particularly those in the lower-income bracket.
Edward Jones analyst Logan Purk said the results indicate that consumer spending remains strong, but also suggest that it is starting to decelerate.
“We believe the mixed guidance and slowing transactions will likely weigh on the stock,” Purk added.
On a positive note, U.S. consumers disregarded macroeconomic worries to ring in a solid holiday season. Adjusted profit of $2.41 per share sailed past analysts’ expectations of $2.34.
Suh added that travel in key markets continued to improve, including China, where it is yet to return to pre-pandemic levels, but is seeing steady sequential recovery.
Payments volume increased 8% in the first quarter on a constant-dollar basis while cross-border volume excluding intra-Europe, a gauge of international travel demand, surged 16%.