Visa earnings topped expectations, but travel category remains slow to return

Visa Inc. topped fiscal third-quarter earnings and revenue expectations on Tuesday, but the COVID-19 crisis continues mixed spending trends with strong growth in e-commerce, but continued in travel-related transactions Weakness.

The amount of payment on Visa V
The latest period dropped 10%, though the amount of cross-border payments, or transactions between shoppers and merchants originating in different countries, dropped 37%. Visa said that cross-border volume fell by 47%, excluding transactions between European countries, where international travel has withdrawn more rapidly.

The shares were down 1.6% after after-hours trading.

In the US, Visa saw a “steady improvement” in person spending during the June quarter, but to prevent that recovery from growing in July due to a spike in COVID-19 cases to a more cautious approach to reopening the economy between. Chief Financial Officer Vasant Prabhu said that the recovery in in-person spending known as card-present volume is largely the same in different states.

Wembush analyst Moshe Katari told Marketwatch in an email that the July trend reflected “plans to reopen 20+ states’ businesses and reduced the benefit of incentive checks”, though he considered the company’s overall E-commerce strength is weak in other areas. Like travel expenses.

The company has seen more than 25% increase in US card-non-present volume, or online transaction value, every week since early April, twice the growth rate before the outbreak of COVID-19. .

Don’t miss: Visa sees ‘massive’ digital acceleration with millions of people trying e-commerce for the first time

Some US spending categories, including home improvement and food stores, have seen increases from their pre-epidemic levels during each week since mid-April, Prabhu said, while others, including retail services and health care, have seen 10 Saw a drop in volume between%. And 50% in April but now showing positive growth relative to a year ago.

Entertainment, fuel and restaurant expenses are still low, as there have been some improvements since their 50% -valuation in April, but the travel category in the US remains over 50%

Officials believed that while the epidemic was pressuring certain spending categories in the near-term, it was also accelerating the adoption of payment habits that could benefit Visa in the long run. In the US, the number of visa credentials involved in e-commerce purchases was 12% in June relative to January, and trends were significantly higher in countries such as Argentina and Romania, where online shopping was less prominent before the crisis.

Read: Visa says COVID-19 crisis can help drive $ 100 billion annual shift from debit card over time

Visa also added more than 80 million new contactless cards in the US in the first six months of 2020, with chief executive Al Kelly noting that many of the company’s financial institutions planned their plans for contactless issuance. Visa hopes to pay taps to gain more momentum in the US due to the increased awareness of germ spread, and Kelly said that once people start going back to their offices, they will be in public for food and drink. Can increasingly use contactless payment methods for purchase- transit fares.

Even before the COVID-19 crisis hit, the company was pushing for contactless adoption in the US, with the hope that tapping payments such as contactless credit cards and mobile wallets on smartphones allowed people to use their cards for smaller card accounts May help to use. Usually handled with cash.

Visa posted net income for the quarter of $ 2.4 billion, or $ 1.07 per share, down from $ 3.1 billion, or $ 1.37 per share, in the year-ago quarter. Adjusted earnings came in at $ 1.06 per share, while analysts polled by FactSet expected $ 1.03 per share. The company’s revenue fell from $ 5.84 billion to $ 4.84 billion, while FactSet’s consensus called for $ 4.82 billion.

Given the uncertainties surrounding COVID-19, the company did not provide an outlook for the entire financial year.

Barclays analyst Ramsey Al-Assal wrote that the higher cost of Visa earnings was driven by savings as the company was able to reduce advertising, marketing and promotional spending by 39% from a year earlier, “likely to postpone Summer Olympics is.”

PayPal Holdings Inc. With PYPL, Visa closed a busy week of payments.
Wednesday bells and MasterCard Inc. Set to report after MA,
After Thursday morning.

Visa shares have increased 15% in the last three months as the Dow Jones Industrial Average DJIA,
Of which visa is a component, increased by about 9%.


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