Visa Inc. (V): Three factors working in favor of this digital payments leader

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Visa Inc. Shares (NYSE: V) rose 3% on Friday, a day after the company delivered strong results for the first quarter of 2023. Revenue and earnings beat expectations and the company is seeing positive trends in its business. Three factors working in favor of this digital payments leader:

Revenue and profit growth

Visa posted strong revenue and profit growth in the first quarter of 2023, beating consensus targets. Net revenue of $7.9 billion increased 12% year-over-year, driven by fixed payments volume and processed transaction growth and continued recovery in cross-border travel.

Total payments volume increased 7% in the first quarter compared to the same period last year, helped by 9% growth in US payments volume and 15% growth internationally, excluding Russia and China. Excluding Europe, cross-border volumes grew 31% year-on-year. Transactions processed grew 10% year-on-year.

In Q1 2023, GAAP EPS rose 8% to $1.99 and adjusted EPS rose 21% to $2.18. Visa expects to see stable trends in domestic payment volume and transactions processed in the second quarter of 2023, with continued recovery in cross-border travel. The company expects revenue growth in the high single digits in Q2.

Favorable growth trends

In the second quarter, Visa saw strong revenue growth in each of its growth areas – consumer payments, net flows and value-added services. Among consumer payments, credentials grew 8%, with double-digit growth in the US, India and Brazil. Excluding Russia, growth was 11%. Excluding the US and Russia, tap payment penetration in face-to-face transactions globally was 72%. In the US, transactions exceed 30%.

Net flow revenue grew more than 20% in constant dollars, driven by strong growth in B2B payments volume and Visa Direct transactions. Excluding Russia, Visa Direct transactions in Q1 grew 39% year-on-year to 1.9 billion. Value-added services generated $1.7 billion in revenue in Q1, up 20% in constant dollars.

Valuable partnerships

Visa has entered into a number of strategic and valuable partnerships that will facilitate further growth. In Q1, it renewed its partnerships with Bank of America and Commerce Bank in the US and payments solutions provider Cuscal in Australia and Kiwibank in New Zealand. The company entered into a new agreement with Banco Nacional de Panama, one of the largest banks in Panama.

In Latin America, it renewed its ties with ICBC Argentina and Banco do Brasil, while inking a new deal with fintech platform Tigo Money. These partnerships, along with many others, provide significant opportunity for additional growth and expansion for Visa.

Click here to read the full transcript of Visa’s Q1 2023 earnings conference call


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