July 23 – Visa’s third-quarter revenue growth fell short of Wall Street expectations as steep borrowing costs limited consumer spending, sending shares of the world’s largest payments processor down 2.1% in extended trading.
The U.S. Federal Reserve’s efforts to curb inflation have taken interest rates to their highest since the global financial crisis of 2008, stretching the budgets of lower-income Americans who live paycheck to paycheck.
Credit card giant American Express also missed expectations for second-quarter revenue last week.
Quarterly net revenue for Visa came in at $8.90 billion, below analysts’ estimates of $8.92 billion, according to LSEG data.
“Visa was priced for perfection back in March but has eased since then as unemployment, payment and loan delinquencies, and continued consumer disposable income concerns tick higher,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“There is room for business and consumer spending growth, especially if Fed interest rates decline.”
Visa’s payments volume rose 7% in the quarter on a constant dollar basis, while cross-border volumes excluding transactions within Europe jumped 14%, signaling robust international travel demand.
The company’s processed transactions jumped 10% in the quarter.
Visa expects net revenue growth in the “low double-digit” percentages for the fourth quarter ending Sept. 30, compared with 10.6% last year. The company also reaffirmed its annual profit and revenue growth forecasts.
It earned $2.42 per share on an adjusted basis for the third quarter, in line with expectations.
Rival Mastercard’s results, due next week, will cap off the reporting season for the sector.
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