By Arasu Kannagi Basil
(Reuters) -Visa beat Wall Street expectations for fourth-quarter profit on Tuesday, as consumers set aside worries of a slowing economy and swiped their cards to splurge on travel and dining out, sending its shares up 2% in trading after the bell.
U.S. consumer spending has remained largely resilient despite elevated interest rates, with analysts expecting a soft landing for the economy to boost confidence and reignite spending growth.
Payments volume rose 8% in the quarter on a constant-dollar basis, while cross-border volume excluding intra-Europe, a gauge of international travel demand, surged 13%.
Visa Chief Financial Officer Chris Suh on a call with analysts said consumer spending across all segments has remained relatively stable, compared with the third quarter.
“The underlying drivers have remained quite stable,” Suh told Reuters, adding that he expected consumer resilience to extend into 2025.
However, Asia-Pacific payments volume growth remained below expectations due to the current economic environment, primarily in China, which has been grappling with weak business sentiment and a prolonged property crisis.
Visa forecast adjusted net revenue growth for 2025 in high single digits to low double digits. That compares with Wall Street expectations of 10.8% growth, according to data compiled by LSEG.
It expects adjusted profit per share growth to be at the high end of low double digits, compared with expectations of 11.7% growth.
Meanwhile, the U.S. Justice Department last month sued Visa for allegedly monopolizing debit card markets. Visa has called the claims meritless.
The lawsuit came months after another major legal setback for Visa, when a judge in June rejected a $30 billion antitrust settlement wherein Visa and Mastercard had agreed to limit fees they charge merchants.
“We will defend ourselves vigorously and are confident in our ability to demonstrate that Visa competes for every transaction in a thriving debit space that continues to grow and see new entrants,” CEO Ryan McInerney told analysts.
Meanwhile, Visa is also reportedly planning to lay off about 1,400 employees and contractors by the end of the year. The company currently employs more than 30,000 employees.
Visa reported net revenue of $9.62 billion in the fourth quarter, while analysts were expecting $9.49 billion.
On an adjusted basis, Visa earned $2.71 per share, beating expectations of $2.58.
Visa’s shares have gained 8.3% in 2024, trailing the 22% jump in the benchmark S&P 500 index.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Anil D’Silva)
