Visa reported better-than-expected quarterly earnings as a surge in online shopping over the holidays helped make up for the continuing slump in international travel.
For the first quarter, Visa’s profit fell to $3.13 billion, or $1.42 a share, from $3.27 billion, or $1.46 a share, a year earlier. But analysts had predicted earnings of $1.28 per share.
The company’s revenue slipped just over 6% to $5.69 billion, a smaller decline than in the third and fourth quarters and above analysts’ estimates of $5.52 billion. Payments volume rose 5% and processed transactions were up 4%, reflecting the growth in online shopping.
According to the National Retail Federation, U.S. holiday sales jumped 8.3% last year to record their best growth in at least 19 years as consumers used their stimulus checks to splurge on gifts.
“Our performance in the fiscal first quarter reflected solid results and continued positive momentum in a challenging COVID-19 environment,” Visa CEO Alfred Kelly said in a news release.”
“We saw sustained strength of debit and e-commerce volumes as well as resilient domestic spending in most countries. We continued to deliver robust Visa Direct transaction growth and accelerated our value-added services revenue – all reflective of our progress in the enablement of money movement globally,” he added.
As Reuters reports, the online shopping surge “helped the world’s biggest payment processor counter a hit to cross-border volumes from a global slowdown in travel and entertainment.”
Cross-border volume fell 21% from a year earlier, but improved from the prior quarter when they crashed 47%.
CFO Vasant Prahbu told analysts the company is “actually back to [its] pre-pandemic growth trajectory,” noting that its debit business is “significantly ahead” of pre-pandemic growth in the U.S., due in part to reduced cash usage during the pandemic, while the credit business “remains a drag.”
Credit card companies are hoping for an uptick in travel as Covid-19 vaccines roll out “Our best sense is that the second-quarter gross-revenue growth rate will recover to be flattish with last year, with most of the improvement driven by international revenues,” Prabhu said.