Visa Tops Profit Expectations as Consumer Spending Defies Economic Concerns and Drives Growth

Visa’s fourth-quarter profits exceeded Wall Street projections as robust consumer spending on travel and dining propelled earnings. Despite rising interest rates, Visa’s net revenue reached $9.62 billion, with cross-border volume growth reflecting resilient international demand. Shares rose 2% post-earnings, driven by optimism for continued growth into 2025.

Visa Reports Steady Q4 Growth Amid Strong U.S. Demand, but Asia-Pacific Lags Expectations

Visa's shares were up 2% in trading after the bell on October 29, as consumers set aside concerns about a slowing economy and used their cards to overspend on travel and dining out, surpassing Wall Street's expectations for fourth-quarter profit, per Reuters.

Despite elevated interest rates, U.S. consumer spending has remained largely resilient. Analysts anticipate a gentle landing for the economy will increase confidence and reignite spending growth.

In the quarter, payments increased by 8% on a constant-dollar basis, while cross-border volume, which measures international travel demand, increased by 13%, excluding intra-Europe.

During a conference call with analysts, Chris Suh, Visa's Chief Financial Officer, stated that consumer spending has remained comparatively consistent across all segments compared to the third quarter.

"The underlying drivers have remained quite stable," Suh told Reuters, adding that he expected consumer resilience to extend into 2025.

Nevertheless, the current economic environment, particularly in China, affected by a protracted property crisis and weak business sentiment, resulted in Asia-Pacific payments volume growth falling short of expectations.

Visa anticipates that its adjusted net revenue growth for 2025 will range from the high single digits to the low double digits. According to data collected by LSEG, this contrasts with the 10.8% growth that Wall Street anticipated.

It anticipates that adjusted profit per share growth will be in the high double digits, as opposed to the expected 11.7% growth.

Visa Faces Legal Challenges Amid Strong Q4 Earnings and Planned Workforce Reductions

In the meantime, the U.S. Justice Department accused Visa of monopolizing the debit card market last month. Visa has rejected the allegations as unfounded.

The lawsuit was filed months after Visa experienced another significant legal setback. In June, a judge rejected a $30 billion antitrust settlement in which Visa and Mastercard agreed to restrict the 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.

Visa also reportedly intends to lay off approximately 1,400 employees and contractors by the end of the year. At present, the organization has a workforce of over 30,000 individuals.

Visa's fourth-quarter net revenue was $9.62 billion, which exceeded analysts' expectations of $9.49 billion.

Visa exceeded the consensus estimate of $2.58 per share by earning $2.71 on an adjusted basis.

In 2024, Visa's shares increased by 8.3%, less than the 22% increase in the benchmark S&P 500 index.