By Arasu Kannagi Basil and Atharva Singh
Oct 27 (Reuters) – Visa beat expectations for fourth-quarter results on Tuesday as customers continued swiping their cards to pay for travel, shopping and dining out despite macroeconomic uncertainty.
The results from the world’s largest payments processor underscore a robust US economy in the face of persistent inflationary pressures as consumers continue spending, underpinned by a strong labor market and wage growth.
“Growth across consumer spend bands remained relatively consistent with prior quarters, with the highest spend band continuing to grow the fastest. We did not see signs of the lower spend consumer weakening in our volumes,” Visa finance chief Chris Suh said in a post-earnings call.
Payments volume, a gauge of consumer and business spending on Visa’s network, jumped 9% in the reported quarter on a constant-dollar basis, while processed transactions rose 10%.
Visa’s extensive digital payments network, which spans more than 200 countries and territories, positions it to better endure economic downturns as billions of people globally rely on the card network for everyday spending and other purchases.
CLIENT INCENTIVES, PROFIT FORECAST IN FOCUS
Client incentives jumped 21% to $5.1 billion in the quarter from the prior year, largely driven by new deals that were signed during the July to September period and early in the fourth quarter.
“The one thing to nitpick is client incentives, which were above expectations,” Seaport analyst Jeff Cantwell said, adding the development likely impacted Visa’s fiscal 2027 forecasts.
Suh told analysts incentives growth would step up in fiscal 2027 as Visa is expecting around 25% of its payments volumes to be renewed, including with several large clients. That compares with 20% in fiscal 2026.
The company anticipates fiscal 2027 profit per share growth between a low-double-digit and low-teens percentage, while net revenue growth is expected to be in the low-double-digit percentage.
“While some may be underwhelmed by the EPS guide, we think it likely reflects… (the management’s) decision to keep investing in long-term strategic initiatives to extend the durability of top-line growth,” KBW analysts led by Sanjay Sakhrani said.
Visa’s shares fell about 1.4% in extended trading. The stock has gained 14.6% this year through the last close.
On an adjusted basis, it earned $3.48 per share in the three months ended September 30, beating an expectation of $3.44 per share, according to estimates compiled by LSEG.
CROSS-BORDER STRENGTH
Cross-border volumes excluding intra-Europe, a measure of international travel demand, were a bright spot as they jumped 14% in the quarter on a constant-dollar basis.
“It is reflective of strong consumer sentiment, strong demand for travel experiences, and the fact that e-commerce has also just expanded,” Suh said.
Suh told Reuters travel in and out of the Middle East was also coming back closer to normal levels after being suppressed due to the Iran conflict.
The FIFA World Cup, which ran from June 11 to July 19, has also helped boost activity across Visa’s network as it brought many visitors to the United States.
“XB (cross-border) showed a nice step-up in growth sequentially, and that was one area we were watching for signs of potential weakness going into earnings,” Seaport’s Cantwell said.
Net revenue jumped 13% to $12.1 billion in the quarter. For fiscal year 2026, Visa hauled record net revenue of $46 billion.
Rival Mastercard is set to report quarterly earnings later this week.
(Reporting by Atharva Singh & Arasu Kannagi Basil in Bengaluru; Editing by Pooja Desai)
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