Visa Profit Climbs 8% as Consumers Keep Spending

Ryan McInerney, chief executive officer of Visa, said in a statement that consumer spending “remains resilient.” (Philip Pacheco/Bloomberg)

Visa reported a higher quarterly profit than a year ago, joining a string of big payments firms and banks whose latest earnings show solid spending patterns in the face of concerns that inflation is sticking around and the economy may slow.

The San Francisco-based company’s net income climbed 8% from a year ago to $5.3 billion, or $2.69 per share. That fell short of Wall Street’s expectations of $2.81, according to estimates compiled by FactSet.

Revenue increased by 14% to $10.2 billion, exceeding estimates. On an adjusted basis, net income of $5.8 billion amounted to per-share earnings of $2.98, topping analysts’ forecasts of $2.85.

“Consumer spending remains resilient, with continued strength in discretionary and non-discretionary growth in the U.S.,” Visa Chief Executive Officer Ryan McInerney said in a statement.

Shares of Visa fell 2.6% in after-hours trading. Shares are up 12% this year, outperforming the S&P 500’s 9% advance. The stock hit a record closing high of $373.31 last month.

The company said a mix of increased payments volume, cross-border volume, and processed transactions drove revenue higher relative to a year ago. Global payments volume—the sum of all purchases made on Visa-branded cards—rose 8%.

Because Visa makes money by facilitating transactions on its sprawling network, Wall Street closely monitors Visa’s payments volume to gauge activity and where customers are making transactions.

In the U.S. and internationally, volumes rose 7% and 10% on a constant-dollar basis, respectively. Morgan Stanley analysts had expected volume in the U.S. to have increased by 7% from a year earlier, while analysts tracked by Visible Alpha were calling for growth of 6.7%.

Visa is the world’s largest card network by payments volume. It competes with the likes of Mastercard , American Express, and Discover Financial Services, which was acquired this year by Capital One.

Banks including JPMorgan Chase and Bank of America, as well as the payments companies American Express and PayPal, have generally reported solid earnings so far this quarter. Executives have expressed optimism about economic growth.

“In a world with a 4.1% unemployment rate, it’s just going to be hard—especially in our portfolio—to see a lot of weakness,” JPMorgan Chief Financial Officer Jeremy Barnum told analysts earlier this month.

That has given investors optimism that the economy is still in fine shape, even as the fate of U.S. trade relations remains unclear and the Trump administration’s negotiations continue.

That backdrop has also led to investors setting a high bar for companies’ performance. Amex reported record-high revenue and topped quarterly earnings expectations, but investors were hoping for more, and shares fell following that report.

And on Tuesday, PayPal shares fell by nearly 9% after a closely watched volume metric fell short of expectations. Its top- and bottom-line results, however, exceeded forecasts.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com