Visa shares dropped 2.3 percent on Thursday (Jan. 31) after an announcement by the company of earnings that beat expectations, but also of low growth in payments volume and cross-border transactions, according to reports.
The company reported a fiscal first-quarter adjusted net income of $3 billion, up from $2.52 billion a year ago. Net revenue went up 13 percent, from $4.86 billion to $5.5 billion.
Visa said exchange rates hampered earnings per share and net revenue growth by 0.5 percentage points each.
"We delivered strong results in our fiscal first quarter, generating 13 percent revenue and 21 percent earnings per share growth against the backdrop of an uncertain geopolitical environment," said Visa CEO Alfred Kelly Jr. "As we look ahead in 2019, we remain focused on our strategy to grow the pie for payments through deeper and new relationships, expansion into new segments and payment flows and a broadening of our acceptance footprint."
An earnings call analysis showed that holiday spending during the quarter was “relatively strong,” according to Kelly. Within the U.S., spending on goods like fuel was lower (reflecting lower fuel prices) and spending on travel and home improvement activity decelerated. Through Jan. 21, processed transactions saw a growth rate of 12 percent, and cross-border transactions went up an adjusted 6 percent.
Beyond the overall trends of credit and debit spending growth, cross-border volume growth was 7 percent, somewhat impacted by macro developments and reflecting a revenue change that recognized at least some payment flows and transactions as being domestic and not cross-border, which management said on the call did not have significant revenue impact.
Cross-border payment growth rates were also affected by past periods that had seen activity tied to cryptocurrencies. Inbound spending that crossed borders into the United States was lower due to the dollar’s strength, but overall were termed by Kelly to be “robust."