Payments heavyweights smash Q1 earnings forecasts

Visa has (again) posted much stronger than expected Q1 2022 earnings amid a consumer spending rebound powered in part by business and personal travel following a “short-lived” jump in Omicron infections.

Payments heavyweights smash Q1 forecasts

On the back of the news, shares surged, Dow component Visa earned $1.79 per share over the three months ending in March, well ahead of forecasts, as group revenues jumped 25% to $7.2 billion.

Cross border spending was up 38%, Visa said, and its suspension of payments in Russia only affected around 4% of its revenues and resulted in a modest $60 million charge.

Looking into the current financial year, Visa said it sees “high teens” percentage growth in revenues, with cross-border travel rising above to pre-pandemic levels recorded in 2019.

“In terms of the big picture, after the short four to five-week impact of Omicron in December and January in the US and many other parts of the world, the recovery continues to be robust,” Al Kelly , Visa CEO, told investors on a conference call.

“At this stage, in terms of volumes, we have seen no noticeable impact due to inflation, supply chain issues or the war in Ukraine.”

“I think the pandemic itself has accelerated people’s usage of card-not-present in e-commerce, and I think that’s a sustaining model that’s going to help drive growth on a going-forward basis as well,” he added.

“So I think we’re going to see ourselves taking advantage of that.”

Mastercard 

Mastercard also reported Q1 2022 earnings of $2.76 per share, which outpaced the predicted estimates by around 27%. The bottom line surged 59% year over year.

Revenues amounted to $5.2 billion, which improved 24% year over year in the quarter under review. The top line beat the mark by 5.4%.

Shares of Mastercard gained 2.6% in the pre-market trading session, courtesy of the Q1 results.

The quarterly results also benefited from substantial recovery in cross-border volume, which resulted from cross-border travel rebounding to pre-pandemic levels as of March 2022.

Improved gross dollar volume (GDV) and higher switched transactions contributed to the upside. However, the upside was partly offset by escalating operating expenses.

GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) came in at $1.9 trillion, which climbed 17% year over year in Q1.

Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) surged 53% year over year on a local-currency basis.

Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 22% year over year to nearly 29 million.

Other revenues improved 18% year over year in the quarter under review. The year-over-year growth comprised 7% contribution from buyouts and the remaining growth resulted from Cyber & Intelligence and Data & Services solutions.

Mastercard’s clients issued 2.9 billion Mastercard and Maestro-branded cards as of Mar 31, 2022.

AmEx also in the mix

Earlier this month, American Express also smashed forecasts with revenue growth of nearly 30%, to $11.74 billion, and a bottom line of $2.73 per share as travel and entertainment budgets swelled.

• Q1 revenues were $12 billion, up 21% from Q1 2021
• Net income came at $2.07 billion, down 6.2% from Q1 2021
• EPS of $2.73 were also better than expected, beating analyst predictions by 11%

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