Its that time again…and its been another stellar quarter for most of the big payments companies even as the rival Big Tech sector has seen a sell off.
Strong consumer spending and a recovery of cross-border travel as the COVID-19 pandemic faded pumped up revenue and earnings for the year ended September 30th.
Results have been very strong despite four-decade-high inflation, the ongoing pandemic, the impact of sanctions following Russia’s invasion of Ukraine last year and the threat of a global recession, but for Visa, Mastercard and American Express its still good news.
Visa reported fiscal Q4 net income jumped 10% to $3.9 billion over last year as revenue soared 19% to $7.8 billion, according to a press release. Results for the fiscal year were similarly positive, with net income climbing 21% to $15 billion on a revenue increase of 22% to $29.3 billion.
Visa CEO Al Kelly told analysts outlook is for more of the same next year, driven by “significant opportunities” from consumer spending, finding new payment flows and providing value-added services.
“We recognize that some economies around the world could face increased pressure so we will be monitoring things very closely,” Kelly said. We will “be flexible and prudent in the management of our expenses.
As a leadership team, we have demonstrated Visa’s ability to manage through many different environments and I remain confident that our strategy will continue to position Visa as a centre of money movement for years to come.”
Mastercard also highlighted strong spending as it topped expectations with its latest earnings numbers.
“We’re seeing the consumer across the board show really good trends,” Chief Financial Officer Sachin Mehra said, as Mastercard recorded 11% growth in gross dollar volume for its latest quarter.
“We’re not a pure play in any one consumer category of spend,” said Mehra. “That diversification benefit is what’s showing up in the numbers.”
The company posted $5.76 billion in revenue, up from $4.99 billion a year earlier and ahead of the $5.65 billion that analysts were anticipating. Mastercard’s headline revenue was up 15%, though the company noted that revenue increased 23% on a currency-neutral basis.
Chief Executive Michael Miebach highlighted on the earnings call that consumers have increased spending on experiences, with airlines, lodging, and restaurants among strong categories. At the same time, the company has seen spending “shift away” from the home furnishing and appliance categories.
American Express’ higher-than-expected provisions in the third quarter cast a shadow over its strong quarterly results and expectations of higher full-year profit.
AmEx set aside $778 million in provisions as loans grew and fears of an economic fallout escalated, compared with analysts’ average estimate of $604.1 million.
“We are mindful of the mixed signals in the broader economy and have plans in place to pivot should the operating environment change dramatically,” AmEx Chief Executive Stephen Squeri said.
AmEx’s third-quarter net income rose 3% to $1.88 billion, or $2.47 a share, beating Street estimate of $2.41.
Overall card member spending grew 21% and revenue 24% to $13.6 billion, helped by an upswing in millennial and GenZ customers.
The company was also buoyed by strong growth in travel and entertainment, with spending in international markets in the segment surpassing pre-pandemic levels for the first time on an adjusted basis.
Discover Financial Shares fell about 1.8% after it posted weaker-than-expected earnings for the recent quarter and noted that it expects operating expenses to rise more than previously anticipated for the full year.
Discover reported third-quarter earnings of $1.01 billion with net income of $3.54 per share.
“Our increase in revenues this year has been largely driven by our strong receivables growth with loans up 17% year-over-year,” said Roger Hochschild – Chief Executive Officer.
“This growth was driven largely by elevated sales volume and the increased number of new accounts we’ve added since mid-2021.”
The results missed Wall Street expectations.
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