Visa Inc beat estimates for quarterly profit on Tuesday as vaccinations and reopening of economies spurred people to spend more on travel and entertainment, boosting volumes for the world’s largest payment processor.
Payment companies are seeing an uptick in volumes from the coronavirus-induced slump as economic stimulus and rising vaccinations take effect, with the rise of e-commerce during lockdowns also driving up transactions.
Visa, which said in April it was re-emerging from the pandemic-led slowdown, reported a 34% jump in third-quarter payment volumes on a constant dollar basis, while the number of transactions processed surged 39%.
Overall U.S. retail sales unexpectedly increased in June, data showed, as the reopening of the world’s biggest economy unleashed widespread demand for travel and shopping.
“Visa delivered another strong quarter as many key economies are well into a reopening-driven recovery," Chief Executive Officer Alfred Kelly Jr said.
“Additionally, cross-border travel spending improved as vaccination rates rose and more borders opened."
Net income rose to $2.58 billion in the third quarter ended June 30 from $2.37 billion a year earlier. On an adjusted basis, Visa reported a profit of $1.49 per share, compared with estimates of $1.35, according to Refinitiv data.
Cross-border volumes jumped 47% on a constant currency basis. Total revenue climbed 27% to $6.13 billion.
Travel spending volumes at Visa is approaching 2019 levels in July, while entertainment surpassed those levels in May, Chief Financial Officer Vasant Prabhu said.
Assuming July trends continue, fourth-quarter net revenue growth is expected to be in line with the third quarter, Prabhu said.
“Online shopping habits acquired during the pandemic are persisting. As the U.S. reopened, travel and entertainment spending improved steadily through the quarter."
Recent announcement by the UK and Canada regarding border openings in August should boost the current quarter, he added.
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