Visa Inc. showed strength in its traditional card-processing business on Tuesday, while talking up big opportunities in new payment forms.
Shares of the card giant fell slightly in after-hours trading, but the latest numbers signaled to Wedbush analyst Moshe Katri that the company is “firing on all cylinders.” He cheered Visa’s V, +0.18% healthy growth in major markets as well as its ability to capitalize on emerging areas such as Latin America through partnerships.
Visa topped earnings and revenue expectations in its fiscal third quarter, benefiting from recent fee increases and lower-than-expected incentives. Katri said Visa’s metrics “actually looked better than last quarter” and seemed on track to continue their recent momentum, “barring any economic shock waves.”
The company grew payment volume by 9% in constant currency and grew cross-border volume by 7% on a constant-dollar basis.
Chief Financial Officer Vasant Prabhu told MarketWatch that the “most exciting part from a growth standpoint isn’t that the core business isn’t growing,” but that Visa is able to blend growth prospects in its traditional business with new things like disbursements, commercial payments and peer-to-peer transactions that are “really going to be a more important part of the future.”
Among the highlights of the most recent quarter were share gains in Europe, showing that the company’s Visa Europe acquisition is beginning to pay off now that Visa has repriced its book of business. Visa also announced that it renewed its crucial partnership with JPMorgan JPM, +1.83% through 2029.
As Visa looks to emerging payment types, Prabhu said the company is seeing “lots of interest and traction with the community of banks” for B2B Connect, a cardless technology for cross-border transactions that Visa launched globally during the quarter. As with the company’s traditional business, Visa is focused on growing the value of the B2B Connect network by attracting more banks.
“That’s another incremental positive in the story if you’re looking for incremental sources of revenue down the road,” Katri said.
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B2B Connect is one of a number of ways Visa is experimenting with payment types beyond traditional credit and debit cards. The company also sees opportunity to digitize disbursement payments that businesses pay their employees or government agencies pay individuals. Such new transaction types are growing “really fast for us,” Prabhu said.
He also expects to see strong results from a co-branding partnership with MercadoLibre Inc., a Latin American e-commerce giant that has recent ties to PayPal Holdings Inc. PYPL, +1.29% as well.
Visa shares have gained 37% so far this year, as the Dow Jones Industrial Average DJIA, +0.65% has climbed 17%.
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