Visa Inc. shares surged after the payments giant said spending on its network jumped, even with the suspension of operations in Russia and as the lingering impacts of the omicron variant hindered travel in the first few weeks of the year.
Purchase volumes climbed 17% to $2.78 trillion in its fiscal second quarter ending March 31, Visa said Tuesday in a statement. That was in line with the average of analysts’ estimates compiled by Bloomberg. Credit-card spending by affluent U.S. customers was well above pre-pandemic levels, which helped buoy results in the quarter, according to Chief Executive Officer Al Kelly.
Heading into results, investors worried Visa faced a storm of headwinds. The company opted to suspend operations in Russia -- where it derived 4% of its net revenue -- after President Vladimir Putin’s decision to invade Ukraine. Global commerce has been plagued by supply-chain dislocations and U.S. consumers are facing once-in-a-generation levels of inflation. The omicron variant of the coronavirus also crimped travel in the early days of the year.
“Even with the invasion of Ukraine and lingering impacts of omicron, volumes, transactions and credentials drove strong second-quarter performance,” Kelly said on a conference call with analysts. “At this stage, in terms of volumes, we have seen no noticeable impact due to inflation, supply-chain issues or the war in Ukraine.”
Visa shares jumped as much as 5.9% to $213.01 in extended trading after the announcement. They had declined 7.2% on the year as of the close of regular New York trading, compared with the 19.8% decline of the S&P 500 Information Technology Index.
Visa warned its decision to exit Russia would crimp revenues by about 4% in the second half of the year. In the second quarter, the company recorded a $60 million charge tied to the move.
Still, Chief Financial Officer Vasant Prabhu said he expects revenues for the full year to climb by a percentage in the “high teens to 20%” range, while adjusted operating expenses may climb by a percentage in the “upper end of the mid-teens.”
Cross-border spending roared back in the quarter -- with the company seeing a short-lived bump in such spending after Russia’s invasion of Ukraine displaced residents -- and international transaction revenues jumped 48%. That was a boon to profit, which climbed 21% to $3.6 billion, or $1.70 a share. That compares with the $1.67 average of analyst estimates compiled by Bloomberg.
“We do see the affluent consumer back spending in force, especially on travel and restaurants and entertainment,” Prabhu said in an interview. “The affluent consumer had cut back quite a bit during the pandemic not because they couldn’t afford it but because they were not able to get out and about. The affluent consumer is definitely back.”
-With assistance from Karen Lin.