Visa (V US, BUY) 3Q23 adj. EPS of $2.16, beat market expectations amid spending and travel boom
- Visa posted 3Q23 results, adj. EPS of $2.16 beat market expectations of $2.11
- Key business drivers continued to record growth on all fronts, but growth slightly slowed down
- Visa maintain its previous full year expectations in FY23F
3Q23 adj. EPS of $2.16 beat market expectations of $2.11. 3Q23 net revenue grew by 12% to $8.1b, largely in line with market expectations. The net revenue growth was buoyed by resilient consumer spending, driving growth in payments volume and processed transactions. Cross-border volume continued to be a tailwind, fueled by travel growth from the ongoing recovery and summer tourism.
Key business drivers continued to record growth on all fronts but growth slightly slowed down. Payments volume grew 9% y-o-y, compared with 2Q payments volume growth rate of 10%, primarily due to the moderating inflation and lower average ticket size. Cross-border volume increased by 17% y-o-y, China cross-border travel continued to improve but remains well below 2019 levels, the continued reopening is going to support top-line gains. Processed transactions was higher by 10% y-o-y, compared to 12% in 2Q. New flows businesses and value-added services have grown much faster than the consumer payments business, and sustaining faster growth rates remains a critical priority.
Visa maintain its previous full year expectations in FY23F. Market expects net revenue will increase by around 10% in 4Q, offsetting some of outperformance seen in 1H, as payments volume growth slows mainly led by US. Global travel resilience and a weakening dollar are likely to support Visa’s ability to withstand these headwinds. Client incentive growth may be higher, though the operating cost increases should be lower sequentially. We believe that the structural non-cash transaction trend will remain resilient, which will cushion Visa’s revenue growth during a downturn.