Visa and Mastercard wow investors with quarterly earnings
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Visa and Mastercard wow investors with quarterly earnings

Last week saw two of the most recognisable names in cashless transactions – Visa and Mastercard – report quarterly earnings that impressed investors, sending share prices sharply up. That’s a strong sign that the shift towards cashless transactions continues apace, and it says good things about the U.S.’s economic environment.

Visa and Mastercard are both seeing brilliant performance year to date

graph 3007 visa

SOURCE: Yahoo Finance

Visa said that spending on its North American credit card products increased by 11%, year on year, to $493 billion in its third fiscal quarter. CEO Al Kelly put this down to a rise in consumer spending that saw the U.S.’s credit card debt reached a new high. He said: “the healthy global economic fundamentals we’ve seen the past few quarters have largely continued,” and added that spending was “fueled by faster growth in almost every region and higher credit growth.”

Total spending on Visa’s network also increased by 11% against the same quarter in the previous year, to $2.1 trillion. This beat analysts’ expectations of $2.09 trillion, and the company also topped consensus estimates on revenue (which stood at $5.09 billion), returning $5.2 billion. That’s a 15% increase, year on year.

Mastercard did similarly well, overshooting predictions on profit, but seeing a slight decline in its share price after it raised forecasts for operating expenses. Despite the temporary pull back this caused, it’s an unquestionably sensible strategy: that money will be invested into safety, security, and digital products.

The company – which is far smaller than its peer Visa – said that gross payment volumes across its business hit $1.48 billion, a 15.3% rise from the same period in the previous year. It also beat on revenue, returning $3.67 billion (20% up, year on year) rather than the Street’s predicted figure of $3.65 billion.

Disclosure

Dominion holds both Visa and Mastercard in its Global Trends Ecommerce Fund.


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