Earnings Results: Visa tops earnings expectations but travel category remains slow to snap back

The company posted net income of $2.4 billion, or $1.07 a share, down from $3.1 billion, or $1.37 a share, in the year-prior quarter. Adjusted earnings came in at $1.06 a share, whereas analysts surveyed by FactSet were expecting $1.03 a share.

Visa’s revenue fell to $4.84 billion from $5.84 billion, while the FactSet consensus called for $4.82 billion. Payment volume dropped 10% for the quarter, while cross-border volume was off 37%. Excluding intra-Europe transactions, cross-border volume fell 47%.

The company said in its earnings release that it saw spending improve in each month of the fiscal third quarter as more countries began easing coronavirus-related restrictions on economic activity. Payments volume “meaningfully improved” in the U.S. as the quarter wore on, giving a boost to card-present spending as e-commerce spending “remained consistently elevated,” backing out travel-related spending.

Processed transactions dropped 13% in the quarter on a global basis. Visa said that this metric has lagged volume growth “as the mix of spending shifted away from smaller transactions.” Cross-border volume “has improved only marginally through the quarter” given continued restrictions on travel, a key source of this sort of spending activity.

Management isn’t providing an outlook for the full fiscal year given the uncertainties around COVID-19.

Visa kicked off a busy week of payments earnings, with PayPal Holdings Inc. PYPL, -0.96% set to report after Wednesday’s closing bell and Mastercard Inc. MA, -0.81% following on Thursday morning.

Shares of Visa have gained 15% over the past three months as the Dow Jones Industrial Average DJIA, -0.77% , of which Visa is a component, has risen about 9%.