Visa (V +0.71%) is one of the world's best-known brands. Its payment cards are accepted by over 80 million merchants around the globe, in over 200 countries and territories. Despite that impressive scale, the stock has actually underperformed the S&P 500 over the last three years. Can Visa pick up the pace and break that trend?
In this Backstage Pass video, which was recorded on Oct. 27, Motley Fool contributor Trevor Jennewine discusses Visa's fourth-quarter earnings, and hits on the headwinds and tailwinds the company will face in the months ahead.
Trevor Jennewine: Visa is the largest payments network in the world. According to the Nielsen report, last year in 2020, Visa's network handled 40% of all purchase transactions. So an enormous company.
They reported earnings yesterday after the market closed. If you check the stock price today it's down about 7%, so something went wrong. We'll get to that in just a second. But starting from the top. This was the end of Visa's fiscal year. So for Q4, revenue came in at $6.6 billion and that was up 29%. And that was a small beat on the top line. Same thing on the bottom line, earnings per share of $1.65, up 70%.
Then with this company, so Visa generates revenue in a couple of ways. It takes a percentage of the payment volume moving through its network. It also takes a flat per-transaction fee. For that reason it's important to pay attention to payments volume and the number of transactions. When these transactions are occurring cross-border, there's an additional fee assessed. Payments volume was $2.8 trillion for the quarter; that was up 19%. But just to provide a little context, that is up 23% from 2019.
2020 was a very difficult year for some of these card payment companies particularly because reduction in travel meant much smaller cross-border volume and a lot of businesses were closed so not as much spending happening in stores. So $2.8 trillion for the payment volume, up 19% over last year, up 23% over 2019.
Cross-border volume was up 41%. That number is moving in the right direction. Actually, in the most recent quarter, cross-border volume crossed above where it had been in 2019. It's now positive in comparison to 2019. Definitely moving in the right direction. Transactions processed was $45.3 billion, up 21% over the prior year and up 24% over 2019.
Then to put everything together for the full fiscal year revenue was $24.1 billion. That was up 10%. Earnings per share of $5.63, up 15%. Then payments volume was $10.4 trillion, up 18%. Then like I mentioned, cross-border volume moving in the right direction, up 14%. And 164 billion transactions went through, were processed by Visa's network. Those numbers were all relatively solid.
The company also returned $3.7 billion to shareholders in the form of share repurchases and dividends, and it upped its dividend payment by 17% to just about $0.38 per share.
Looking ahead, the outlook is what really gave Wall Street some pause. Wall Street was expecting growth for fiscal 2022 to come into the 20% range, a little bit higher. On the earnings call, Visa mentioned that in the first quarter they're expecting high-teens revenue growth, lower than expected. And full-year at the high end of the mid-teens range, 16%, 17% is what their outlook is for next year. That sent the stock down about 7%.
Then just to add a little bit more context on there, each month Visa reports the spending momentum and has a number of the Spending Momentum Index and that has been falling. This tracks consumer spending and it was up in July and then up-selling August fell again in September. That could be a headwind for the company coming into the first quarter of fiscal 2022. On the flip side, the U.S. is set to reopen borders to international travelers on the 8th of November, so that could be a tailwind. Anytime those transactions are occurring cross-border. If the card is issued in a different country than which it's used, that the cross-border transactions. So, getting more international travelers inside the United States could boost cross-border volume. All in all, relatively strong quarter, but mixed reaction or a negative reaction to the outlook for what's ahead for Visa.
