Everybody knows Visa (V +0.25%) is a credit card giant, but the company is expanding its business in new ways, including through cryptocurrency and partnering with tech e-commerce companies.
In this episode of "Beat and Raise" recorded on Jan. 28, Fool.com contributors Trevor Jennewine and Brian Withers discuss Visa's recent quarter and how the company is innovating with new products.
Brian Withers: Hey, Trevor, how did Visa do?
Trevor Jennewine: Great quarter for Visa. Similar to Mastercard. Jason set me up nicely there. You've seen the stock this afternoon and Visa was up 10 percent today. Let's take a look at the slide. Visa reported yesterday. This is the largest payments company in the world in terms of purchase transactions and a solid beat on both the top and bottom line.
Revenue in the first quarter came in at 7.1 billion, was up 24 percent. Earnings per share was $1.23, up 29 percent. In terms of guidance, they gave pretty strong guidance for the next quarter and the full-year. They said that they're looking for revenue that is going to be at the high end of the high teens for both the second quarter and the full-year. To me, that means 18 percent, 19 percent full-year revenue growth, so strong guidance. Then Jason explained the importance of cross-border volume, payment volume, etc, so what's it on some of those metrics? Payment volume was up 20 percent to $2.97 trillion. That was a beat there. Then the company saw a cross-border volume rise 37 percent on a nominal basis; if you pull everything into US dollars. In constant currency, it was up 40 percent. Management did note that strong recovery of cross-border back in October and November with a slight setback more recently due to the Omicron variant, but they do expect the recovery to continue in February.
In terms of process transactions, that was up 21 percent to $47.6 billion. That was a beat as well. A few other highlights that stood out to me. Visa is really focused on three growth areas-consumer payments, which you can just think of as your card payments. What they call new flows, and that encapsulates what Jason was talking about with the business-to-business transactions as well as business-to-consumer, government-to- consumer-type transactions. Then the third one is value-added services. That middle one, the new flows, management estimates that, that is a $185 trillion opportunity. To put that in context, remember, Visa's payment volume was $2.97 trillion. A big opportunity there.
One of the solutions they have as Visa Direct, which is a push payment solution that supports like person-to-person transactions, business-to-consumer, business-to-employee transactions. For example, they partnered with Toast, allowing restaurants to payout tips and wages more quickly to their employees. Visa Direct transactions grew 35 percent in the quarter. It's good to see some of their new initiatives gaining traction. Another thing that they are focused on is cryptocurrency. Al Kelly, the CEO, noted that credentialed crypto wallets had more than $2.5 billion in payment volume in the quarter. That's already 70 percent of what they did in the previous year. Visa has partnered with 65 different crypto platforms and exchanges to issue credentials, including Coinbase. Al Kelly said that the company is going to continue to lean into that trend.
Then one other thing, so these also highlighted its partnership with Shopify. In the third quarter, Shopify began rolling out its money management solution, Shopify Balance. You have an account with a linked Visa power debit card that let's merchants access their funds the next day and they can earn cashback rewards on all business expenses. Making partners in the e-commerce space, looking at the crypto space, and then pursuing those new flows, all that seems to be going well. As far as concerns, the only thing that I'd be really concerned about is what's going to happen with the Omicron variant, are cross-border volumes going to go back the other way? Are they going to continue rising? That's a significant portion of this company's revenue, so it's important to see that continue to improve.
Brian Withers: Awesome. Well, I will ask you the same question I asked Jason. In the world of fintech, how would you rate Visa? Is it gold, silver, or bronze stock?
Trevor Jennewine: I would lean toward silver. I like where Jason put Mastercard as a gold, and I would lean toward silver for Visa.
Brian Withers: Awesome. I love having both of these companies report early in the season. The fact to me, just the growth that they've seen is exciting from a consumer spending standpoint. I think you should see that flow through to some of the other consumer brands that we'll report later.
Trevor Jennewine: Absolutely. A strong quarter for Visa. Definitely a strong quarter.
