What happened
Shares of the two largest payment rails, Visa (V 0.05%) and Mastercard (MA -0.08%), had risen nearly 8% and 6%, respectively, as of 10:22 a.m. ET today after Visa reported strong earnings results for its second fiscal quarter of the year. Mastercard, which will report its latest earnings results tomorrow morning, is also benefiting considering how similar the two companies are.
So what
Visa reported earnings per share of $1.70 on revenue of $7.2 billion for the three months ending on March 31. Non-GAAP (adjusted) earnings came in at $1.79 for the quarter. Both non-GAAP earnings and revenue beat analyst estimates for the quarter.
Payments volume came in 17% higher on a year-over-year basis, while cross-border volume came in 38% higher.
Image source: Getty Images.
"The Omicron variant impacts were short-lived and the global economic recovery that began in the middle of last year continued," Visa CEO Alfred Kelly Jr. said in an earnings statement.
He added, "While the geopolitical environment remains uncertain, we expect continued growth driven by a robust travel recovery and through the enablement of traditional and newer ways to pay globally."
On the company's earnings call, Visa CFO Vasant Prabhu said the suspension of Visa's business in Russia, which the company did in light of Russia's invasion of Ukraine, will hit revenue in the second half of the year by roughly 4%.
But Prabhu also said the company expects revenue in the next quarter to grow in the upper end of the mid-teens percentage range, and fourth-quarter financials to be roughly in line with third-quarter numbers, which seemed to be better than analysts had been forecasting.
Now what
The fact that Visa beat estimates and provided an outlook that is better than expected, despite the headwind from Russia and all of the other events impacting markets and the economy right now, is why investors are so pleased this morning.
With the similarity in their businesses, I would expect Mastercard to also report strong results and a strong outlook tomorrow.
