Is Visa Poised for Q4 Earnings Beat on Strong U.S. Payments?

Visa Stock

Visa Inc. (NYSE:V) is expected to continue its earnings beat streak in the fourth quarter of fiscal 2023, with the results set to be released on October 24, after the market closes. Here’s a closer look at what to expect in Visa’s upcoming Q4 earnings:

Q4 Earnings Estimate 

The Zacks Consensus Estimate for Visa’s fourth-quarter fiscal 2023 earnings per share is $2.23, which has remained steady over the past week. This estimate reflects a 15.5% increase from the year-ago reported figure. Visa has a strong history of beating earnings estimates, with an average beat of 5.2% over the past four quarters.

Q3 Earnings Recap

In the last reported quarter, Visa exceeded expectations with adjusted earnings per share of $2.16, surpassing the Zacks Consensus Estimate by 2.4%. This outperformance was driven by higher payments, cross-border volumes, and processed transactions. Strong growth in cross-border travel and robust data processing volumes contributed to the results, although there were some offsetting factors like increased costs.

Factors Influencing Q4 Earnings

Visa’s fourth-quarter results are expected to benefit from the ongoing growth in travel and entertainment-related spending. The continued adoption and popularity of digital payment methods are also anticipated to have contributed to Visa’s performance during the quarter. Key factors influencing Visa’s performance include:

  • Higher Spending: Visa generates revenues based on a set percentage of total transaction value each time customers make payments with their debit or credit cards. Higher spending leads to increased revenues through transaction processing fees.
  • Transaction Volumes: The Zacks Consensus Estimate for total processed transactions in the fiscal fourth quarter indicates an 8.1% year-over-year growth, while the consensus estimate for total payments transactions suggests an 8.6% year-over-year increase.
  • International Growth: Visa is expected to benefit from cross-border volume growth, contributing to international transaction revenues.
  • Data Processing Revenues: The Zacks Consensus Estimate for data processing revenues indicates a significant 11.6% growth in the fiscal fourth quarter, while service revenues are estimated to grow by 12.5%. Both of these revenue categories are key drivers of Visa’s overall performance.

However, rising expenses and client incentives (a contra-revenue item) are expected to partially offset the positive impact of higher transaction volumes and revenues. Adjusted total operating expenses for the quarter are projected to increase by almost 8% year over year.

Client incentives are also expected to be significant, with an estimate of around $3.4 billion in the fiscal fourth quarter. These incentives represent a cost for Visa but are essential in maintaining and growing its network.

Visa is well-positioned to deliver year-over-year growth in Q4, driven by increased transaction volumes and strong international performance. The company’s robust history of beating earnings estimates suggests it may continue to outperform expectations.

Investors will be closely watching Visa’s Q4 results to assess its performance in the digital payment space. Please note that while these estimates provide valuable insights, actual results may vary, and it’s important to consider other factors and guidance provided by the company when interpreting the results.

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