V slips 5% following earnings; Test of 20-sma in play

Visa Inc. (V), the global payments technology company, recently released its Q1 2024 earnings results Net revenue for the quarter amounted to $8.6 billion, reflecting an 8.9% year-over-year increase, slightly exceeding the estimated $8.57 billion. This growth was primarily driven by the expansion of payments volume, cross-border volume, and processed transactions. Net revenues increased by 9% on a constant-dollar basis. 

In terms of revenue breakdown, Visa's fiscal first quarter service revenues rose by 11% to $3.9 billion compared to the prior year. This segment's revenues are recognized based on payments volume in the previous quarter. Additionally, data processing revenues increased by 14% to $4.4 billion, international transaction revenues grew by 8% to $3.0 billion, and other revenues rose by 18% to $692 million. However, client incentives revenue decreased by 20% to $3.3 billion compared to the previous year.

The company's adjusted EPS came in at $2.41, surpassing the estimated $2.34 and representing an increase from the previous year's $2.18. 

Visa recorded a growth trend in its payments volume, with an 8% increase on a constant-dollar basis compared to the same period last year. This growth aligns closely with estimates, which anticipated an 8.03% rise.

Cross-border volumes at constant currency experienced a significant increase of 16%, exceeding the estimated growth of 14.9%. 

Total processed transactions reached $57.5 billion, indicating a 9.5% year-over-year increase, slightly below the estimated $57.77 billion. 

Operating expenses for the quarter totaled $2.68 billion, marking a 5.8% year-over-year decline and slightly below the estimated $2.7 billion. Visa reported a decrease of -20% in client incentives revenue to $3.35 billion.. These expense figures were in line with the estimated figures.

Looking ahead to the second quarter of fiscal year 2024, Visa expects net revenue growth in the upper mid to high single-digit range. Meanwhile, earnings per share growth is forecasted to be in the high teens, outpacing the estimated growth of 12.15%. 

For the full year 2024, Visa projects a low double-digit increase in net revenues and operating expenses. The company anticipates diluted Class A common stock earnings per share to grow in the low-teens. 

Shares slipped 5% in reaction to the report. The stock is testing support at its 20-sma ($264) in after hours trade. This lines up as a key level of defense for bulls. 

Despite the global economic uncertainty and market fluctuations, Visa Inc.'s Q1 earnings report reflects the company's resilience and ability to deliver strong results. Its optimistic guidance for the coming quarters and fiscal year signifies the management's confidence in maintaining this growth trajectory. Investors will be keen to observe Visa's performance in light of the evolving market conditions and its capacity to adapt to new trends and challenges in the payments technology sector.

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