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Its Quarterly earnings, that time of year again as the quarter finishes and all the major players review and publish the latest data from their platforms – last quarter it was good news for all three majors.
Big 3 continue to beat forecasts
Visa
Visa reported solid Q4 fiscal 2023 results, driven by increased payments, cross-border volumes and processed transactions.
Steady cross-border travel growth, resilient consumer spending and higher-than-expected data processing aided the results, partially offset by increased costs and client incentives.
It reported Q4 fiscal 2023 earnings of $2.33 per share, which beat the Zacks Consensus Estimate of $2.23 by 4.5%. The bottom line improved 21% year over year.
Net revenues amounted to $8.6 billion, which advanced 11% year over year in the quarter under review. The top line outpaced the consensus mark by 0.7%.
Visa’s payments volume grew 9% year over year on a constant-dollar basis in the fiscal Q4, backed by strength in Europe, CEMEA and LAC regions.
Processed transactions (implying transactions processed by Visa) totalled 56 billion, which rose 10% year over year and beat modelled estimates of 55.5 billion.
On a constant-dollar basis, the cross-border volume of Visa climbed 16% year over year in the quarter under review.
Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) advanced 18% year over year on a constant-dollar basis.
Service revenues improved 12% year over year to $3.9 billion during the September quarter on the back of better payment volumes in the prior quarter.
The metric was only 1.8% lower than our estimate. Visa’s data processing revenues of $4.3 billion grew 13% year over year in the quarter under review, beating estimates of $4.2 billion.
International transaction revenues advanced 10% year over year to $3.2 billion, which met estimates on higher cross-border volume.
Other revenues of $744 million jumped 35% year over year and beat estimates by 12.4%.
Mastercard
Mastercard Q3 fiscal results came in ahead of expectations as well, with the payments processor reporting a second consecutive quarter of profit growth on continued strong consumer spending trends.
Mastercard posted net income of $3.2 billion, or $3.39 per share, representing an increase of 28% on a year-over-year basis.
The company’s revenue also climbed, growing 14% year-over-year to $6.5 billion for the quarter, as transaction volumes also grew.
Despite inflation and high interest rates, consumer spending across many categories has trended upward in recent months.
For Mastercard, this has led to a boost in transaction volumes, particularly driven by increased spending in the travel and entertainment industries.
This trend continued into Q3 of the year, with Mastercard noting amount of purchases made with Mastercard-branded cards grew 12%.
Mastercard attributed some of its growth to a 17% jump in value-add services such as fraud monitoring, security, and consulting.
American Express
American Express Q3 consolidated total revenues net of interest expense were $15.4 billion, up 13% from $13.6 billion a year ago.
The increase was primarily driven by higher average loan volumes and increased Card Member spending.
Credit metrics remained strong in the current quarter, with net write-off and delinquency rates for total Card Member loans and receivables below pre-pandemic levels.
Consolidated provisions for credit losses were $1.2 billion, compared with $778 million a year ago. The increase reflected higher net write-offs, partially offset by a lower net reserve build of $321 million, compared with a reserve build of $387 million a year ago.
Consolidated expenses were $11.0 billion, up 7% from $10.3 billion a year ago.
The increase primarily reflected higher customer engagement costs, which were driven by higher network volumes and increased usage of travel-related benefits, partially offset by lower marketing expenses.
Operating expenses also increased, primarily driven by increased compensation costs.
The consolidated effective tax rate was 20.9%, down from 23.6% a year ago, primarily reflecting discrete tax benefits in the current quarter and changes in the geographic mix of income.
U.S. Consumer Services reported third-quarter pretax income of $1.6 billion, compared with $1.3 billion a year ago.
Total revenues net of interest expense were $7.2 billion, up 16% from $6.2 billion a year ago. The increase was primarily driven by higher average loan volumes and increased Card Member spending.
International Card Services reported third-quarter pretax income of $387 million, compared with $166 million a year ago.
Total revenues net of interest expense were $2.6 billion, up 17% (12% FX-adjusted) from $2.3 billion a year ago. The increase was primarily driven by increased Card Member spending and higher card fee revenue.
Global Merchant and Network Services reported third-quarter pretax income of $986 million, compared with $792 million a year ago.
Total revenues net of interest expense were $1.9 billion, up 11% from $1.7 billion a year ago, primarily reflecting higher merchant-related revenues.
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