Visa Inc. (V, Financial), the global leader in terms of payment volume, recorded yet another quarter of solid revenue growth as the company beat Wall Street estimates on the top as well as bottom line for the third quarter. The continued digitization of financial services around the world has been helping payments processing companies like Visa, Mastercard (MA, Financial) and PayPal (PYPL, Financial) enjoy steady increases in volume over the past several years. And going by this quarter’s Visa numbers, that growth is still many quarters away from running out of steam.
For the third quarter,Ă‚ Visa posted earnings per share of 86 cents on the back of $4.57 billion in revenues, while the market was expecting earnings per share of 81 cents and revenues of $4.36 billion. Net operating revenue shot up more than 26% to hit $4.6 billion, while payments volume increased 38% during the quarter compared to the prior-year period.
CEO Al Kelly said the company performed well against its operating plan and strategic prioities for the year.
“We saw healthy growth in our key metrics for payments, volume and process transaction," Kelly said during the earnings call. "Payment volume was solid across all five regions. Growth was particularly strong in India, the United States, Russia, Mexico and Australia.”
With one quarter left in its current fiscal year, Visa reaffirmed its financial outlook. The company expects its annual operating margin in the mid-60s and net revenue growth to be around 20% on a nominal dollar basis.
Source: Visualcapitalist
Despite the increase in the use of smartphones and the advancing level of technology with each passing year, a huge portion of the world’s financial transactions are still happening through cash. But the slow and steady shift to digital is already happening, as illustrated in the chart above, and the long-term opportunities for payment processors like Visa are huge.
“The transition to the digital economy has been broad based across several categories, including everyday spend and suggests wide societal participation," Kelly said. "This past quarter we saw payments volume increase over 80% and process transactions more than double versus last year.”
The transition to digital is one of the main factors that has been driving double-digit revenue growth for Visa and PayPal, and it will continue to do so over the next several quarters. Visa’s stock price has shot up by more than 25% in the last year. If it continues growing at this rate, it could push the stock higher for the remainder of the year.
Disclosure: I have no positions in the stock mentioned above and have no intention of initiating a position in the next 72 hours.
