Visa Q3 - Strong growth from Visa Direct

Visa reported numbers on Tuesday night, its third-quarter revenue growth fell slightly short of Wall Street targets, marking a rare miss for the world's largest payments processor. The company's shares dropped 4% on Wednesday. The last time Visa missed on revenue was in 2021 when travel had stalled due to the Covid-19 pandemic.

Visa reported an impressive quarterly net revenue of $8.90 billion, up 10% year-on-year. Chief Financial Officer Chris Suh noted that while growth in high-spend consumers remained stable, there was a slight moderation in spending among lower-end consumers, mostly due to high interest rates.

Visa Direct, a platform that allows customers to move money across countries, saw the strongest growth. Worldwide card spending increased by 4.9% year-over-year. In the US, which accounts for approximately 40% of Visa's revenue, spending grew by 5.1%.

Visa's payments volume rose 7% on a constant dollar basis, and cross-border volumes excluding transactions within Europe increased by 14%, indicating strong international travel demand. Growth in Asia-Pacific payment volumes was tepid. This is not unexpected, given the difficulties in that region.

The good news is that Visa hasn't changed its outlook as it expects net revenue growth in the "low double-digit" percentages for the next quarter, consistent with last year's 10.6%. The company also reaffirmed its annual profit and revenue growth forecasts.

We are confident that Visa will continue to grow as more people swipe their cards when they travel. This company deserves to be an anchor position in every long-term portfolio.