Visa shares up after profit tops estimates amid solid consumer spending backdrop

Investing.com - Visa (NYSE:V) shares moved higher in premarket U.S. trading after the world's largest payments processor reported first-quarter earnings that topped Wall Street expectations thanks to strong payments volume and a surge in cross-border transactions.

Despite lingering pressures from elevated interest rates, recent economic data has suggested that the U.S. labor market remains robust and wage growth is ongoing -- both of which could help bolster consumer spending. Visa, as well as rival Mastercard (NYSE:MA), stand to benefit from this trend because they charge a small fee off of each transaction made on their networks. 

The San Francisco, California-based company posted earnings per share of $2.75, beating analysts' estimates of $2.66. Revenue rose to $9.51 billion, exceeding the consensus forecast of $9.35 billion.

Visa said its total payments volume increased 9% on a constant dollar basis in the quarter and processed transactions grew 11%, as indications of broader economic strength and merchant discounts spurred on consumer expenditures.

"Focusing on retail, holiday spending growth was a couple of points higher than last year and retail spending growth on key shopping days from Thanksgiving to Cyber Monday was several points higher," CFO Chris Suh told analysts in a post-earnings call.

Meanwhile, cross-border volume excluding intra-Europe transactions jumped 16% as improved pricing supported international travel demand.

For the second quarter, Visa expects net revenue growth in the high single-digit to low double-digit range on an adjusted constant dollar basis. Full-year net revenue growth is projected to be in the low-double digits, which analysts at Bank of America (NYSE:BAC) noted was an improvement on a constant-currency basis from Visa's prior guidance range of high-single digit to low-double digit growth..

The firm also forecast high single-digit growth in its current-quarter earnings per share, while the full-year figure is tipped to rise in the low-teens percentage range.

(Pratyush Thakur contributed reporting.)

"[Visa] provided another important proof point that the consumer spending environment remains quite healthy," analysts at Barclays (LON:BARC) led by Ramsey El-Assal said in a note to clients.