Visa vs. Mastercard: Who had a stronger quarter?

Visa vs. Mastercard: Who had a stronger quarter?

Quarterly results of both payment leaders are out, indicating resilient consumer spending throughout the period.

by SARA KHAIRI

Visa (V)

Visa released its Q2 2023 earnings on Tuesday.

The company reported:

• Net income was $4.26 billion or $2.03 per share for the fiscal second quarter
• Net revenue of $7.99 billion was reported for Q2'23, an increase of 11% and 13% on a constant-dollar basis
• Processed transactions (implying transactions processed by Visa) totaled 50.1 billion, which rose 12% y-o-y
• Total operating expenses were $2.6 billion, which increased 11% y-o-y

Visa's quarterly results surpassed analysts' expectations. The results were helped by higher payments volume that grew 10% y-o-y on a constant-dollar basis in the second quarter. While Visa's cross-border volume climbed 24% y-o-y for the same quarter on a constant-dollar basis. Cross-border travel growth remained steady and lower-than-expected client incentives aided in the revenue.

However, higher costs -- personnel costs and professional fees -- resulted in expenses for the company.

"Visa's strong fiscal second quarter performance reflects a continued focus on our growth levers - consumer payments, new flows, and value-added services," said Visa CEO, Ryan McInerney.

Shares of Visa rose 1.3% higher in after-hours trading Tuesday.

Analyst's take

"We view the Y/Y acceleration in US credit and debit dollar volumes as strong positives. On balance, we expect a positive stock reaction even though one could argue that revenue also benefited from lower incentives (26.7% vs. guide of upper end of 26.5-27.5%) as well as expanding service and data processing yields," said Dan Dolev, senior equity analyst at Mizuho.

Mastercard (MA)

Mastercard also released its Q1 2023 results on Thursday.

The company reported:

• Net income was $2.36 billion or $2.47 per share for the fiscal first quarter
• Net revenue of $5.75 billion was reported in the first quarter period, an increase of 11% y-o-y, and a 14% increase on a currency-neutral basis
• Total operating expenses rose 10% to $2.4 billion in the first quarter ended March

Mastercard's quarterly results came out better than expected as estimated by analysts. The revenue was fueled by an increase in gross dollar volume, cross-border volume, and switched transactions, which increased by 15%, 35%, and 12% correspondingly. Additionally, high demand for data analytics, consulting, and marketing services, and continued strong growth in cyber and intelligence solutions also benefitted the results.

But the company saw losses jump due to higher personnel costs.

"We delivered strong revenue and earnings growth this quarter, reflecting resilient consumer spending and the continued recovery of cross-border travel, " said Mastercard CEO, Michael Miebach. 

Shares of Mastercard climbed 2% in morning trade on Thursday.

Analyst's take

"Following Visa's results earlier this week, MA's strong 1Q should be no surprise to investors, highlighted by the slight increase to management's non-GAAP revenue guide. While US volumes in April appear solid and similar to Visa, ROW debit volumes appear to bifurcate in favor of MA, which we believe garners further attention," added Dolev.

Market recap

Amid a flurry of earnings releases, the overall fintech IPO index dipped by 5.5%

MoneyLion (ML) - down 30% to $9.02 per share

• MoneyLion shares slid nearly 30%.
• The Board of Directors has approved a 1-for-30 reverse stock split of MoneyLion’s Class A common stock.

BNY Mellon (BK) - down 6% to $42.01 per share

• The bank’s stock fell 5% on Monday as it revealed a $90m impact in its first-quarter profits, which were down 18% -- due to the company ceasing banking and investment-related operations in Russia.
• For the year to date, the stock is down 21%.

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