Why Visa Stock Vaulted Today

What happened

Shares of Visa (NYSE: V) surged 10.6% on Friday after the digital payments giant delivered impressive fiscal 2022 first-quarter earnings results.

So what

Visa's revenue jumped 24% year over year to $7.1 billion. The gains were fueled by sustained growth in e-commerce and a surprisingly fast rebound in travel-related spending.

Notably, Visa's lucrative cross-border volume -- which is comprised of transactions between purchasers and merchants that reside in different countries -- soared 40%.

A person is paying for drinks at a cafe with a credit card.

Image source: Getty Images.

In all, the fintech titan's total payments volume grew 20%, while the number of its processed transactions increased 21% to 47.6 billion. Visa's adjusted net income, in turn, climbed 25% to $3.9 billion. And its adjusted earnings per share, which were boosted by stock buybacks, increased 27% to $1.81.

Now what

Debit and credit card usage is accelerating in key international markets, including Latin America. Yet, despite this rapid expansion, Visa sees many years of growth still to come for the digital payments industry.

"While cash displacement is certainly a reality, global personal consumption expenditure of cash and check grew at a CAGR [compound annual growth rate] of 2% over the 10 years ending in 2019," CEO Alfred Kelly said during a conference call with analysts. "When we look at the opportunity ahead, if you assume global cash grows at 1% annually, industrywide digital penetration of personal consumption expenditure wouldn't reach 90% for several decades."

Kelly also sees a promising near-term growth environment for Visa.

"As we look ahead, we do not believe the current surge in the pandemic will curtail the recovery," Kelly said. "We see economies around the world continuing to improve and, as restrictions are lifted, cross-border travel will continue to recover."

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Visa. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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