Visa and Mastercard have announced their latest earnings – Q3 2022 for Mastercard and Q4 2022 for Visa. Both companies have reported strong net revenue growth, largely driven by cross-border volume increases, however year-on-year growth has slowed.
Visa Q4 2022 earnings
- Visa achieved net revenue growth of 19% YoY to $7.8bn for Q4, aided by a 49% increase in cross-border volume excluding intra-Europe and a 36% climb in total cross-border volume. This helped the company see a 22% increase in FY revenues to $29.3bn.
- Cross-border growth is being buoyed by a return to travel, with cross-border travel-related spend (excluding intra-Europe) growing 101% YoY. Significantly, it is also now 16% above 2019 levels.
- Visa Direct grew 42% in Q4, with 1.7 billion transactions, up seven points from the last quarter. It has seen 36% growth over the full year excluding Russia, reaching 5.9 billion transactions. Visa Direct’s partnership with Thunes has also added access to 78 digital wallet providers and 1.5 billion wallets.
- In cross-border flows, Visa has signed an agreement between Visa B2B Connect and TD Bank, its first in Canada. It has also signed banks for the first time in Switzerland and Korea, as well as five new banks across Kazakhstan, Qatar and Azerbaijan. As part of new flows, 2021-acquired Currencycloud has signed 35 new partnerships this quarter.
- On crypto, Visa has expanded its partnership with cryptocurrency exchange FTX beyond the US to over 40 countries, bringing Visa’s issuing partnerships with crypto platforms to over 70.
- The strength of the dollar proved a significant headwind in Q4, dragging down reported net revenue growth by 4 points, while discontinuation of operations in Russia also reduced net revenue growth by about 5 points.
- Looking forward, the company assumes stable conditions through fiscal year 2023 and expects reported nominal dollar net revenue growth in the high single-digit range for the first quarter.
Mastercard Q3 2022 earnings
- Mastercard saw net revenues of $5.75bn, an increase of 15% YoY, with one of the biggest drivers being its cross-border volume growth of 44% on a local currency basis, or 53% excluding Europe.
- Travel has been a particularly strong driver this quarter, with cross-border travel growing 73% YoY, while in the first three weeks of October, cross-border travel was up 62%. Cross-border travel is also now at 125% of 2019 levels.
- By contrast, ecommerce-based cross-border card not present, excluding travel, was up 13% YoY and 12% in October, which includes the impact of significant promotional activities.
- On crypto, Mastercard has announced Crypto Source, which is designed to give financial institution partners access to a various buy, hold and sell services for key crypto assets. This will be augmented with the company’s identity, cybersecurity and advisory services.
- Looking to the fourth quarter, the company expects YoY net revenue to grow at the high end of a mid-teens rate on a currency-neutral basis, excluding acquisitions. This reflects four factors: generally resilient consumer spending relative to 2019 levels; stable to slightly improved cross-border travel growth relative to 2019 levels; higher rebates and incentives as a percent of gross revenues; and the lapping of a strong year-ago quarter as border restrictions were lifted in the US, UK and Canada during Q4 2021.
- Foreign exchange is expected to have a headwind of approximately 6 to 7 ppt for Q4. The primary driver of this is the significant depreciation of the euro YoY. The company estimates that the annual impact to net revenue of a $0.01 change in the value of the euro relative to the US dollar would be approximately $55m.