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Visa's tepid revenue outlook clouds profit beat, shares drop

Smartphone with Visa logo is placed near toy shopping cart in this illustration

By Manya Saini

(Reuters) -Visa's tepid forecast for current-quarter revenue growth on Thursday eclipsed a market-beating earnings report that was powered by customers swiping their cards for big purchases during the holiday shopping period and robust travel.

Even so, executives at Visa struck an optimistic tone over the outlook for spending across the year.

Severe winter storms that hit the U.S. have weighed on volumes at the start of the year, CFO Chris Suh said in an interview with Reuters, but added that the company is not worried about any broader impact and expects it to get smoothed out over the quarter.

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"As it turns out, no one goes out in negative 10 degree weather ... Conversely, in cities where the weather has been good, there's been no change in volume," Suh said.

Shares of Visa, the world's largest payments processor, were down 3% in extended trading after the company forecast an increase of "upper mid- to high single-digit" in second-quarter net revenue. The outlook compares with an 11% growth in the corresponding period in 2023.

The outlook for payments firms has been marred by worries that a slowing economy and high-interest rates will continue to pressure the wallets of consumers, particularly those in the lower-income bracket.

Edward Jones analyst Logan Purk said the results show that consumer spending remains robust, but also reveal that it is starting to slow down.

"We believe the mixed guidance and slowing transactions will likely weigh on the stock," Purk added.

In a bright spot, U.S. consumers shrugged off macroeconomic worries to ring in a solid holiday season. Adjusted profit of $2.41 per share sailed past analysts' expectations of $2.34.

Suh added that travel in key markets continued to improve, including China, where it is yet to return to pre-pandemic levels, but is seeing steady sequential recovery.

Payments volume increased 8% in the first quarter on a constant-dollar basis while cross-border volume excluding intra-Europe, a gauge of international travel demand, surged 16%.

(Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila and Sherry Jacob-Phillips)