Visa Q4 - Supported By Travel Return

On Tuesday night, Visa released a strong set of results, highlighting that the world is returning to normal. I love reading the Visa numbers because they show how people are spending their money, which tells us a lot about the state of the economy. The company noted that there has been a moderate recovery in travel spending and there are more in-person payments again. Overall, Visa processed 21% more transactions.

For their latest quarter Visa saw a 38% increase in cross-border transactions, compared to last year. This very profitable business segment was sorely missed in 2020. Thanks to the return of travel, Visa saw a 29% increase in revenue and 68% increase in profits.

The card payment industry has a brilliant business model. Setting up the operations is expensive, but it is relatively cheap to grow once the infrastructure is in place. Visa has been going since 1958, so as shareholders we get to reap the benefits of six decades of investment. Over the last three months, Visa generated $3.8 billion in free cash flow; $3 billion was returned to shareholders in share buy-backs and $700 million through dividends.

Due to Covid-related uncertainty and limited travel, the Visa share price has been flat for most of the year. Last night's share price slump was due to expectations of a slightly stronger recovery. We've been using the recent weakness as an opportunity to accumulate more shares in a business that should be a core part of your portfolio for decades to come.