Visa is planning to cut around 2,600 jobs, according to a Bloomberg News report. The layoffs will affect about 7% of the company’s workforce, as citing a staff memo. The company is making the cuts as it looks to become more efficient in a challenging payments industry. Most of the layoffs will happen in Visa’s technology and product teams.
Artificial intelligence (AI) helped reduce repetitive work and speed up product development, but AI was not the only reason for the layoffs, Bloomberg News reported, citing a person familiar with the company’s reasoning. The reported layoffs come just before Visa is scheduled to release its quarterly earnings after the U.S. stock market closes on Tuesday. The timing of the layoffs has drawn attention because investors are waiting to see how Visa performed during the latest quarter.
Visa earnings outlook
Visa delivered strong results in the previous quarter, reporting revenue of $11.23 billion, up 17.1% from a year earlier, according to StockStory. The company also beat analysts’ expectations for both earnings per share (EPS) and EBITDA in the previous quarter. For the current quarter, Wall Street expects Visa’s revenue to grow 11.9% year over year. That expected growth would be slower than the 14.3% revenue growth Visa recorded in the same quarter last year.
Analysts expect steady growth
Analysts have mostly kept their forecasts unchanged over the past 30 days, suggesting they expect Visa’s business to remain stable heading into earnings. StockStory noted that Visa has a strong record of meeting or beating Wall Street’s revenue estimates. Other payment and financial companies have also announced job cuts this year, showing a wider industry trend.
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Payment industry layoffs
Mastercard earlier announced plans to cut 4% of its global workforce as it shifts investments to different areas. Fintech company Block also said in February that it would cut nearly 4,000 jobs, or almost half of its workforce. Investors appeared positive about Visa despite the reported layoffs. The company’s shares were up 2.2% in premarket trading, Reuters reported. Visa’s stock has gained about 4% over the past month.
Visa stock in focus
The broader credit card sector has also performed well recently, with shares rising an average of 5.4% over the last month. Some of Visa’s industry peers have already reported quarterly earnings. Bread Financial posted 6.9% revenue growth and beat analysts’ expectations, while Capital One reported 25.8% revenue growth that matched estimates.
Following their earnings reports, Bread Financial shares rose 2.4%, while Capital One shares fell 2.9%. Analysts currently have an average price target of $403.26 for Visa’s stock, compared with its recent trading price of $355.58, according to StockStory. Investors will closely watch Visa’s earnings report to see whether the company can continue its strong financial performance while carrying out the reported workforce reductions.
