(Bloomberg) — Visa Inc. Chief Executive Officer Al Kelly warned the firm will be challenged “for a number of quarters” even as declines in spending on its network began to moderate in April.

As the U.S. government began sending out stimulus payments to millions of consumers this month, Visa saw an increase in spending on home improvement, automotive and some areas of health care. Still, spending on the firm’s cards in the U.S. has dropped 19% in April compared with the same period a year earlier, according to Chief Financial Officer Vasant Prabhu.

To offset the slowdown in spending on its cards, Visa said expenses in the second half of the year would be flat compared with the same period a year ago. The company, which has vowed it won’t make any virus-related layoffs this year, said costs rose 4% to $1.93 billion in the first three months of the year, below the $2.02 billion average of analyst estimates compiled by Bloomberg.

“We are pulling back on discretionary spending, especially related to personnel, travel, professional services and marketing,” Kelly said Thursday on a conference call with analysts after Visa announced fiscal second-quarter results.

More than one-fifth of the U.S. spending on Visa’s network comes from food and drug stores, Walmart Inc., Costco Wholesale Corp. and Target Corp. — and that’s the only category to post an increase in April, climbing 20%. Spending on items like telecommunications, utilities, insurance and business supplies and equipment has been flat in April.

Cross-border spending — among the most lucrative transactions for Visa and its rival Mastercard Inc. — fell 2% in the quarter ended March 31 as global travel ground to a halt. Still, declines in such spending moderated later, Visa said in a presentation on its website.

“Although the road ahead will likely be challenging for a number of quarters, our business model is resilient,” Kelly said, adding that the firm renewed several partnerships in the period.

Visa inked a new co-brand card deal with China’s Tencent Holdings Ltd., which operates WeChat, the messaging app used by more than 1 billion people. The firm also renewed and expanded its partnership with Truist Financial Corp.

Visa said net revenue in the quarter rose 7% to $5.85 billion, in line with analyst expectations. Profit climbed 4% to $3.08 billion, or $1.38 a share, topping the $1.34 average of analyst estimates compiled by Bloomberg.

The shares fell 0.4% to $178 at 6:02 p.m. in late trading in New York. They ended regular New York trading at $178.72, for a decline this year of about 5%.

(Updates with card spending, expenses starting in second paragraph)

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