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    V
    Earnings call· Dec 2024(Q1 FY25)

    VISA INC. V

    Jan 30, 2025 Source

    Executive summary

    Visa Q1 FY25 — Strong Start with Double-Digit Revenue and EPS Growth

    Visa reported a strong start to its fiscal year, exceeding expectations with robust revenue and EPS growth driven by improving underlying business drivers and effective execution. The company's strategy across consumer payments, new flows, and value-added services continues to resonate, leading to significant volume and transaction growth. Management remains focused on innovation and client obsession, with an optimistic outlook for the full year, despite some regional macroeconomic softness.

    Highlights

    5

    • Net revenue increased 10% year-over-year to $9.5 billion.

    • Adjusted EPS grew 14% year-over-year to $2.75.

    • Cross-border volume, excluding intra-Europe, rose 16% in constant dollars.

    • Processed transactions grew 11% year-over-year.

    • Value-added services revenue grew 18% in constant dollars to $2.4 billion.

    Concerns

    2

    • Asia Pacific payments volume growth remained muted at just above 1% year-over-year in constant dollars.

    • Operating expenses grew 11% year-over-year, including $213 million in severance costs.

    Guidance & targets

    10
    CategoryTargetConfidence
    Adjusted Net Revenue Growth
    high single digits to low double digits
    high materiality
    High
    Adjusted Operating Expense Growth
    high single to low double digits
    medium materiality
    High
    Nonoperating Income
    negligible
    low materiality
    High
    Tax Rate
    around 17.5%
    medium materiality
    High
    Adjusted EPS Growth
    high single digits
    high materiality
    High
    Adjusted Net Revenue Growth
    low double digits
    high materiality
    High
    Adjusted Operating Expense Growth
    no material changes
    medium materiality
    High
    Nonoperating Income
    no material changes
    low materiality
    High
    Tax Rate
    between 17.5% and 18%
    medium materiality
    High
    Adjusted EPS Growth
    low teens
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    U.S.
    Benefited from a strong holiday shopping season and the lapping of Reg II impacts from Q1 last year. Consumer holiday spending growth was in the upper mid-single digits, with strong growth in discretionary categories like retail, travel, and entertainment.
    Total payments volume: 7% YoY growthCredit payments volume: 7% YoY growthDebit payments volume: 8% YoY growth
    		————
    International
    Payments volume growth rates in constant dollars were strong across most regions. Cross-border volume, excluding intra-Europe, was up 16% YoY, with e-commerce and travel both up 16% YoY. Outbound Europe and Asia Pacific travel volume growth benefited from solid client portfolios.
    Total payments volume: 11% YoY growth (constant dollars)
    		————
    Latin America
    Strong payments volume growth in constant dollars.
    		—22%——
    CEMEA
    Strong payments volume growth in constant dollars.
    		—18%——
    Europe
    Strong payments volume growth in constant dollars.
    		—13%——
    Asia Pacific
    Payments volume growth saw a slight improvement from Q4 in constant dollars, but still reflects a somewhat muted macroeconomic environment.
    		—just above 1%——

    Operational metrics

    34
    Net Revenue
    $9.5B10% YoY
    Q1 FY25

    Higher than expectations due to strong international transaction revenue and value-added services revenue.

    Severance Costs
    $213M
    Q1 FY25

    Related to changes to workforce, focusing investment on highest growth opportunities and accelerating innovation. Reflected in full year guide, no further charges expected this year.

    Tax Rate
    17.7%
    Q1 FY25

    Better than expected.

    Diluted EPS
    $2.7514% YoY
    Q1 FY25

    Higher than expected, primarily due to revenue outperformance and lower-than-expected tax rate.

    Stock Buyback
    $3.9B
    Q1 FY25

    Amount executed in Q1.

    Remaining Buyback Authorization
    $9.1B
    as of December 31
    Dividends Distributed
    $1.2B
    Q1 FY25
    Service Revenue Growth
    8%YoY
    Q1 FY25

    Versus 8% growth in Q4 constant dollars payments volume.

    Data Processing Revenue Growth
    9%YoY
    Q1 FY25

    Versus 11% processed transaction growth, due largely to back half-loaded FY25 pricing impact.

    International Transaction Revenue Growth
    14%YoY
    Q1 FY25

    Better than expected, benefiting from higher cross-border volumes and higher currency volatility. Below 16% increase in constant dollar cross-border volume (ex-intra-Europe) due to FX and lapping higher currency volatility from last year.

    Other Revenue Growth
    32%YoY
    Q1 FY25

    Primarily driven by better-than-expected consulting and marketing services growth and select pricing modifications.

    Client Incentives Growth
    13%YoY
    Q1 FY25

    Reflecting a strong renewal quarter. Up from 6% in Q4.

    New Flows Revenue Growth
    19%YoY
    Q1 FY25

    Driven by better-than-expected commercial cross-border performance across all regions and Visa Direct transaction growth.

    Commercial Payments Volume Growth
    6%YoY
    Q1 FY25

    Up from Q4.

    Visa Direct Transactions Growth
    34%YoY
    Q1 FY25
    Value-Added Services Revenue Growth
    18%YoY
    Q1 FY25
    Visa Flexible Credential Launches
    3
    Q1 FY25

    Continued growth in interest for flexible credentials.

    Tap to Pay Penetration (Japan)
    44%up 20 percentage points since last year
    Q1 FY25
    Tap to Pay Penetration (Argentina)
    78%up 22 percentage points
    Q1 FY25
    Tap to Pay Penetration (U.S.)
    57%up 13 percentage points
    Q1 FY25
    Tap to Phone Markets
    118
    Q1 FY25
    Tap to Phone Enabled Phones Growth
    more than doubledYoY
    last year
    Tap to Phone Transactions Growth
    more than tripledYoY
    last year
    Visa Direct Transactions
    nearly 3B
    Q1 FY25
    Visa Protect for A2A Payments Expansion
    10
    FY25

    New service powered by AI-based fraud detection models, providing real-time risk scores for account-to-account payments.

    Tokenized Transactions Share
    1/3
    Q1 FY25

    Of all Visa transactions.

    Tokenized Transactions Count
    21B-22B
    Q1 FY25
    E-commerce Approval Rate (Tokenized)
    6higher
    Q1 FY25

    On tokenized transactions compared to non-tokenized.

    E-commerce Fraud Rate Reduction (Tokenized)
    30%reduction
    Q1 FY25

    On tokenized transactions compared to non-tokenized.

    U.S. Payments Volume Growth (through Jan 28)
    8%YoY
    Q2 FY25 (partial)

    Driver trends remained strong.

    Processed Transactions Growth (through Jan 28)
    11%YoY
    Q2 FY25 (partial)

    Driver trends remained strong.

    Cross-Border Volume Growth ex-intra-Europe (constant dollars, through Jan 28)
    17%YoY
    Q2 FY25 (partial)

    Driver trends remained strong.

    Travel-Related Cross-Border Volume Growth (through Jan 28)
    17%YoY
    Q2 FY25 (partial)

    Driver trends remained strong.

    Cross-Border Card-Not-Present ex-Travel Volume Growth (through Jan 28)
    16%YoY
    Q2 FY25 (partial)

    Driver trends remained strong.

    Industry KPIs

    7
    MetricValueDetails
    Capital returns$3.9BUSD
    Cross border volume16%%
    Payments volume gdv9%%
    Client incentives rebates13%%
    Cards in force credentials4.7Bcredentials
    Value added services revenue18%%
    Switched processed transactions11%%

    Deals & partnerships

    31
    ICBCRenewal of partnership with the largest bank in the world and biggest credit card issuer in Mainland China.

    Focus on growing affluent and cross-border volume.

    ICICI Bank, SBI Card, Kotak Mahindra BankRenewal of long-standing credit agreements with three largest issuers in India.

    Focus on growing affluent and cross-border volume. Also renewed debit agreement with Kotak Mahindra Bank.

    Bank of New ZealandLong-term renewal across consumer debit, consumer credit, and business credit.long-term

    One of the largest banks in the country.

    SantanderRenewal of portfolios in Argentina and Uruguay.long-term

    Focus on growing affluent.

    BACDeepened partnership to grow acceptance and issuance.

    Goal to enable 300,000 nano and small merchants, grow in new verticals, and won issuance of their cross-border credit portfolio (Millas Plus).

    NeonExtended partnership with digital bank in Brazil.

    Includes the launch of a new credit portfolio.

    BNP ParibasPan-European agreement renewal.

    Includes winning additional portfolios in France and Belgium.

    Dutch Bangla BankSecured credentials from their closed-loop system.

    Secured nearly 6 million credentials in Bangladesh.

    Banco Popular Puerto RicoMultiyear credit and debit partnership renewal.multiyear

    Aims to expand digital penetration through new products, including a co-badge card with the local network.

    RBC Royal BankRenewed business in 10 Caribbean countries and expanded relationship.

    Expanded to include transfer of debit credentials in Dutch Caribbean to Visa and support for new credit and commercial products.

    Times Black ICICI BankLaunched a new co-brand credit card.

    Catering to high net worth individuals with travel and lifestyle benefits in India.

    HSBC TajLaunched India's first premium co-branded hospitality credit card.
    AldarSigned for a co-brand card for its Darna Rewards by Aldar loyalty program.

    With issuing bank Emirates NBD in the U.A.E.

    Alrajhi Bank and Marriott BonvoyLaunched a new co-brand card.

    In Saudi Arabia, for the global travel program by Marriott International.

    EGYPTAIRWon the portfolio for Africa's second largest airline.
    SWISS card Miles & More programExpanded business.
    Casas BahiaSigned for co-brand cards.

    One of the top retailers in Brazil.

    VoltSigned for co-brand cards.

    A leading ride-hailing and food delivery operator in Ukraine.

    X MoneyPartnership for X Money account launch, including P2P payment functionality.

    Utilizes Visa Direct to enable secure and instant funding of X wallet with debit card and instant transfer of funds back to bank account via debit card.

    OnePayAgreement for Visa Direct as the engine for wallet loads.

    Fintech company with more than 3 million monthly active users.

    Banco PichinchaWill begin using Visa Direct for cross-border remittance payments.

    One of Ecuador's largest issuers.

    Libra Internet BankLaunched a real-time multicurrency FX service for business customers.

    Utilizing Currencycloud solution in Romania.

    OCBCLaunched a cross-border P2P solution on the OCBC app.

    Allows customers in Singapore to send money to Chinese wallets using Visa Direct with recipient's China national ID, name, and mobile number.

    DoorDashShopper card program will use Visa virtual commercial credit cards.

    To enable Dashers to pay for customer orders at physical merchant outlets in the U.S. In addition to existing Visa Direct relationship for Dasher payouts.

    iFood PagoSigned a commercial business card deal for commercial customers.

    Fintech for the largest food delivery platform in Brazil.

    mySofieReached a virtual card agreement.

    Insurtech company in France, offering medical policyholders an easy way to pay for healthcare.

    AirwallexRenewed and deepened partnership.

    Global financial platform. Expanding to new geographies across use cases in expense cards and B2B travel.

    emerchantpay, NeoNet, BancardWill offer CyberSource to their merchants.

    European, Guatemalan, and Paraguayan acquirers, respectively.

    FiservPartnering to include CyberSource gateway as a solution for acquirers and merchants in Europe and Asia Pacific.

    Fiserv also expanding use of cardholder authentication from CardinalCommerce.

    FeaturespaceAcquisition of fraud prevention technology company.

    Enables expanded fraud prevention tools and real-time consumer protection across payment methods.

    Alrajhi BankExpanding advisory relationship.

    Into risk, digital enablement, and data analysis across their portfolios.

    Risks & headwinds

    3
    Muted Macroeconomic Environment in Asia PacificQ1 FY25

    Payments volume growth just above 1% YoY in constant dollars.

    Mitigation: Focus on strategic renewals and partnerships to drive growth, such as with ICBC and Bank of New Zealand.

    Foreign Exchange and Lapping Higher Currency VolatilityQ1 FY25

    International transaction revenue growth of 14% YoY was below 16% cross-border volume growth due to FX and lapping higher currency volatility.

    Mitigation: Not explicitly stated, but inherent in global operations; focus on constant dollar growth metrics.

    Impact of Stronger U.S. Dollar on Travel PatternsEarly period, ongoing monitoring

    Stronger dollar leads to stronger purchasing power for Americans abroad but makes travel to the U.S. more expensive, potentially shifting travel corridors.

    Mitigation: Monitor travel patterns; historically, overall travel spending remains consistent, with shifts in destinations. Too early to quantify impact.

    What to watch in Q2 FY25

    5

    Adjusted Net Revenue Growth

    Q2 FY25
    Current11% (constant dollars) in Q1 FY25
    Targethigh single digits to low double digits

    Why it matters

    This is a key indicator of overall business health and execution against guidance, especially given the leap year impact.

    For the second quarter, we expect adjusted net revenue growth to be in the high single digits to low double digits.

    Q&A highlights

    7

    Does the improved full-year outlook assume sustained growth rates, and what are the key drivers behind the acceleration?

    The improved outlook reflects stronger Q1 results driven by healthy underlying drivers, value-added services, new flows growth, and higher FX volatility. Q2 guidance incorporates these trends, adjusted for the leap year impact. While the full-year guide was raised, management noted it's only one quarter into the year and will provide more updates for H2 later.

    “Our Q2 guide reflects many of those same trends, those stronger trends, adjusted, obviously, for the impact of leap year that I referred to. And so Q1 and Q2, strong start to the year, which has resulted in taking up the full year guide, as you heard, to be low double digits in adjusted revenue.”

    asked by Sanjay Sakhrani · answered by Christopher Suh

    2 min read6 chapters

    Detailed Narrative

    01

    Consumer Payments Growth and Innovation

    Visa's consumer payments business demonstrated strong growth, with 4.7 billion credentials, up 7% year-over-year, and 12.6 billion tokens, a 44% increase year-over-year. The company continues to expand its flexible credential solutions, including launches with Affirm in the U.S. and SMCC in Japan. Tap-to-pay adoption is accelerating globally, with 74% of face-to-face transactions now using this method, and tap-to-phone is live in 118 markets, with enabled phones more than doubling and transactions tripling in the last year.

    02

    New Flows Expansion and Visa Direct Momentum

    New flows revenue grew 19% year-over-year in constant dollars, driven by strong commercial cross-border performance and Visa Direct transaction growth. Visa Direct has surpassed 10 billion transactions over the last 12 months, with nearly 3 billion transactions this quarter. Key partnerships include X Money for P2P functionality and wallet loads, OnePay for wallet loads, and Banco Pichincha for cross-border remittances, highlighting the platform's expanding use cases and global reach.

    03

    Value-Added Services Driving Diversified Revenue

    Value-added services (VAS) revenue increased 18% in constant dollars to $2.4 billion, led by consulting, marketing, issuing, and risk/identity solutions. Visa is partnering with acquirers like emerchantpay, NeoNet, and Bancard to offer CyberSource to merchants, generating revenue on both Visa and non-Visa transactions. The acquisition of Featurespace enhances fraud prevention tools, and new services like Visa Protect for A2A payments are being piloted to identify fraud on real-time payment networks.

    04

    Strategic Renewals and Market Share Gains

    Visa secured significant renewals and expanded partnerships globally, including with ICBC in Mainland China, ICICI Bank, SBI Card, and Kotak Mahindra Bank in India, and Bank of New Zealand. The company is successfully converting credentials from domestic networks, such as securing nearly 6 million credentials with Dutch Bangla Bank and expanding with Banco Popular Puerto Rico and RBC Royal Bank in the Caribbean. Co-brand cards remain a key strength, with new launches in India, UAE, Saudi Arabia, Brazil, and Ukraine.

    05

    Tokenization as a Platform for Innovation and Monetization

    Tokenization continues to be a critical investment priority, with over 12.5 billion tokens issued globally and 8,400 issuers. Tokenized transactions now account for one-third of all Visa transactions, offering significant performance improvements like 6 percentage points higher approval rates and a 30% reduction in fraud for e-commerce. Visa is monetizing tokenization through services like credential enrichment for merchants and heat map creation for issuers, enabling new revenue streams and deepening client relationships.

    06

    Regulatory Environment and AI Adoption

    Management expressed optimism regarding the U.S. regulatory environment, anticipating reduced burdens for businesses and the financial sector, which should spur economic growth and digital payments. Visa is an early and aggressive adopter of AI, embedding it across operations for productivity gains in engineering, client services, sales, finance, and marketing. AI is also enhancing predictive and detective modeling capabilities for risk management and driving the development of new products, positioning Visa for the future of digital commerce.

    AI-generated summary of the company’s earnings call. Not investment advice.