Visa Inc. (V) Earnings

Management highlights

- Client Growth and Relationship Strength * Maintained a Net Promoter Score of 76 for the third consecutive year in the Global Client Engagement Survey, with scores rising for both sellers and fintechs. * Secured major new client wins globally: NatWest's full consumer credit portfolio (Europe), extended 55-year relationship with Bradesco (Brazil), domestic processing partnership with Grupo Aval (Colombia, where processing penetration now exceeds 90% from single digits five years ago), Colony Bank U.S. consumer debit portfolio, and B2B travel portfolio with Al-Rajhi Bank (Saudi Arabia). * Total credentials grew 8% YoY, with global e-commerce tokenized penetration nearing 60%. - Product Innovation and Operational Transformation * Deployed generative and agentic AI across internal operations, reorganizing product teams into smaller, nimble agentic squads of 2-4 people. Teams using the new agentic toolchain have seen 80% more code commits, requirement definition time cut from 30 days to 5 days, and 65% faster feature development. * Actively investing across all layers of the stablecoin ecosystem: joined the Open Standard consortium to support the new OpenUSD stablecoin for global payments, and launched the Visa stablecoin platform for minting, movement, and management of stablecoins, integrated with Pismo. * Building infrastructure for agentic commerce, including an agent score, agent directory, and token assurance framework, and announced a strategic partnership with OpenAI to enable secure Visa payments within agentic commerce. * Announced workforce reductions, with majority cuts in technology and product teams, to reallocate resources to high-growth priority areas; $563 million in GAAP severance costs were recorded this quarter. - Value-Added Services Expansion * Top network products Subscription Manager and Stop Payment Services now have 2 billion enrolled credentials; launched a white-label AI financial assistant for banks to embed in their customer apps. * Launched DPS full-service credit, an integrated credit issuer processing solution combining DPS and Pismo capabilities for fintechs and small-to-mid-sized banks, pilot launching in Q4 in the U.S. with general availability in 2027. * Unified Checkout for Cybersource, launched globally in March, has been adopted by over 4,500 sellers and acquirers globally. * Leveraged the 2026 FIFA World Cup for high client engagement in marketing services, delivering over 300 FIFA engagements to 240+ clients across 70 markets, driving an 8% lift in card activation and $400 million in incremental payments volume from one Brazilian bank campaign alone, and extended Visa's global partnership as the official payment technology partner for FIFA tournaments.

Guidance

- Q4 2026 Guidance (adjusted non-GAAP constant dollar, excluding acquisition impacts): * Expects net revenue growth in the high end of low double digits, broadly similar to Q3's adjusted growth rate. * Assumes current foreign exchange volatility levels (consistent with Q1 2026) will persist, implying a larger drag than previously incorporated. * Expects operating expense growth in the low double digits, including the shift of some Q3 marketing expenses to Q4. * Expects EPS growth in the low end of mid-teens. - Full Year 2026 Guidance (adjusted non-GAAP constant dollar, excluding acquisition impacts): * Updated full-year net revenue growth guidance to the low end of low teens. * Expects full-year operating expense growth to also come in the low end of low teens. * Expects full-year EPS growth to be in the low end of mid-teens. * Full-year non-operating expense is expected to be ~$165 million, with a full-year effective tax rate of 18% to 18.25%. - Management noted it is currently conducting 2027 strategic and financial planning, with new 2027 guidance to be provided next quarter, and expressed conviction in the company's strategy and ability to deliver sustained long-term growth.

Segment performance

Visa reported fiscal Q3 2026 net revenue of $11.6 billion, up 14% year-over-year, with EPS of $3.32, up 11% year-over-year. Global payments volume grew 10% YoY in constant dollars, crossing $4 trillion for the first time in company history, while total processed transactions grew 10% YoY to $72 billion. - Consumer Payments: Revenue grew driven by strong underlying payments volume, cross-border volume, and processed transaction growth. U.S. domestic payments volume grew 10% YoY, with credit up 11% and debit up 9%. International total payments volume grew 10% YoY in constant dollars. Cross-border volume (excluding intra-Europe) grew 12% YoY, with cross-border e-commerce up 16% and travel-related cross-border up 10%. - Commercial and Money Movement Solutions (CMS): Revenue grew 17% YoY in constant dollars. Commercial payments volume grew 13% YoY in constant dollars (accelerating 2 points from Q2), outpacing overall company volume growth. Visa Direct transactions grew 21% YoY. - Value-Added Services (VAS): Revenue grew 34% YoY in constant dollars to $3.8 billion, accounting for approximately 33% of total Q3 net revenue. All four VAS sub-portfolios (issuing solutions, acceptance solutions, risk and security solutions, advisory and marketing services) grew faster than their historical investor day disclosed growth rates, with advisory and other growing the fastest.

Risks & headwinds

- Forward-looking statements are inherently uncertain, and actual results could differ materially due to a range of unforeseen factors, with additional risk factor disclosure available in Visa's SEC filings. * Foreign exchange volatility represents a headwind to revenue, with current volatility levels expected to create a larger drag on Q4 results than previously modeled. * Geopolitical conflict (notably the Middle East conflict) has acted as an ongoing offsetting factor to cross-border travel growth, and creates continued macro uncertainty. * Stablecoin and agentic commerce are still in early stages of adoption, and broader market adoption is difficult to predict, creating uncertainty around the timing of revenue from these new areas. * Intensifying competition from domestic payment schemes in regional markets, particularly in Europe, creates ongoing competitive pressure.

Analyst Q&A

• Q: What was the aggregate impact of the FIFA World Cup on June/July cross-border travel growth, and how should we normalize for this effect going into Q4? /

  A: While FIFA did provide a boost to inbound cross-border spend in North America and Latin America in June, Visa's cross-border volume is well diversified, with no region representing more than 25% of total volume. Management noted that the underlying health of both cross-border travel and e-commerce remains strong, and this underlying strength is expected to continue into Q4.

• Q: Can you elaborate on the Pismo and DPS integrated issuer processing strategy, and what client segments it targets? /

  A: The Pismo acquisition was driven by client demand for cloud-native, API-based core processing to modernize their technology stacks and expand into new geographies, which will deepen client relationships and grow new revenue streams. In the U.S., DPS continues to serve banks of all sizes for debit processing, while the new integrated DPS-Pismo solution targets small and mid-sized banks and fintechs seeking an integrated debit and credit processing platform; large banks typically prefer to keep their separate customized platforms, but Pismo is also used to help large banks like Wells Fargo migrate core platforms to the cloud. Outside the U.S., Pismo is the single go-to-market platform across all client segments, and has expanded into 19 new markets since acquisition.

• Q: What is Visa's strategy for OpenUSD, and will it compete with existing established stablecoins? /

  A: Visa's long-term strategy is multi-coin and multi-chain: Visa does not aim to pick winners in the stablecoin space, but instead enables clients to connect to the stablecoin ecosystem securely at scale regardless of which stablecoins gain adoption. OpenUSD is designed with neutral governance and shared economics to scale stablecoin adoption for payments, and Visa is pleased to partner on the initiative, but will continue supporting all stablecoin projects that bring value to Visa's clients.

• Q: What is your long-term outlook on the faster-than-expected growth of CMS and VAS relative to consumer payments, is this faster growth sustainable? /

  A: The strong outperformance of CMS and VAS over the past two years reflects strong execution against the strategy laid out at investor day. Management continues to focus on executing this strategy to drive sustained long-term growth, and all four VAS sub-portfolios are currently growing faster than their previously disclosed historical growth rates, with broad strength across issuing, acceptance, risk, and advisory/marketing services. There is a large long-term growth opportunity for these higher-growth segments, and management expects this momentum to continue.