VISA INC. Q2 FY2025 earnings call

• Visa is a strong business with $9.6 billion net revenue, up 9% y-o-y, and EPS up 10%.
• Key business drivers: strong payments volume growth, with overall payments volume up 8% in constant dollars, US up 6%, international up 9%.
• Consumer payments: expanded credentials and acceptance, with 7% growth in total credentials, 1 billion new tokens added, and progress in displacing cash in key markets like India, Mexico, and Brazil.
• Commercial and money movement solutions: strong results with commercial volume up 6% in constant dollars, Visa Direct transactions up 28%, and CMS revenue growth.
• Value-added services: deepened client relationships, launched new product offerings like the new Authorized.net and unified checkout experience, and grew client relationships in acceptance solutions.

Visa's segment performance showed strong results. In consumer payments, net revenue was $9.6 billion, up 9% year-over-year. Total credentials grew 7%, with 13.7 billion tokens, and nearly 50% of e-commerce transactions globally are tokenized. Cross-border volume, excluding Intra-Europe, rose 13% in constant dollars. For commercial and money movement solutions, revenue grew 13% in constant dollars year-over-year, with commercial payment volume growing 6% in constant dollars and Visa Direct transactions up 28% to 3 billion. Value-added services revenue grew 22% in constant dollars to $2.6 billion, driven by strong growth across all portfolios including issuing solutions, acceptance solutions, and risk and identity solutions.

• Expect third-quarter adjusted net revenue growth in the low-double-digits, essentially in line with Q2.
• Operating expenses expected to have adjusted operating expense growth in the low-double-digits.
• Non-operating income in Q3 expected to be approximately $150 million.
• Tax rate in Q3 expected to be between 17% and 17.5%.
• Full-year guidance for adjusted revenue growth, operating expense growth, non-operating income, tax rate, and adjusted EPS growth remains unchanged.

• Macro-economic impacts: while business is resilient, macro conditions can affect performance.
• FX volatility: high levels seen in April, but assumed to moderate starting in May.
• Geopolitical risks: uncertainty in consumer and business confidence, which can impact spending and operations.

Q: Further on FX vol offset, hedging, and e-com cross-border?

A: 10% growth in international transaction revenue due to FX, higher volatility, client mix, and hedging. Hedging gains were lower than previous year. De minimis from China has no material impact on volumes. E-com cross-border is factored but not a material portion currently.

Q: US volume growth normalization and Easter effects?

A: 8% month-to-date US volume growth reflects benefits from Easter timing. Overall consumer spending remains resilient, stable volumes, don't read too much into six vs eight growth rates.

Q: Entertainment weakness and affluent group outlook?

A: Travel and entertainment had deceleration but offset by retail goods. Discretionary and non-discretionary spend both strong and stable. Higher spend bands growing faster but quarter-on-quarter performance consistent.

Q: Geopolitical backdrop and investment bets?

A: Macro-environment has uncertainty, but consumer spending remains strong. Committed to product and investment roadmap, will act decisively if needed. M&A opportunities may arise but will wait and see.

Q: Macro shifts and revenue/cost levers?

A: Business is resilient with diversification. If downturn occurs, volumes historically grow faster than PC. Incentives are variable, expenses can be flexed. Management stands ready to act thoughtfully.

Q: Stablecoin demand and client thoughts?

A: Stablecoin is early, $200 million settlement volume milestone. Optimistic about potential with clear regulations, but early days. Team has experts, tipping point with clear regulations.

Q: Navigating government nationalism risk?

A: Regularly engage with governments and regulators globally. Have world-class government engagement team. Tailor strategies to unique needs of clients and partners in each market, feel confident in navigating.