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VI

VISA INC. (V)·Q1 2025 Earnings Summary

Executive Summary

  • Visa delivered a strong start to FY25: net revenue $9.51B (+10% nominal, +11% constant), GAAP EPS $2.58 (+8%), non-GAAP EPS $2.75 (+14%), on broad-based strength across payments volume, cross-border and processed transactions .
  • Management raised full-year adjusted net revenue outlook to “low double digits” and lowered the full-year tax rate to 17.5–18% (from 18–18.5%), citing revenue outperformance and lower-than-expected tax in Q1; Q2 guidance calls for high single to low double-digit adjusted net revenue growth and high single-digit EPS growth .
  • Key growth engines: cross-border volume ex intra-Europe +16% (constant), processed transactions +11%, U.S. payments +7%, international +11%; value-added services revenue grew 18% (constant) with tokens up 44% and 12.6B issued credentials .
  • Catalysts: pricing impact back-half loaded (April), Investor Day (Feb 20), and AI-driven fraud prevention (Featurespace) integration; international transaction revenue and VAS outperformed internal expectations in Q1 .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based driver strength: payments volume +9% constant, cross-border ex intra-Europe +16% constant, processed transactions +11%; revenue up 10% nominal/11% constant, EPS +14% (non-GAAP) .
    • Value-added services momentum (consulting, marketing, risk, issuing solutions): other revenue +32%; management highlighted strong tokenization (12.6B tokens, +44%) improving approval rates and reducing fraud, and progress on A2A risk solutions and Featurespace integration .
    • International transaction revenue grew 14% YoY; U.S. holiday season boosted discretionary categories (retail, travel, entertainment) and lapping of Reg II helped U.S. volumes .
    • Quote: “We delivered 10% net revenue growth, 8% GAAP EPS growth and 14% non-GAAP EPS growth… focused on innovating across consumer payments, new flows and value-added services.” — Ryan McInerney, CEO .

  • What Went Wrong

    • Client incentives +13% (renewal-heavy quarter) weighed on net yields; GAAP opex +22% (severance $213M, lease consolidation $39M, litigation $27M) and equity investment losses ($75M) lifted expenses .
    • Asia Pacific remained muted (~1% payments growth YoY constant in Q1); management expects continued regional softness, impacting cross-border travel growth trajectories .
    • Data processing revenue grew +9%, lagging +11% processed transactions due to pricing cadence back-half loaded for FY25, limiting Q1 yield .
    • Analyst concern: sustainability of cross-border e-commerce/travel mix and crypto-related uplift modest; travel visibility still normalizing; incentives expected to remain elevated in H1 due to renewals .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Revenue ($USD Billions)$8.90 $9.62 $9.51
GAAP EPS ($)$2.40 $2.65 $2.58
Non-GAAP EPS ($)$2.42 $2.71 $2.75
Operating Income ($USD Billions)$5.94 $6.35 $6.23
Operating Margin (%)66.7% 66.0% 65.5%
Effective Income Tax Rate (GAAP)18.6% 16.5% 17.4%
Client Incentives ($USD Billions)$(3.53) $(3.63) $(3.80)
Processed Transactions (Billions)59.3 61.5 63.8

Segment revenue breakdown

Segment ($USD Billions)Q3 2024Q4 2024Q1 2025
Service revenue$3.967 $4.199 $4.208
Data processing revenue$4.489 $4.610 $4.745
International transaction revenue$3.194 $3.468 $3.442
Other revenue$0.780 $0.969 $0.912
Client incentives (contra)$(3.530) $(3.629) $(3.797)
Net revenue$8.900 $9.617 $9.510

KPIs

KPIQ3 2024Q4 2024Q1 2025
Payments volume YoY (constant)+7% +8% +9%
U.S. payments volume YoY+5% +5% +7%
International payments volume YoY+10% +10% +11%
Cross-border excl. intra-Europe YoY (constant)+14% +13% +16%
Processed transactions YoY+10% +10% +11%
Processed transactions (Billions)59.3 61.5 63.8

Non-GAAP and special items (Q1 2025)

  • Special items: severance $213M, lease consolidation $39M, litigation provision $27M; equity investment net losses $75M; amortization of acquired intangibles/acquisition-related costs $80M .
  • Non-GAAP operating expenses $2.917B; non-GAAP non-operating income $41M; non-GAAP tax rate 17.7% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Net Revenue GrowthFY 2025High single to low double digits Low double digits Raised
Adjusted EPS GrowthFY 2025High end of low double digits Low teens Maintained
Tax Rate (Adjusted)FY 202518–18.5% 17.5–18% Lowered
Adjusted Net Revenue GrowthQ2 2025N/AHigh single to low double digits New
Adjusted Operating Expense GrowthQ2 2025N/AHigh single to low double digits New
Non-operating incomeQ2 2025N/ANegligible New
Tax rateQ2 2025N/A~17.5% New
Adjusted EPS GrowthQ2 2025N/AHigh single digits New
Dividend per shareQ1 2025$0.590 (raised in Q4) $0.590 declared (payable Mar 3, 2025) Maintained
Acquisition impactsQ2 2025N/A~1.5pt OpEx contribution; ~0.5pt EPS headwind New
Acquisition impactsFY 2025Minimal revenue impact; ~1pt OpEx; ~0.5pt EPS headwind Minimal revenue impact; ~1pt OpEx; ~0.5pt EPS headwind Maintained

Earnings Call Themes & Trends

TopicPrevious Q-2 (Q3 2024)Previous Q-1 (Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesTokens crossed 10B; VAS risk tools (Visa Protect A2A pilot better fraud detection); genAI enabling products Announced intent to acquire Featurespace; continued VAS expansion; DPS/CyberSource scale highlighted Featurespace closed; tokens 12.6B (+44%); A2A risk pilots expanding to 10 RTP networks; token monetization use cases and benefits detailed Accelerating
Product performance (Tap to Pay, Tap to Phone)Global tap-to-pay ex-US 80%; US >50% and 30 cities above 60% US Tap to Pay 54%, global 82%; transit expansion US Tap to Pay 57%; Tap to Phone live in 118 markets; strong adoption Improving
Regional trendsLatAm/CEMEA/Europe strong; APAC ~flat due to China macro LatAm +24%, CEMEA +19%, Europe +12% payments; APAC <1% growth US +7%; international +11%; APAC just above 1% and still muted Stable outside APAC; APAC muted
Cross-border e-commerce/travelMid-teens growth; travel index recovery continuing; e-com strong E-com +15% vs travel +12%; Asia travel softness; volatility subdued E-com and travel both +16%; crypto uplift modest; strong holiday retail helped Improving sequentially
Regulatory/legalMDL class settlement rejection noted; DOJ complaint disclosed; ongoing engagement DOJ lawsuit response; MDL update; open banking rule opportunity (Tink) US regulatory environment optimism (reduction in burden); tariffs impact unknown; monitoring Ongoing; tone constructive
New flows (Visa Direct, Commercial)Visa Direct +41% txns; commercial +7%; B2B wins and vertical expansion Visa Direct +38% txns; commercial +5%; onetime rebate adjustment benefit in Q4 Visa Direct ~3B txns in Q1; new partnerships (X Money, OnePay); commercial volumes +6% (days mix benefit) Strong; quarter-to-quarter variability

Management Commentary

  • “We had a strong start to our fiscal year with $9.5B in net revenue, up 10% Y/Y and EPS up 14%… payments volume grew 9%… cross-border excluding intra-Europe rose 16%… processed transactions grew 11%.” — Ryan McInerney, CEO .
  • “Fiscal first quarter net revenue was up 10%, higher than our expectations, primarily due to strong international transaction revenue and value-added services revenue… EPS up 14%… tax rate lower than expected.” — Chris Suh, CFO .
  • “Tap to pay penetration in Japan up 20 pts to 44%; Argentina up 22 pts to 78%; US up 13 pts to 57%.” — Ryan McInerney .
  • “We now expect full year adjusted net revenue growth to be in the low double digits… lowering expected tax rate to 17.5%–18%… adjusted EPS growth in the low teens.” — Chris Suh .
  • “We are piloting Visa Protect for A2A with 5 significant players in Brazil… closed our acquisition of Featurespace to provide an expanded set of fraud prevention tools.” — Ryan McInerney .

Q&A Highlights

  • Outlook drivers and sustainability: Management sees strong U.S. holiday and lapping Reg II aiding volumes; will update H2 closer to period (cautious on extrapolation) .
  • Cross-border mix: Visa Direct cross-border is growing faster than total Visa Direct, but remains a small portion; crypto uplift to cross-border e-commerce modest .
  • Value-added services emphasis: No change in prioritization; expanding off-network services; token-enabled monetization examples on both merchant and issuer sides .
  • Tariffs/macro/regulatory: No direct tariff-driven spend impact observed; optimistic on U.S. regulatory simplification; APAC outlook remains muted .
  • Incentives cadence: Renewal cycle heavy in H1 FY25; incentives growth stepped up (13% in Q1) with Q2 to continue reflecting renewals .

Estimates Context

  • S&P Global consensus EPS and revenue for Q1 2025 were unavailable due to data access limitations; therefore, we cannot quantify beats/misses vs Street consensus at this time. Management indicated Q1 net revenue and EPS were above internal expectations due to stronger international transaction revenue, VAS, and a lower-than-expected tax rate .
  • Note: We attempted to fetch S&P Global estimates but encountered an access limit error; as a result, consensus comparisons are unavailable.

Key Takeaways for Investors

  • Strong Q1 print anchored by cross-border (+16% constant) and processed transactions (+11%) with net revenue +10% and non-GAAP EPS +14%; VAS momentum remains a multi-year growth lever .
  • Guidance raised for FY25 adjusted net revenue (low double digits) and tax rate lowered to 17.5–18%, implying EPS tailwind vs prior view; near-term Q2 guide is solid albeit below Q1 due to leap-year lap and incentives cadence .
  • Pricing impact back-half loaded in April should lift data processing yields sequentially; watch for uplift in H2 alongside lower FX volatility drag .
  • APAC remains a watch item; Latin America, CEMEA, Europe are strong; U.S. discretionary categories healthy; cross-border travel improving broadly but corridor normalization continues .
  • Tokenization scale (12.6B tokens) and Featurespace integration enhance fraud mitigation and monetization of VAS; expect continued AI-enabled product rollouts to differentiate and support yields .
  • Incentives are elevated in H1 FY25 due to heavy renewals; monitor yield impact and the mix of value-in-kind incentives tied to VAS adoption .
  • Near-term catalysts: Investor Day (Feb 20) for strategic detail, April pricing cadence, and continued VAS/new flows announcements .

Additional Relevant Press Releases (Context)

  • Visa completes acquisition of Featurespace (Dec 19, 2024): strengthens AI fraud prevention suite to protect customers in real time .
  • Visa Direct to make funds available in U.S. cardholders’ bank accounts in one minute or less starting April 2025 (Dec 12, 2024): enhances money movement speed across 11B endpoints .
  • Tap to Phone adoption surged 200% YoY worldwide; expanding tap capabilities and new use cases (Mar 3, 2025) .
  • Visa unveils Scam Disruption Practice; prevented $350M in attempted fraud in 2024; PERC blocked $40B in attempted fraud last year (Mar 11, 2025) .

Disclosures and Notes

  • All figures, trends, and quotes are sourced from Visa’s Q1 FY25 8-K earnings release and earnings call, and prior quarter releases/calls, with citations per cell or statement.
  • Non-GAAP adjustments and constant-currency metrics are as defined by Visa; margins presented are derived from cited operating income and net revenue figures .
  • S&P Global Street estimates were not retrievable; comparison to consensus is not provided due to access limitations.