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VI

VISA INC. (V)·Q2 2025 Earnings Summary

Executive Summary

  • Visa delivered a clean beat: Q2 FY25 non-GAAP EPS of $2.76 vs $2.68* consensus and net revenue of $9.59B vs $9.55B*; constant-currency revenue growth was 11% with solid drivers in payments volume (+8% cc), cross‑border (+13% cc), and processed transactions (+9%) .
  • Value-Added Services accelerated to 22% growth and reached $2.6B, helping offset FX and mix headwinds in international transaction revenue; incentives were lower than expected in Q2, providing a modest tailwind .
  • GAAP results reflected a $1.0B litigation provision (MDL), lifting GAAP opex +22% and trimming GAAP net income (-2% y/y), while non‑GAAP EPS still grew 10% y/y; Board authorized a new $30B buyback and declared a $0.590 dividend payable June 2, 2025 .
  • Guidance: Q3 adjusted revenue growth low double-digits, adjusted opex low double-digits, non‑op income ~+$150M, tax rate 17.0–17.5%, and adjusted EPS growth in the high teens; full-year adjusted revenue, opex, tax, and EPS growth guidance unchanged. Pricing benefits remain back‑end loaded; incentives to step up sequentially in 2H .

Note: All items marked with * are S&P Global consensus values. Values retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • EPS and revenue beat: Non-GAAP EPS $2.76 vs $2.68* and net revenue $9.59B vs $9.55B*, aided by resilient consumer spend and lower-than-expected incentives .
    • VAS momentum: “Value-added services revenue growth accelerated to 22% in constant dollars to $2.6 billion,” led by Issuing Solutions and Advisory & Other, inclusive of Featurespace .
    • Product/tech execution: Tokenization scaled to 13.7B tokens; nearly 50% of global e‑commerce transactions are tokenized; Tap to Pay penetration reached 76% globally (U.S. >60%), underscoring conversion and fraud benefits .

  • What Went Wrong

    • GAAP headwind from litigation: $992M litigation provision drove GAAP opex +22% and GAAP net income down 2% y/y in Q2 .
    • FX and mix pressure: International transaction revenue grew 10%, below +13% cross-border cc volume, due to FX, client mix and lower y/y hedging gains versus last year .
    • Travel moderation: Growth in certain travel corridors (e.g., Canada→U.S.) softened and currencies in parts of LAC and Asia weighed on cross‑border; management assumes Q3/Q4 cross‑border slightly below Q4’24 levels .

Financial Results

Headline P&L and Margins

MetricQ4 2024Q1 2025Q2 2025
Net Revenue ($B)$9.62 $9.51 $9.59
GAAP Net Income ($B)$5.32 $5.12 $4.58
GAAP EPS ($)$2.65 $2.58 $2.32
Non-GAAP EPS ($)$2.71 $2.75 $2.76
Operating Income ($B)$6.35 $6.23 $5.44
EBIT Margin %66.1%*68.7%*67.1%*

Note: * Values retrieved from S&P Global.

Revenue Components (Q2 FY25)

ComponentQ2 2025 ($B)YoY
Service Revenue$4.399+9%
Data Processing$4.701+10%
International Transaction$3.291+10%
Other Revenue$0.937+24%
Client Incentives$(3.734)+15%
Net Revenue$9.594+9% (11% cc)

KPIs and Operating Drivers

KPIQ4 2024Q1 2025Q2 2025
Payments Volume (cc YoY)+8% +9% +8%
Cross‑Border ex Intra‑Europe (cc YoY)+13% +16% +13%
Processed Transactions (YoY / Count)+10% / 61.5B +11% / 63.8B +9% / 60.7B
Value‑Added Services Revenue ($B)$2.4; +22% (cc) $2.4; +18% (cc) $2.6; +22% (cc)
Client Incentives (YoY)+6% +13% +15%

Actuals vs Consensus (EPS & Revenue)

MetricQ4 2024Q1 2025Q2 2025
EPS (Actual)$2.71 $2.75 $2.76
EPS (Consensus Mean)*$2.575$2.661$2.680
Revenue (Actual, $B)$9.617 $9.510 $9.594
Revenue (Consensus Mean, $B)*$9.491$9.339$9.549

Note: * Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Net Revenue GrowthQ3 FY25n/a (Q2 guide: high single to low double digits) Low double digits (in line with Q2) New quarterly detail
Adjusted Operating Expense GrowthQ3 FY25n/a (Q2 guide: high single to low double digits) Low double digits New quarterly detail
Non‑Operating IncomeQ3 FY25“Negligible” in Q2 ~+$150M (includes interest reversal) Raised
Tax RateQ3 FY25~17.5% (Q2) 17.0–17.5% Slightly lower midpoint
Adjusted EPS GrowthQ3 FY25n/a (Q2 guide: high single digits) High teens Raised vs prior quarter
Full‑Year Adjusted Net RevenueFY25Low double digits Unchanged Maintained
Full‑Year Adjusted Opex GrowthFY25High single to low double digits (FY25 planning) Unchanged Maintained
Full‑Year Tax RateFY2517.5–18.0% Unchanged Maintained
Full‑Year Adjusted EPS GrowthFY25Low teens Unchanged Maintained
Pricing Contribution TimingFY25Back‑half weighted Back‑half weighted (unchanged) Maintained
Incentives CadenceFY25 2HQ1: renewal-heavy; Q2: still elevated Step‑ups in Q3 and Q4; 2H growth > 1H Raised 2H cadence
DividendQ2Declared $0.590 (pay 6/2/25) —Maintained run-rate

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/Tech & ProductQ4: Announced Intent to acquire Featurespace; strong token adoption; Visa A2A plan for 2025 . Q1: 12.6B tokens; Tap to Pay U.S. 57%; engineering productivity via AI .New Authorize.net with AI agent; unified checkout; 13.7B tokens; Product Drop focused on AI .Accelerating launches; deepening AI usage.
Cross‑Border TravelQ4: +12% travel; APAC softness; FX drag . Q1: +16% total; both e‑com and travel +16% .+13% total; travel +12%; Canada→U.S. softer; FX and hedging/mix impacted revenue yield .Moderating vs Q1; still above pre‑COVID trend.
Value‑Added ServicesQ4: +22% to $2.4B . Q1: +18% to $2.4B .+22% to $2.6B; Issuing & Advisory led; Featurespace integration .Re-accelerating growth; scaled revenue.
Stablecoins/Tokenized AssetsQ4: Little emphasis. Q1: Crypto modest benefit to cross‑border e‑com .7‑day stablecoin settlement surpassed $200M; Tokenized Asset Platform; BBVA pilot .Early traction; increased focus.
Macro/TariffsQ4: FY25 built assuming stable macro; volatility no longer a drag post Q2 FY25 . Q1: Not economic forecasters; watch tariffs .Consumer spend resilient; tariff uncertainty acknowledged; assumptions embedded; FX vol high in April .Stable demand; watch FX and policy.
Regulatory/LegalQ4: DOJ lawsuit disclosed . Q1: Regulatory changes could be constructive for FIs .Government engagement and nationalism risk managed via local strategies .Ongoing management of legal/reg frameworks.

Management Commentary

  • “Visa’s strong 9% fiscal second quarter net revenue growth was driven by healthy trends in payments volume, cross-border volume and processed transactions.” — CEO Ryan McInerney .
  • “Value-added services revenue growth accelerated to 22% in constant dollars to $2.6 billion… inclusive of Featurespace.” — CFO Chris Suh .
  • “Tap to Pay penetration is now at 76% globally with the U.S. passing 60% for the first time… nearly 50% of our e‑commerce transactions globally are tokenized.” — CEO Ryan McInerney .
  • “We expect third quarter adjusted net revenue growth in the low double digits… adjusted EPS growth to be in the high teens.” — CFO Chris Suh .

Q&A Highlights

  • Cross‑border/travel outlook: Management cited FX weakness (LAC, parts of Asia), Ramadan/Easter timing, and a softer Canada→U.S. corridor; modeled Q3/Q4 cross‑border growth slightly below Q4’24 by averaging March/April .
  • Incentives cadence: Q2 incentives +15% but below internal plan on deal timing; expect sequential step‑ups in Q3 and Q4 and 2H growth higher than 1H .
  • Pricing timing: Contribution to growth remains back‑half weighted in FY25, consistent with start‑of‑year plans .
  • FX and revenue yield: International transaction revenue grew below cross‑border cc volume due to FX, client mix and lower y/y hedge gains .
  • Stablecoins: $200M of cumulative stablecoin settlement volume; BBVA pilot planned; still early but potential depends on regulatory clarity .

Estimates Context

  • Q2 FY25 beats: EPS $2.76 vs $2.68* and revenue $9.59B vs $9.55B*; Q1 FY25 also beat EPS and revenue; Q4 FY24 beat as well .
  • Post‑print, street models may adjust: (1) increase VAS trajectory, (2) reflect higher 2H incentives cadence, (3) modestly trim international revenue yield for FX/mix, (4) incorporate Q3 non‑op +$150M and lower tax rate .

Note: * Values retrieved from S&P Global.

Consensus vs Actuals (detail)

QuarterEPS (Actual)EPS (Consensus Mean)*Revenue (Actual, $B)Revenue (Consensus Mean, $B)*# EPS Est.*# Rev Est.*
Q4 2024$2.71 2.575$9.617 9.4912726
Q1 2025$2.75 2.661$9.510 9.3392725
Q2 2025$2.76 2.680$9.594 9.5492826

Note: * Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core engine remains healthy: broad-based volume growth, resilient consumer spend, and steady processed transactions underpin mid‑teens adjusted EPS growth outlook into Q3 .
  • Mix shift opportunity: VAS re‑acceleration to $2.6B highlights durable, higher‑quality growth beyond core transactions, partially insulating FX/mix pressure in international revenues .
  • Near‑term model watch‑outs: step‑ups in incentives in 2H, FX volatility, and slightly softer travel corridors may cap revenue yield even as volumes hold .
  • Capital returns robust: new $30B buyback authorization plus ongoing dividends support TSR while GAAP noise from litigation provisions is non‑operational on a non‑GAAP basis .
  • Product/AI roadmap is a catalyst: upcoming product releases (Authorize.net relaunch, unified checkout) and AI‑enabled services can bolster conversion, fraud management, and monetization over time .
  • Stablecoin optionality: early but progressing (settlement volume and bank pilot); upside lever contingent on regulatory clarity .
  • Bottom line: Beat-and-raise quarter at the intra‑quarter level (Q3 outlook stronger than Q2 guide), full‑year unchanged with healthier VAS momentum—supportive for sentiment, with FX/incentives the key variables to track .