- Key insights: The payments giant is counting on the FIFA World Cup this summer for windfalls in its consumer and commercial businesses.
- What's at stake: Visa posted its strongest quarter of revenue growth since 2022 in its second fiscal quarter.
- Forward look: Long-term, agentic commerce is creating a whole new ecosystem to attach itself, Visa CEO Ryan McInerney said on a call with analysts.
Visa posted its strongest quarterly revenue growth since 2022 in its second fiscal quarter of the year, and sought to project a clear runway for continued short- and long-term growth.
Revenue for Visa's second fiscal quarter ended March 31 hit $11.2 billion, an increase of 17% from the same period last year thanks to growth in payments volume, cross-border volume, and processed transactions.
Consumers continued to spend during the quarter. Payments volume increased 9% on a constant-dollar basis, and cross-border volume excluding transactions within Europe increased 11% on a constant-dollar basis. Total processed transactions grew 9% to 66.1 billion transactions.
The better-than-expected quarter led to an increase in Visa outlook for the rest of its fiscal year, Chief Financial Officer Chris Suh said on the call with analysts Tuesday. Visa now expects revenue to grow in the low-double digits to low-teens.
Suh acknowledged "near-term uncertainty" for cross-border payments in the CEMEA region due to the war in the Middle East, but said that it expected improvements in inbound travel to the U.S. from Latin America thanks to the World Cup would help offset those declines.
The World Cup begins in June, and more than 1.2 million people are expected to travel to the U.S., according to Tourism Economics.
"With FIFA, we have already seen increased activation of cards, spend and engagement from our clients," Visa Ryan McInerney said. Visa has already benefited from increased spending this year
Daniel Perlin, managing director at RBC Capital Markets said in a research note that he expects cross-border volumes to face near-term pressure if macro volatility persists, and that geopolitical pressures were not yet showing a meaningful impact on consumer spending trends.
"Visa's possible exposures are both positive and negative in that higher oil prices and inflation in general can prove to be good given part of Visa's revenue model is based on the percent of the average ticket," he said.
Eyes on agentic
In the long-term, Visa is counting on the developing agentic commerce industry to help keep its revenue machine churning.
"Just like the advent of e-commerce and mobile commerce, agentic commerce will increase economic growth generally," McInerney said. "Third parties estimate we are looking at a boost of 80 to 150 basis points of incremental GDP growth from AI, and when GDP grows, spending grows and digital payments transactions grow."
Agentic transactions bring new complexities to payment security, and Visa expects to capitalize on its scale to manage transaction risk, identity risk, and fraud in the new ecosystem using its token technology. It's also hoping to capitalize on agent micro-transactions.
"Agents will create significantly more transactions," McInerney said. "In some use cases, we expect agents will pay for their own data and resource consumption, transaction by transaction and event by event, which creates an entirely new category of commerce with micro transactions," he said.
Visa earnings, by the numbers
Net income tallied $6 billion, or $3.14 per diluted share, a 32% increase, largely due to a lower litigation provision when compared with the prior year. Adjusted EPS came in at $3.31 per diluted share. Analysts expected $3.10 per diluted share, according to S&P CapitalIQ.
The precipitous drop in litigation provision – $311 million this quarter versus $992 million in Q2 of last year – pushed down operating expenses by 4% to $4 billion. On an adjusted basis, operating expenses increased 17% to $3.6 billion due to marketing and personal costs.
Consumers continued to spend during the quarter. Payments volume increased 9% on a constant-dollar basis, and cross-border volume excluding transactions within Europe increased 11% on a constant-dollar basis. Total processed transactions grew 9% to 66.1 billion transactions.
In the U.S., credit transactions grew by 10% on a constant-dollar basis, and debit transactions grew by 7%. Visa Direct transactions grew 23% year over year to 3.7 billion transactions.
Service revenue, which is generated from payments volume in the
