Visa Inc. (V) 2024 Q3 Earnings Call Summary

Optimistic Highlights

• Strong Q3 Results: Visa reported $8.9 billion in net revenue, a 10% year-over-year increase, and EPS up 12%. Payments volume grew 7% year-over-year, with U.S. payments volume up 5% and international payments volume up 10%.

• High Global Net Promoter Score: Visa achieved a Global Net Promoter Score of 76, up three points from last year, indicating strong client satisfaction across all regions.

• Significant Partnerships and Expansions: Visa expanded and renewed key partnerships globally, including with Lloyds Banking Group, NatWest, Raiffeisen Bank International AG, KB Kookmin Card, Banco de Credito de Peru, and Wells Fargo, enhancing its consumer payments and new flows offerings.

• Brand Engagement and Co-brand Partnerships: Visa leveraged its brand for the Olympic Games, resulting in nearly 6 million Olympic and Paralympic-branded Visa cards in Europe. New co-brand cards were launched with Adani One and ICICI Bank in India, and a partnership with Unicomer in Latin America was established.

• Growth in New Flows and Value-Added Services: New flows revenue grew 18% year-over-year, with Visa Direct transactions up 41%. Value-added services revenue increased by 23%, driven by issuing solutions, acceptance solutions, and advisory services.

Pessimistic Highlights

• Moderation in U.S. Payments Volume Growth: U.S. payments volume growth slightly moderated, with a slight deceleration observed in July due to factors such as weather and a major tech outage.

• Challenges in Asia Pacific: Payments volume growth in Asia Pacific slowed, primarily due to the macroeconomic environment in Mainland China.

• Settlement Rejection: The court rejected the settlement reached for the injunctive relief class, which Visa had believed provided meaningful relief to all merchants.

Company Outlook

• Q4 Expectations: Visa anticipates payments volume and processed transactions to grow at a similar rate to Q3, with total cross-border volume growth expected to be slightly below Q3 levels. Adjusted net revenue growth is expected in the low double digits for Q4, with a full-year low double-digit adjusted net revenue growth.

Q & A Highlights

• U.S. Volume Growth and Revenue Capability (Darrin Peller, Wolfe Research)

  A: Visa observed stable growth in U.S. payments volume in Q3, with a slight deceleration in July. Despite this, Visa's diverse revenue streams, including value-added services and cross-border transactions, enable it to maintain low double-digit revenue growth.

• Incentives Growth Rate (Bryan Keane, Deutsche Bank)

  A: Incentives are expected to have their lowest growth rate in Q4, influenced by the volume of renewals and client performance. Details for FY 2025 will be shared in the next earnings call.

• Cyclicality of VAS and Pricing for Value (Ken Suchoski, Autonomous Research)

  A: Visa's value-added services (VAS) growth is driven by both Visa transactions and non-Visa transactions. The company continues to price for value based on the benefits delivered to clients, indicating room for growth and resilience in the business.

• U.S. Transaction Size Acceleration (Tien-Tsin Huang, JPMorgan)

  A: Average transaction size (ATS) in the U.S. showed slight improvement in Q3 and is expected to continue improving in Q4, with fuel prices being a variable to watch.

• Contactless Payments Penetration (Gus Gala, Monness, Crespi, Hardt)

  A: Tap to Pay penetration is high globally, with 80% of face-to-face transactions outside the U.S. being contactless. In the U.S., penetration has surpassed 50%, with significant growth in major cities like New York.

• Litigation Impact on Ecosystem (Will Nance, Goldman Sachs)

  A: Visa is pursuing a revised settlement following the court's rejection of the previous settlement for the injunctive relief class. The company emphasizes the complexity of the payment ecosystem in its response.

• Value In-Kind Incentives and Revenue Recognition (Timothy Chiodo, UBS)

  A: Value in-kind incentives are recognized as contra revenue when granted and as revenue when utilized by clients for services, reflecting Visa's strategy to offer value through its services.

• Near-Term Trends and Credit vs. Debit Growth (James Faucette, Morgan Stanley)

  A: Visa observed a slight moderation in credit growth compared to debit in the U.S., attributing it to various factors without indicating a trend. The company remains focused on delivering value across payment types.

• New Flows Growth and Sustainability (Bryan Bergin, TD Cowen)

  A: Visa's new flows revenue grew 18% year-over-year, with Visa Direct transactions up 41%. The company sees early stages of growth in this area, with a focus on expanding use cases and partnerships.

• U.S. Growth Algorithm and Secular Digitization Opportunity (Harshita Rawat, Bernstein)

  A: Visa sees a $20 trillion opportunity in consumer payments globally, with a quarter of that in the U.S. The company is focused on expanding acceptance, driving e-commerce growth, and innovating new products to capture this opportunity.