Visa Inc. Presents at Wolfe Research FinTech Forum 2024, Mar-14-2024 09:20 AM - NYSE:V

NYSE:V

Christopher Suh, the Chief Financial Officer of Visa Inc., discussed several topics during the presentation at the Wolfe Research FinTech Forum 2024. Here’s a detailed summary of his statements:

On His Tenure and Learning Experience

• Tenure: Christopher Suh has been the CFO of Visa since August, which amounts to about 9 months.
• Learning Experience: He mentioned that he is new to the industry but has spent nearly 30 years in tech, mostly at Microsoft. He expressed enthusiasm about the great company, market position, people, culture, and the significant growth opportunities.

On Challenges and Growth Opportunities

• Growth Opportunity: Visa faces a significant growth opportunity across consumer payments, value-added services, and new flows.
• Challenges: The challenge lies in making good decisions to prioritize investments and identify the biggest bets to pursue.

On Payment Volume Trends

• Payment Volume Growth: Payment volume growth through February 21 was relatively stable compared to Q1, both in the U.S. and major markets worldwide.
• Cross-Border Business: Cross-border business also showed relative stability in the first half of Q2, indicating that weather-related issues in January had abated.

On Consumer Behavior

• Consumer Resilience: Consumers remain resilient, with stable spending across different categories and geographies.

On Cross-Border Travel

• Travel Growth: Total cross-border volumes grew 16% in Q1, with travel growing 19% and e-commerce performing better than expected.
• Regional Strength: Certain regions like Latin America, Europe, and CEMEA have continued to grow strongly, with travel volumes exceeding pre-pandemic levels.
• Improvement Areas: Inbound travel to the U.S. and travel in and out of Asia improved in Q1 compared to Q4, although Asia’s recovery was slightly slower.

On Payment Volume Growth

• Full-Year Expectations: Visa expects low double-digit payment volume growth for the year, driven by transaction growth and ticket size improvements.
• Transaction Growth: Transactions grew 9.4% in Q1, with strong performance in the U.S. and internationally, particularly in Latin America.
• Ticket Size Environment: Ticket sizes in the U.S. were negatively impacted by declining fuel prices and moderating inflation, but are expected to turn flat to positive in the second half of the year.

On Revenue Growth

• Revenue Guidance: The guidance implies an accelerated revenue growth rate in the second half of the year compared to the start, with a potential exit rate of around 12%.
• Revenue Drivers: The drivers include normalized growth in the second half, lapping FX volatility and other one-time factors from the first half.

On Growth Pillars

• Consumer Payments: Visa sees a massive amount of cash and checks globally to digitize, driving growth in credentials, acceptance locations, and engagement.
• Value-Added Services: This segment generated $2.1 billion in Q1, growing 20% across various services, with substantial runway ahead.
• New Flows: This segment focuses on expanding money movement beyond traditional consumer-to-business transfers, tapping into a $200 trillion market opportunity.

On Value-Added Services

• Diverse Business: The VAS segment is diverse, comprising five lines of business including issuing solutions, acceptance solutions, risk and identity, advisory, and open banking.
• Key Businesses:
  • Issuing solutions (DPS, card benefits, Buy Now Pay Later services).
  • Acceptance solutions (CyberSource, fraud services).
  • Risk and identity (Visa Advanced Authorization, Visa Risk Monitoring).
  • Advisory (consulting and marketing services).
  • Open banking (leveraging Tink acquisition).

On Acquisitions

• Pismo Acquisition: Pismo is a cloud-native issuer processor for debit, credit, and commercial, complementing Visa’s existing services.
• Prosa Stake: Visa announced taking a majority stake in Prosa, a Mexican payment processor, enabling domestic processing in a cash-heavy market.

On New Flows

• B2B Opportunity: Visa sees a significant opportunity in B2B payments.
• Visa Direct: Visa Direct experienced 20% transaction growth in Q1, with a focus on expanding money movement beyond consumer-to-business transactions.
• Cross-Border Focus: Cross-border transactions are a growing focus area, with higher yields and strong growth.

On Competitive Landscape

• RTP Networks: Visa works alongside RTP networks, recognizing the unique value it brings through robust services and safeguards.

On Class B Conversion

• Conversion Process: Visa is in the later stages of the SEC review process for the Class B conversion. After SEC approval, the offer will be opened publicly for a minimum of 20 business days.
• Eligible Shares: Approximately half of the $96 billion total of Class B shares are eligible for conversion.

On Regulatory Impact

• Reg II Impact: The impact of Reg II on U.S. debit volumes was modest and stable in the first quarter. Visa differentiates itself through its capabilities, such as dual message support, liability differences, tokenization, and fraud protection.

On Goals for the Year

• Financial and Operational Goals: Delivering on the financial plan and executing on operational priorities are key goals.

• Planning for Next Fiscal Year: Prioritizing investments and identifying the biggest bets for the next fiscal year is a critical strategic activity.