PWW

Portfolio AI Insights

pww.comVisa Inc., Q4 2024 Earnings Call, Oct 29, 2024 - NYSE:V

NYSE:V

Jennifer Como [Head of Investor Relations] 💬

Jennifer Como, Head of Investor Relations, welcomed participants to Visa's Fiscal Fourth Quarter and Full Year 2024 Earnings Call. She introduced Ryan McInerney, Visa's CEO, and Chris Suh, Visa's CFO. Jennifer highlighted that the call is being webcast on the Investor Relations section of Visa's website, and a replay will be available for 30 days. She also noted that the presentation includes forward-looking statements and referred to the company's annual report on Form 10-K and subsequent reports for additional information. Jennifer then turned the call over to Ryan McInerney.

Ryan M. McInerney [President, CEO & Director] 💬

**- Fourth Quarter Results: Strong performance with $9.6 billion in net revenue, up 12% year-over-year, and EPS up 16%.

  • Payment Volumes: Overall payments volume grew 8% year-over-year, U.S. payments volume grew 5%, and international payments volume grew 10%.
  • Cross-Border Volume: Excluding intra-Europe, cross-border volume rose 13%.
  • Processed Transactions: Grew 10% year-over-year.
  • Product and Innovation:
    • Increased credentials and acceptance, with over 4.6 billion credentials and 11.5 billion tokens.
    • Renewed agreements with Cantaloupe, Albert Heijn, and AppFolio.
    • Launched Visa A2A for account-to-account payments, collaborating with NatWest, Nationwide Building Society, and fintechs.
    • Expanded tap-to-pay solutions, with global penetration excluding the U.S. at 82% and U.S. penetration at 54%.
  • Deal Highlights:
    • Renewals with major clients in Latin America, Asia Pacific, CEMEA, and North America.
    • Strategic agreement renewal with Intesa Sanpaolo in Europe.
    • Signed over 650 commercial partnerships with fintechs.
  • New Flows:
    • Revenue grew 22% year-over-year.
    • Visa Direct transactions grew 38% to 2.8 billion.
    • Commercial volumes grew 5% year-over-year.
    • Virtual card issuing deal with JPMorgan Chase in Europe.
    • Partnership with Adyen for B2B travel solutions.
  • Value-Added Services:
    • Revenue up 22% in the fourth quarter and full year.
    • Pismo, a core banking and issuer processing platform, renewed with Itaú in Brazil.
    • Intent to acquire Featurespace for real-time AI payments protection.
    • Foodpanda to use AI-powered data token solution.
    • Visa Consulting and Analytics delivered over 3,000 consulting engagements.
  • Regulatory and Legal:
    • Confident in defending against the Department of Justice lawsuit.
  • Future Outlook:

    • Exceeded the goal of new flows and value-added services revenue representing more than 30% of net revenue by the end of 2024.

    • Hosting another Investor Day on February 20, 2025, to discuss future strategies.**

Christopher Suh [Chief Financial Officer] 💬

**- Q4 2024 net revenue grew 12% year-over-year, above expectations, driven by lower-than-expected incentives, stronger-than-expected other revenue, and FX being less of a drag than expected.

  • EPS was up 16% year-over-year and 17% in constant dollars, higher than expected due to strong net revenue performance and a lower-than-expected tax rate.

  • U.S. payments volume grew 5% year-over-year, in line with Q3. Credit and debit each grew 5%. Card-present volume grew 2%, and card-not-present volume grew 6%.

  • International payments volume was up 10% in constant dollars, stable to Q3, with strong growth in Latin America (24%), CEMEA (19%), and Europe (12%). Asia Pacific payments volume grew less than 1% year-over-year, primarily due to macroeconomic conditions in Mainland China.

  • Cross-border volume, excluding intra-Europe, was up 13% in Q4, below Q3, in line with expectations. Cross-border e-commerce grew 15%, faster than cross-border travel volume growth at 12%.

  • Service revenue grew 8% year-over-year, data processing revenue grew 8%, and international transaction revenue was up 9%.

  • Other revenue grew 30%, primarily driven by marketing services revenue related to the Olympics, consulting, and pricing.

  • Client incentives grew 6%, the lowest annual growth due to lapping significant renewals from the prior year and some one-time adjustments.

  • Value-added services revenue grew 22% in constant dollars to $2.4 billion, led by strong growth in marketing services, consulting, and issuing solutions.

  • Operating expenses grew 11%, led by increases in marketing and personnel expenses.

  • EPS was $2.71, up 16% over last year, with a 1-point drag from exchange rates and a 0.5-point drag from Pismo.

  • In Q4, Visa bought back approximately $5.8 billion in stock and distributed over $1 billion in dividends.

  • For fiscal 2025, Visa expects payments volume and processed transaction growth to remain strong and generally in line with full year 2024 levels.

  • Cross-border volumes are expected to follow the Q4 '24 trend, with card-not-present excluding travel volume growing slightly more than travel volume.

  • Adjusted net revenue growth for 2025 is expected to be in the high single to low double digits, with incentives being the key driver of the difference between 2024 and 2025.

  • Adjusted operating expense growth is expected to be in the high single digit to low double digits.

  • Nonoperating income is expected to be between $150 million and $200 million, and the tax rate is expected to be between 18% and 18.5%.

  • For Q1 2025, adjusted net revenue growth is expected to be in the high single digits, with a significant step-up in incentives and less pricing impact in the first half of the year.

  • Adjusted EPS growth for Q1 is expected to be in the low double digits.**

Feedback