Visa Inc. V reported first-quarter fiscal 2025 earnings per share (EPS) of $2.75, which outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year.
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Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%.
The strong quarterly results benefited from resilient consumer spending during the holiday season, higher processed transactions, payments, and cross-border volumes. However, the upside was partly offset by increased operating expenses, primarily general and administrative and personnel costs.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Q1 Business Drivers of Visa
Visa's payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter due to expanding operations across Canada, the United States, Asia Pacific, Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion. The metric beat the Zacks Consensus Estimate and our estimate of 63.2 billion.
On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis.
Visa’s Q1 Operational Performance
Service revenues (depending on payments volume in the previous quarter) increased 8% year over year to $4.2 billion in the December quarter, attributable to expanding payment volumes. However, the metric missed the consensus mark of $4.23 billion and our estimate of $4.24 billion.
Data processing revenues of $4.75 billion grew 9% year over year, but the metric fell short of the Zacks Consensus Estimate of $4.79 billion.
International transaction revenues rose 14% year over year to $3.44 billion in the fiscal first quarter, driven by higher cross-border volume. The metric also beat the consensus mark of $3.39 billion and our estimate of $3.42 billion. Other revenues were $912 million, which climbed 32% year over year and surpassed our estimate of $837.5 million.
Client incentives (a contra-revenue item) increased 13% year over year to $3.8 billion but were lower than the Zacks Consensus Estimate of $3.9 billion. The metric accounted for 28.5% of the company’s gross revenues of $13.3 billion.
Adjusted operating expenses of $2.92 billion escalated 11% year over year due to higher general, administrative, and personnel costs. This was higher than our estimate of $2.89 billion. However, interest expenses fell 2.7% year over year to $182 million.
Visa’s Balance Sheet (as of Dec. 31, 2024)
Visa exited the December quarter with cash and cash equivalents of $12.4 billion, which rose 3.3% from the fiscal 2024-end level.
Total assets of $91.9 billion decreased 2.8% from fiscal 2024-end.
Visa’s long-term debt amounted to $16.7 billion, declining 19.9% from the figure as of Sept. 30, 2024.
Total equity declined 1.1% from the fiscal 2024-end figure to $38.3 billion.
V’s Cash Flows
The company generated net cash from operations of $5.4 billion in the fiscal first quarter, which rose 49.3% year over year. Free cash flows were recorded at $5.1 billion, up 50.9% year over year.
Visa’s Capital Deployment Update
Visa rewarded $5.1 billion to shareholders via share buybacks ($3.9 billion) and dividends ($1.2 billion) in the December quarter. V had leftover authorized funds of $9.1 billion under its repurchase program as of Dec. 31, 2024.
The quarterly cash dividend, amounting to 59 cents per share, will be paid on March 3, 2025, to shareholders of record as of Feb. 11.
Visa’s Fiscal 2Q25 Outlook
On an adjusted constant-dollar basis, net revenues are anticipated to witness high single-digit to low double-digit growth. Operating expenses are estimated to grow high single digit to low double digits on an adjusted constant-dollar basis. It expects EPS to witness high single-digit growth.
Visa’s Fiscal 2025 View
Management estimates net revenues to witness low-double-digit growth on an adjusted constant-dollar basis in fiscal 2025. Operating expense is also expected to witness high single-digit to low double-digit growth on an adjusted constant-dollar basis. Management also anticipates EPS will witness growth in the low teens.
The amortization of acquired intangible assets is projected at around $205 million, or 8 cents per share. Acquisition-related costs are expected to be roughly $100 million or 4 cents per share.
V’s Zacks Rank & Key Picks
Visa currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Business Services space are OppFi Inc. OPFI, Fidelity National Information Services, Inc. FIS and Affirm Holdings, Inc. AFRM. While OppFi currently sports a Zacks Rank #1 (Strong Buy), Fidelity National and Affirm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for OppFi’s 2024 bottom line is pegged at 86 cents per share, up from 51 cents a year ago. The consensus estimate for OPFI’s 2024 top line is pegged at $520 million, suggesting 2.2% year-over-year growth. OPFI beat earnings estimates in each of the trailing four quarters, with an average surprise of 67.7%.
The Zacks Consensus Estimate for Fidelity National’s current-year earnings is pegged at $5.18 per share, which remained stable over the past week. FIS beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 8.2%. The consensus estimate for current-year revenues is pegged at $10.2 billion.
The Zacks Consensus Estimate for Affirm’s current-year earnings indicates a 62.9% improvement from the year-ago period. AFRM beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 17.8%. The consensus mark for current-year revenues suggests a 33.7% year-over-year increase.
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