Visa Inc. (V Quick QuoteV - Free Report) reported first-quarter fiscal 2024 earnings per share of $2.41, which outpaced the Zacks Consensus Estimate of $2.33 by 3.4%. The bottom line rose 11% year over year.

Net revenues improved 9% year over year to $8.6 billion in the quarter under review. The top line beat the consensus mark by 1.5%.

The quarterly results benefited on the back of expanding payments volume, cross-border volume and processed transactions. Strong consumer spending and a decline in overall expenses drove Visa’s performance. However, the upside was partly offset by an increase in client incentives.

Q1 Business Drivers

Visa's payments volume increased 8% year over year on a constant-dollar basis in the fiscal first quarter, attributable to expanding operations across Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by V) grew 9% year over year to 57.5 billion but missed our estimate of 57.6 billion.

On a constant-dollar basis, the cross-border volume of Visa climbed 16% year over year in the quarter under review. 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.

Q1 Operational Performance

Service revenues of $3.9 billion grew 11% year over year in the December quarter on the back of improved payment volumes. The figure surpassed our estimate of $3.8 billion. Data processing revenues of the company climbed 14% year over year to $4.4 billion, which beat the Zacks Consensus Estimate of $4.3 billion and our estimate of $4.2 billion.

International transaction revenues amounted to $3.02 billion, which improved 8% year over year in the fiscal first quarter. The metric benefited from increased cross-border volume but missed the consensus mark of $3.06 billion and our estimate of $3.1 billion. Other revenues rose 18% year over year to $692 million, which beat the Zacks Consensus Estimate of $678 million and our estimate of $648.9 million.

Client incentives (a contra-revenue item) escalated 20% year over year to $3.35 billion in the quarter under review and beat our estimate of $3.3 billion. The metric accounted for 27.9% of the company’s gross revenues of $12 billion.

Operating expenses of Visa declined 6% year over year to $2.7 billion in the fiscal first quarter due to lower litigation provision expense. Interest expenses of $187 million escalated 36.5% year over year.

Balance Sheet (as of Dec 31, 2023)

Visa exited the December quarter with cash and cash equivalents of $13.6 billion, which fell 16.5% from the fiscal 2023 year-end level.

Total assets of $91.4 billion inched up 1% from the fiscal 2023 year-end level.

V’s long-term debt amounted to $20.7 billion, which inched up 1.2% from the fiscal 2023 year-end level.

Total equity of $39.7 billion increased 2.6% from the fiscal 2023 year-end figure.

Decline in Cash Flows

Visa generated net cash from operations of $3.6 billion in the fiscal first quarter, which declined 13.4% year over year. Free cash flows are recorded at $3.3 billion, down 14.7% year over year.

Capital Deployment Update

Visa rewarded $4.4 billion to shareholders via share buybacks and dividends in the December quarter. V had leftover authorized funds of $26.4 billion under its repurchase program as of Dec 31, 2023.

On Jan 23, 2024, management sanctioned a quarterly cash dividend of 52 cents per share, which will be paid out on Mar 1, 2024, to shareholders of record as of Feb 9, 2024.

Business Update

Visa completed the Pismo buyout on Jan 16, 2024. The acquisition of the global cloud-native issuer processing and core banking platform provider is expected to enable V to provide enhanced core banking and issuer processing capabilities across various card types.

Fiscal 2Q24 Outlook

On an adjusted constant-dollar basis, net revenues are anticipated to witness upper mid to high single-digit growth. Operating expenses are estimated to grow in low double digits on an adjusted constant-dollar basis.

Fiscal 2024 View

Management continues to expect net revenues to grow in low double digits on an adjusted constant-dollar basis in fiscal 2024. Operating expense is expected to witness low double-digit growth on an adjusted constant-dollar basis compared with the earlier guidance of high single-digit to low double-digit growth.

Amortization of acquired intangible assets is projected at around $175 million or 7 cents per share. Acquisition-related costs are expected at roughly $115 million or 5 cents per share.

Zacks Rank

Visa currently carries a Zacks Rank #3 (Hold).

Upcoming Earnings Releases

Here are three other companies from the Business Services space that are set to report their respective quarterly earnings soon.

PagSeguro Digital Ltd. (PAGS Quick QuotePAGS - Free Report) has an Earnings ESP of +10.35% and sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PAGS’s fourth-quarter 2023 earnings is pegged at 29 cents per share, suggesting a 20.8% rise from the prior-year quarter’s reported number.

PagSeguro Digital’s earnings beat estimates in each of the trailing four quarters, the average surprise being 8.95%.

FLEETCOR Technologies, Inc. has an Earnings ESP of +0.37% and a Zacks Rank #2 (Buy) at present. The Zacks Consensus Estimate for FLT’s fourth-quarter 2023 earnings is pinned at $4.47 per share, implying 10.6% growth from the year-ago quarter’s reported figure.

FLEETCOR Technologies’ earnings beat estimates in three of the trailing four quarters and matched the mark once, the average surprise being 1.64%.

Mastercard Incorporated (MA Quick QuoteMA - Free Report) currently has an Earnings ESP of +0.33% and a Zacks Rank #3. The Zacks Consensus Estimate for MA’s fourth-quarter 2023 earnings is pegged at $3.08 per share, suggesting a 16.2% rise from the prior-year quarter’s reported number.

Mastercard’s earnings beat estimates in each of the trailing four quarters, the average surprise being 3.55%.