Visa Inc. (V Quick QuoteV - Free Report) reported fourth-quarter fiscal 2024 earnings of $2.71 per share, which outpaced the Zacks Consensus Estimate of $2.58 by 5%. The bottom line increased 16% year over year. 

Net revenues of $9.6 billion improved 12% year over year. The top line beat the consensus mark by 1.2%. 

The quarterly results were driven by increased payments volume, processed transactions and cross-border volumes, benefiting from expanding global operations and solid demand for digital payments. However, the upside was partly offset by increased operating expenses, primarily marketing and personnel costs.

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Q4 Business Drivers of Visa

Visa's payments volume increased 8% year over year on a constant-dollar basis in the fiscal fourth quarter on the back of expanding operations across Canada, Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by Visa) grew 10% year over year to 61.5 billion. The metric fell short of the Zacks Consensus Estimate of 61.9 billion but outpaced our estimate of 61.4 billion. 

On a constant-dollar basis, the cross-border volume of Visa rose 13% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 13% year over year on a constant-dollar basis.

Visa’s Q4 Operational Performance

Service revenues (depending on payments volume in the previous quarter) advanced 8% year over year to $4.2 billion in the September quarter, attributable to expanding payment volumes. The metric beat the consensus mark of $4.14 billion but lagged our estimate of $4.21 billion. 

Data processing revenues of $4.61 billion grew 8% year over year. The metric fell short of the Zacks Consensus Estimate of $4.72 billion and our estimate of $4.67 billion. 

International transaction revenues advanced 9% year over year to $3.47 billion in the fiscal fourth quarter on the back of higher cross-border volume. The metric lagged the consensus mark of $3.5 billion but beat our estimate of $3.46 billion. Other revenues were $969 million, which climbed 30% year over year and surpassed our estimate of $915.2 million.

Client incentives (a contra-revenue item) increased 6% year over year to $3.6 billion but were lower than the Zacks Consensus Estimate of $3.7 billion. The metric accounted for 27.4% of the company’s gross revenues of $13.2 billion.

Adjusted operating expenses of $3.19 billion escalated 11% year over year due to higher marketing and personnel costs. The metric was higher than our estimate of $3.12 billion. However, interest expenses fell 3.8% year over year to $176 million.

Visa’s Balance Sheet (as of Sept. 30, 2024)

Visa exited the September quarter with cash and cash equivalents of nearly $12 billion, which declined 26.5% from the fiscal 2023-end level. 

Total assets of $94.5 billion increased 4.4% from the fiscal 2023 year-end level.

Visa’s long-term debt amounted to $20.8 billion, up 1.8% from the figure as of Sept. 30, 2023. 

Total equity inched up 1% from the fiscal 2023 year-end figure to $39.1 billion.

V’s Cash Flows

The company generated net cash from operations of $6.7 billion in the fiscal fourth quarter, which slipped 3.8% year over year. Free cash flows were recorded at $6.4 billion, down 4% year over year.

Visa’s Capital Deployment Update

Visa rewarded $6.8 billion to shareholders via share buybacks ($5.8 billion) and dividends ($1 billion) in the September quarter. V had leftover authorized funds of $13.1 billion under its repurchase program as of Sept. 30, 2024.

On Oct. 29, 2024, Visa’s board of directors announced a raise in the quarterly cash dividend for Class A common stock. The increased dividend amounting to 59 cents per share will be paid out on Dec. 2, 2024, to shareholders of record as on Nov. 12.

V’s Fiscal 2024 Update

In fiscal 2024, Visa achieved net revenues of $35.9 billion, marking a 10% year-over-year increase. Adjusted earnings per share (EPS) increased 15% year over year to $10.05. 

Visa’s payments volume rose 8% year over year on a constant-dollar basis. Processed transactions totaled 233.8 billion, representing a 10% year-over-year increase. Cross-border volume expanded 15% on a constant-dollar basis in fiscal 2024.

Visa’s Fiscal 1Q25 Outlook

On an adjusted constant-dollar basis, net revenues are anticipated to witness high single-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 low double-digit growth.

Visa’s Fiscal 2025 View

Management estimates net revenues to witness high-single-digit to 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. It anticipates EPS to witness growth in the high end of low double digits. 

Amortization of acquired intangible assets is projected at around $180 million or 8 cents per share. Acquisition-related costs are expected at roughly $90 million or 4 cents per share.

V’s Zacks Rank

Visa currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Of the Business Services sector players that have already released September-quarter results so far, the bottom-line results of The Western Union Company (WU Quick QuoteWU - Free Report) , Equifax Inc. (EFX Quick QuoteEFX - Free Report) and Robert Half Inc. (RHI Quick QuoteRHI - Free Report) beat the respective Zacks Consensus Estimate.

Western Union reported third-quarter adjusted EPS of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year. However, total revenues declined 6% on a reported basis to $1.04 billion. Additionally, the top line beat the consensus estimate by 0.4%. Adjusted operating margin was 19.1%, which deteriorated 50 bps year over year.  Operating income fell 22% year over year to $164.9 million. 

The Consumer Money Transfer, or CMT, segment recorded revenues of $932.2 million, which tumbled 9% on a reported basis and 8% on an adjusted basis. Transactions within the CMT segment grew 3% year over year, attributable to 15% transaction growth in the Branded Digital business. Branded Digital revenues, which accounted for 25% of CMT’s third-quarter revenues, advanced 8% on a reported basis and 9% on an adjusted basis. The CS segment’s revenues climbed 32% on a reported basis and 15% on an adjusted basis to $103.8 million. 

Equifax’s third-quarter 2024 adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, which outpaced the Zacks Consensus Estimate by a slight margin and increased 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis. Revenues in the Workforce Solutions segment totaled $620 million, up 7% from the year-ago quarter. Within the segment, Verification Services’ revenues of $524.9 million were up 14% from the year-ago quarter’s actual. Employer Services’ revenues of $95.1 million were down 19% on a year-over-year basis.

USIS segment’s revenues were $476.9 million, which grew 12% from the year-ago quarter and outpaced our expectation of $459.4 million. Within the segment, Online Information Solutions’ revenues of $381.1 million grew 9% year over year. Mortgage Solutions’ revenues of $38 million increased 39% from the year-ago quarter. Financial Marketing Services’ revenues were $57.8 million, which gained 14% on a year-over-year basis. Adjusted EBITDA amounted to $471.9 million, up 8% on a year-over-year basis. 

Robert Half reported third-quarter earnings of 64 cents per share, which beat the consensus mark by 1.6% but declined 28.9% year over year. Revenues of $1.47 billion beat the consensus mark by 1.7% but decreased 6.3% year over year. Talent Solutions’ revenues of $954 million decreased 13% year over year on an as-adjusted basis. U.S. Talent Solutions’ revenues of $725 million were down 13% year over year. Non-U.S. Talent Solutions revenues also decreased 13% year over year on an adjusted basis to $229 million.

Protiviti revenues were $511 million, which were up 5% year over year on an as-adjusted basis and surpassed our expectation of $490.2 million. The U.S. Protiviti revenues of $411 million increased 8% year over year on an adjusted basis. Non-U.S. Protiviti revenues of $90 million declined 8% year over year on an as-adjusted basis. Adjusted gross profit was $577.8 million, down 9.5% year over year. The adjusted gross profit margin of 39.4% declined 140 basis points year over year.