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Visa Q2 Earnings Beat Estimates on Strong Payment Volumes
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Visa Inc. (V - Free Report) reported second-quarter fiscal 2025 earnings per share (EPS) of $2.76, which outpaced the Zacks Consensus Estimate of $2.68 by 3%. The bottom line increased 10% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Net revenues of $9.6 billion improved 9.3% year over year. The top line beat the consensus mark by 0.3%.
The strong quarterly results benefited from higher processed transactions, payment and cross-border volumes. However, the upside was partly offset by increased operating expenses, primarily personnel costs.
Visa's payments volume increased 8% year over year on a constant-dollar basis in the fiscal second quarter due to expanding operations across the United States, Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by Visa) grew 9% year over year to 60.7 billion. However, the metric missed the Zacks Consensus Estimate of 61.1 but was in line with our estimate of 60.7 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 jumped 13% year over year on a constant-dollar basis.
Visa’s Q2 Operational Performance
Service revenues (depending on the payment volume in the previous quarter) increased 9% year over year to $4.4 billion in the March quarter, attributable to expanding payment volumes. The metric came in line with the consensus mark of $4.4 billion and beat our estimate of $4 billion.
Data processing revenues of $4.7 billion grew 10.4% year over year and beat the Zacks Consensus Estimate of $4.6 billion.
International transaction revenues rose 10.3% year over year to $3.3 billion in the fiscal second quarter, driven by higher cross-border volumes. However, the metric missed the consensus mark of $3.4 billion but was in line with our estimate of $3.3 billion. Other revenues were $937 million, which climbed 24% year over year and surpassed our estimate of $835.9 million.
Client incentives (a contra-revenue item) increased 15% year over year to $3.7 billion but were lower than the Zacks Consensus Estimate of $3.8 billion.
Adjusted operating expenses of $3.07 billion escalated 7% year over year due to higher marketing and personnel costs. However, this was lower than our estimate of $3.17 billion. Interest expenses increased 92.7% year over year to $158 million.
Visa’s Balance Sheet (as of March 31, 2025)
Visa exited the March quarter with cash and cash equivalents of $11.7 billion, which declined from the fiscal 2024-end level of $12 billion.
Total assets of $92.9 billion decreased 1.8% from the fiscal 2024-end.
Visa’s long-term debt amounted to $16.8 billion, down from $20.8 billion as of Sept. 30, 2024.
Total equity declined 2.8% from the fiscal 2024-end figure to $38 billion.
Visa’s Cash Flows
The company generated net cash from operations of $4.7 billion in the fiscal second quarter, which rose 3.5% year over year. Free cash flows were recorded at $4.4 billion, up 2.6% year over year.
Visa’s Capital Deployment Update
Visa rewarded $5.6 billion to shareholders via share buybacks ($4.5 billion) and dividends ($1.2 billion) in the March quarter. V had leftover authorized funds of $4.7 billion under its repurchase program as of March 31, 2025. It added a new $30 billion program this April.
The quarterly cash dividend, amounting to 59 cents per share, will be paid out on June 2, 2025, to shareholders of record as of May 13.
Visa’s Fiscal 3Q25 Outlook
On an adjusted nominal-dollar basis, net revenues are anticipated to witness low double-digit growth. Operating expenses are estimated to grow in low double digits on an adjusted nominal-dollar basis. It expects EPS to witness growth in the high teens.
The amortization of acquired intangible assets is projected at around $55 million, or 2 cents per share. Acquisition-related costs are expected to be roughly $15 million or 1 cent per share.
Visa’s Fiscal 2025 View
Management estimates net revenues to witness high single-digit to low double-digit growth on an adjusted nominal-dollar basis in fiscal 2025. Operating expenses are also expected to witness high single-digit to low double-digit growth on an adjusted nominal-dollar basis. Management also anticipates EPS will witness growth in the high end of the low double-digit range.
The amortization of acquired intangible assets is projected at around $220 million, or 9 cents per share. Acquisition-related costs are expected to be roughly $95 million or 4 cents per share. It also expects severance costs of $213 million and litigation provision of $1 billion.
The Zacks Consensus Estimate for OppFi’s current-year earnings of $1.07 per share has witnessed two upward revisions in the past 60 days against no movement in the opposite direction. OppFi beat earnings estimates in each of the trailing four quarters, with the average surprise being 73%. The consensus estimate for current-year revenues is pegged at $576.9 million, implying 9.7% year-over-year growth.
The Zacks Consensus Estimate for Stantec’s current-year earnings of $3.74 per share has witnessed one upward revision in the past week against no movement in the opposite direction. Stantec beat earnings estimates in each of the trailing four quarters, with the average surprise being 6.9%. The consensus estimate for current-year revenues is pegged at $4.7 billion, implying 8.7% year-over-year growth.
The Zacks Consensus Estimate for PAR Technology’s current-year earnings of 16 cents per share has witnessed one upward revision in the past seven days against no movement in the opposite direction. The consensus estimate for PAR Technology’s current-year revenues is pegged at $450.5 million, implying 16.9% year-over-year growth.
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Visa Q2 Earnings Beat Estimates on Strong Payment Volumes
Visa Inc. (V - Free Report) reported second-quarter fiscal 2025 earnings per share (EPS) of $2.76, which outpaced the Zacks Consensus Estimate of $2.68 by 3%. The bottom line increased 10% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Net revenues of $9.6 billion improved 9.3% year over year. The top line beat the consensus mark by 0.3%.
The strong quarterly results benefited from higher processed transactions, payment and cross-border volumes. However, the upside was partly offset by increased operating expenses, primarily personnel costs.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Q2 Business Drivers of Visa
Visa's payments volume increased 8% year over year on a constant-dollar basis in the fiscal second quarter due to expanding operations across the United States, Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by Visa) grew 9% year over year to 60.7 billion. However, the metric missed the Zacks Consensus Estimate of 61.1 but was in line with our estimate of 60.7 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 jumped 13% year over year on a constant-dollar basis.
Visa’s Q2 Operational Performance
Service revenues (depending on the payment volume in the previous quarter) increased 9% year over year to $4.4 billion in the March quarter, attributable to expanding payment volumes. The metric came in line with the consensus mark of $4.4 billion and beat our estimate of $4 billion.
Data processing revenues of $4.7 billion grew 10.4% year over year and beat the Zacks Consensus Estimate of $4.6 billion.
International transaction revenues rose 10.3% year over year to $3.3 billion in the fiscal second quarter, driven by higher cross-border volumes. However, the metric missed the consensus mark of $3.4 billion but was in line with our estimate of $3.3 billion. Other revenues were $937 million, which climbed 24% year over year and surpassed our estimate of $835.9 million.
Client incentives (a contra-revenue item) increased 15% year over year to $3.7 billion but were lower than the Zacks Consensus Estimate of $3.8 billion.
Adjusted operating expenses of $3.07 billion escalated 7% year over year due to higher marketing and personnel costs. However, this was lower than our estimate of $3.17 billion. Interest expenses increased 92.7% year over year to $158 million.
Visa’s Balance Sheet (as of March 31, 2025)
Visa exited the March quarter with cash and cash equivalents of $11.7 billion, which declined from the fiscal 2024-end level of $12 billion.
Total assets of $92.9 billion decreased 1.8% from the fiscal 2024-end.
Visa’s long-term debt amounted to $16.8 billion, down from $20.8 billion as of Sept. 30, 2024.
Total equity declined 2.8% from the fiscal 2024-end figure to $38 billion.
Visa’s Cash Flows
The company generated net cash from operations of $4.7 billion in the fiscal second quarter, which rose 3.5% year over year. Free cash flows were recorded at $4.4 billion, up 2.6% year over year.
Visa’s Capital Deployment Update
Visa rewarded $5.6 billion to shareholders via share buybacks ($4.5 billion) and dividends ($1.2 billion) in the March quarter. V had leftover authorized funds of $4.7 billion under its repurchase program as of March 31, 2025. It added a new $30 billion program this April.
The quarterly cash dividend, amounting to 59 cents per share, will be paid out on June 2, 2025, to shareholders of record as of May 13.
Visa’s Fiscal 3Q25 Outlook
On an adjusted nominal-dollar basis, net revenues are anticipated to witness low double-digit growth. Operating expenses are estimated to grow in low double digits on an adjusted nominal-dollar basis. It expects EPS to witness growth in the high teens.
The amortization of acquired intangible assets is projected at around $55 million, or 2 cents per share. Acquisition-related costs are expected to be roughly $15 million or 1 cent per share.
Visa’s Fiscal 2025 View
Management estimates net revenues to witness high single-digit to low double-digit growth on an adjusted nominal-dollar basis in fiscal 2025. Operating expenses are also expected to witness high single-digit to low double-digit growth on an adjusted nominal-dollar basis. Management also anticipates EPS will witness growth in the high end of the low double-digit range.
The amortization of acquired intangible assets is projected at around $220 million, or 9 cents per share. Acquisition-related costs are expected to be roughly $95 million or 4 cents per share. It also expects severance costs of $213 million and litigation provision of $1 billion.
V’s Zacks Rank & Key Picks
V currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader business services space are OppFi Inc. (OPFI - Free Report) and Stantec Inc. (STN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). Another company, PAR Technology Corp (PAR - Free Report) , currently carries 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 current-year earnings of $1.07 per share has witnessed two upward revisions in the past 60 days against no movement in the opposite direction. OppFi beat earnings estimates in each of the trailing four quarters, with the average surprise being 73%. The consensus estimate for current-year revenues is pegged at $576.9 million, implying 9.7% year-over-year growth.
The Zacks Consensus Estimate for Stantec’s current-year earnings of $3.74 per share has witnessed one upward revision in the past week against no movement in the opposite direction. Stantec beat earnings estimates in each of the trailing four quarters, with the average surprise being 6.9%. The consensus estimate for current-year revenues is pegged at $4.7 billion, implying 8.7% year-over-year growth.
The Zacks Consensus Estimate for PAR Technology’s current-year earnings of 16 cents per share has witnessed one upward revision in the past seven days against no movement in the opposite direction. The consensus estimate for PAR Technology’s current-year revenues is pegged at $450.5 million, implying 16.9% year-over-year growth.