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Visa Q2 Earnings Beat Estimates on Payment Volume Strength
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Key Takeaways
Visa Q2 adjusted EPS rose 20% to $3.31 as net revenues jumped 17% to $11.23B.
V posted 9% payment volume growth and processed 66.1B transactions, up 9% year over year.
V returned $9.2B via buybacks and dividends and outlined upbeat Q3 and FY26 growth targets.
Visa Inc. (V - Free Report) delivered second-quarter fiscal 2026 adjusted earnings of $3.31 per share, up 20% year over year and ahead of the Zacks Consensus Estimate by 7.1%. Net revenues came in at $11.23 billion, rising 17% year over year and topping the consensus mark by 5.1%.
The strong quarterly results reflected resilient spending trends, higher cross-border volumes andsolid network activity, including a 9% year-over-year increase in payments volume on a constant-dollar basis. However, the upside was partly offset by increased operating expenses.
On a constant-dollar basis, cross-border volume increased 12% year over year, reflecting steady travel and e-commerce activity. Excluding transactions within Europe, cross-border volume rose 11% in constant dollars.
Network throughput also improved. Total processed transactions were 66.1 billion for the March quarter, marking a 9% year-over-year increase.
Adjusted operating expenses were $3.6 billion, up 17% year over year and in line with our model estimate. Higher personnel costs of $1.8 billion and marketing expenses of $545 million were notable contributors, alongside general and administrative expenses of $450 million. The litigation provision totaled $329 million in the quarter, down sharply from $1 billion a year ago.
V’s Segment Performance
Service revenues increased 13% year over year to $4.98 billion and beat our model estimate of $4.92 billion, supported by expanding payment volumes. Data processing revenue climbed 18% to $5.54 billion and beat our estimate of $5.36 billion, pointing to healthy growth in transactions processed across Visa’s network.
International transaction revenues rose 10% to $3.63 billion and beat our model estimate of $3.56 billion, while other revenue advanced 41% to $1.32 billion, beating our estimate of $1.14 billion. Offsetting a portion of these gains, client incentives, recorded as a contra-revenue item, increased 14% to $4.25 billion. It came a bit lower than our estimate of $4.27 billion.
Visa Returns Capital Aggressively
Visa continued to emphasize shareholder returns. During the quarter, the company repurchased $7.9 billion of class A shares and paid $1.3 billion in dividends, totaling $9.2 billion returned to shareholders. The company had leftover authorized funds of $13.2 billion under its repurchase program as of March 31, 2026. The board also authorized a new $20 billion multi-year share repurchase program in April.
Cash generation remained solid. Free cash flow was $2.6 billion in the quarter, after $383 million of capital expenditures. Visa ended March 31, 2026, with $14.2 billion in cash, cash equivalents and investment securities. Its long-term debt amounted to $22.4 billion, up from $19.6 billion at fiscal 2025-end. Current maturities of debt were at $1.6 billion.
V Outlines Strong Growth Targets Ahead
For the third quarter of fiscal 2026, Visa expects adjusted net revenue growth in the high-end of low-double-digit range and operating expense growth in the mid-teens, while projecting adjusted earnings per share growth in the high-single-digit range.
For fiscal 2026, the company anticipates adjusted net revenue growth in the low-teens range and operating expense growth in the mid-teens range. Adjusted earnings per share are expected to grow in the mid-teens.
Major rival Mastercard Incorporated (MA - Free Report) is scheduled to report first-quarter 2026 results on April 30. The Zacks Consensus Estimate for adjusted earnings is pegged at $4.40 per share, indicating 18% year-over-year growth. The same for revenues is pegged at $8.29 billion, signaling a 14.4% increase. Mastercard beat earnings estimates in each of the past four quarters with an average surprise of 5.5%.
American Express Company (AXP - Free Report) reported first-quarter 2026 EPS of $4.28, which surpassed the Zacks Consensus Estimate by 6.2% and advanced 18% year over year. Total revenues, net of interest expense, improved 11% year over year to $18.9 billion. The quarterly results were driven by increased Card Member spending, higher net interest income and improved card fee growth. However, the upside was partly offset by elevated operating expenses.
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Visa Q2 Earnings Beat Estimates on Payment Volume Strength
Key Takeaways
Visa Inc. (V - Free Report) delivered second-quarter fiscal 2026 adjusted earnings of $3.31 per share, up 20% year over year and ahead of the Zacks Consensus Estimate by 7.1%. Net revenues came in at $11.23 billion, rising 17% year over year and topping the consensus mark by 5.1%.
The strong quarterly results reflected resilient spending trends, higher cross-border volumes andsolid network activity, including a 9% year-over-year increase in payments volume on a constant-dollar basis. However, the upside was partly offset by increased operating expenses.
Visa Inc. Price, Consensus and EPS Surprise
Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote
Visa’s Q2 Highlights
On a constant-dollar basis, cross-border volume increased 12% year over year, reflecting steady travel and e-commerce activity. Excluding transactions within Europe, cross-border volume rose 11% in constant dollars.
Network throughput also improved. Total processed transactions were 66.1 billion for the March quarter, marking a 9% year-over-year increase.
Adjusted operating expenses were $3.6 billion, up 17% year over year and in line with our model estimate. Higher personnel costs of $1.8 billion and marketing expenses of $545 million were notable contributors, alongside general and administrative expenses of $450 million. The litigation provision totaled $329 million in the quarter, down sharply from $1 billion a year ago.
V’s Segment Performance
Service revenues increased 13% year over year to $4.98 billion and beat our model estimate of $4.92 billion, supported by expanding payment volumes. Data processing revenue climbed 18% to $5.54 billion and beat our estimate of $5.36 billion, pointing to healthy growth in transactions processed across Visa’s network.
International transaction revenues rose 10% to $3.63 billion and beat our model estimate of $3.56 billion, while other revenue advanced 41% to $1.32 billion, beating our estimate of $1.14 billion. Offsetting a portion of these gains, client incentives, recorded as a contra-revenue item, increased 14% to $4.25 billion. It came a bit lower than our estimate of $4.27 billion.
Visa Returns Capital Aggressively
Visa continued to emphasize shareholder returns. During the quarter, the company repurchased $7.9 billion of class A shares and paid $1.3 billion in dividends, totaling $9.2 billion returned to shareholders. The company had leftover authorized funds of $13.2 billion under its repurchase program as of March 31, 2026. The board also authorized a new $20 billion multi-year share repurchase program in April.
Cash generation remained solid. Free cash flow was $2.6 billion in the quarter, after $383 million of capital expenditures. Visa ended March 31, 2026, with $14.2 billion in cash, cash equivalents and investment securities. Its long-term debt amounted to $22.4 billion, up from $19.6 billion at fiscal 2025-end. Current maturities of debt were at $1.6 billion.
V Outlines Strong Growth Targets Ahead
For the third quarter of fiscal 2026, Visa expects adjusted net revenue growth in the high-end of low-double-digit range and operating expense growth in the mid-teens, while projecting adjusted earnings per share growth in the high-single-digit range.
For fiscal 2026, the company anticipates adjusted net revenue growth in the low-teens range and operating expense growth in the mid-teens range. Adjusted earnings per share are expected to grow in the mid-teens.
Visa currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Are Visa’s Peers Placed This Quarter?
Major rival Mastercard Incorporated (MA - Free Report) is scheduled to report first-quarter 2026 results on April 30. The Zacks Consensus Estimate for adjusted earnings is pegged at $4.40 per share, indicating 18% year-over-year growth. The same for revenues is pegged at $8.29 billion, signaling a 14.4% increase. Mastercard beat earnings estimates in each of the past four quarters with an average surprise of 5.5%.
American Express Company (AXP - Free Report) reported first-quarter 2026 EPS of $4.28, which surpassed the Zacks Consensus Estimate by 6.2% and advanced 18% year over year. Total revenues, net of interest expense, improved 11% year over year to $18.9 billion. The quarterly results were driven by increased Card Member spending, higher net interest income and improved card fee growth. However, the upside was partly offset by elevated operating expenses.