Visa Q2 Earnings Beat Estimates on Strong Payment Volumes

Core Insights - Visa Inc. reported Q2 fiscal 2025 EPS of $2.76, exceeding the Zacks Consensus Estimate of $2.68 by 3%, with a year-over-year increase of 10% [1] - Net revenues reached $9.6 billion, reflecting a 9.3% year-over-year improvement and beating the consensus mark by 0.3% [1] Business Drivers - Payments volume increased by 8% year over year on a constant-dollar basis, driven by growth in the U.S., Europe, CEMEA, and LAC regions [3] - Processed transactions grew 9% year over year to 60.7 billion, although it slightly missed the Zacks Consensus Estimate of 61.1 billion [3] - Cross-border volume rose 13% year over year on a constant-dollar basis, indicating strong international transaction revenues [4] Operational Performance - Service revenues increased 9% year over year to $4.4 billion, in line with consensus estimates [5] - Data processing revenues grew 10.4% year over year to $4.7 billion, surpassing the Zacks Consensus Estimate of $4.6 billion [5] - International transaction revenues rose 10.3% year over year to $3.3 billion, although it missed the consensus mark of $3.4 billion [6] - Other revenues climbed 24% year over year to $937 million, exceeding the estimate of $835.9 million [6] Expenses and Incentives - Client incentives increased 15% year over year to $3.7 billion, lower than the Zacks Consensus Estimate of $3.8 billion [7] - Adjusted operating expenses rose 7% year over year to $3.07 billion, primarily due to higher marketing and personnel costs, but were below the estimate of $3.17 billion [7] - Interest expenses surged 92.7% year over year to $158 million [7] Balance Sheet - As of March 31, 2025, Visa had cash and cash equivalents of $11.7 billion, down from $12 billion at the end of fiscal 2024 [8] - Total assets decreased by 1.8% to $92.9 billion from the fiscal 2024-end [8] - Long-term debt reduced to $16.8 billion from $20.8 billion as of September 30, 2024 [8] - Total equity declined 2.8% to $38 billion from the fiscal 2024-end figure [8] Cash Flows - Visa generated net cash from operations of $4.7 billion in Q2, a 3.5% year-over-year increase [9] - Free cash flows were recorded at $4.4 billion, up 2.6% year over year [9] Capital Deployment - Visa returned $5.6 billion to shareholders through share buybacks ($4.5 billion) and dividends ($1.2 billion) in Q2 [10] - A new $30 billion share repurchase program was announced in April 2025 [10] - The quarterly cash dividend of 59 cents per share will be paid on June 2, 2025 [10] Fiscal Outlook - For Q3 fiscal 2025, net revenues are expected to grow in the low double-digit range, with operating expenses also anticipated to rise in low double digits [11] - EPS growth is projected in the high teens [11] - For fiscal 2025, management estimates net revenues to grow in the high single-digit to low double-digit range, with EPS growth expected in the high end of the low double-digit range [12]