Visa(US:V)2024-04-24 00:06Financial Data and Key Metrics - Net revenue for Q2 2024 was $8.8 billion, up 10% YoY, with GAAP EPS up 12% and non-GAAP EPS up 20% [6] - Global payments volume grew 8% YoY in constant dollars, with US payments volume up 6% and international payments volume up 11% [6] - Cross-border volume excluding Intra-Europe rose 16% YoY, and processed transactions grew 11% [6] - Value-added services revenue grew 23% in constant dollars to $2.1 billion, driven by issuing and acceptance solutions and advisory services [31] Business Line Performance - Consumer payments growth was driven by stable payments volume, process transactions, and cross-border volume [31] - New flows revenue improved to 14% YoY growth in constant dollars, with Visa Direct transactions growing 31% YoY [31] - Tap-to-pay grew to 79% of face-to-face transactions globally, excluding the US, up five percentage points YoY [13] - E-commerce payments volume in the US grew several points faster YoY than face-to-face spend, with similar trends in Canada, Brazil, Australia, and India [14] Market Performance - US payments volume grew 6% YoY, with credit and debit both up 6% [26] - International payments volume grew 11% in constant dollars, with strong growth in Latin America, CEMEA, and Europe ex-UK, each growing more than 19% [27] - Cross-border travel volume was up 17% YoY, with strong recovery in LAC, Europe, and CEMEA, but slower recovery in Asia-Pacific [28] Company Strategy and Industry Competition - The company is focused on digitizing cash and check, enhancing e-commerce capabilities, and building new solutions for its network of networks [24] - Visa is expanding its presence in open banking through Tink, with recent agreements in the US including Capital One, Fiserv, and Jack Henry [19] - The company is leveraging its Visa Direct platform to enable faster push payments, with agreements like Thunes expanding its reach to 108 countries [16] Management Commentary on Operating Environment and Future Outlook - The company expects adjusted net revenue growth in the low-double-digits for the full year, with total payments volume growth adjusted to high-single-digits due to trends in Asia [34] - Management remains optimistic about the growth opportunities in consumer payments, new flows, and value-added services, despite macroeconomic challenges [24] - The company has agreed to a landmark settlement with US merchants, lowering credit interchange rates and capping them until 2030, providing clarity and stability to the market [23] Other Important Information - The company has commenced an exchange offer for Visa's Class B1 common stock, set to expire at the end of the following week [22] - Visa has over 9.5 billion tokens globally, with 1 billion tokens in Asia-Pacific, enhancing security and authorization rates in e-commerce [15] Q&A Session Summary Question: Impact of Easter on Q2 trends and tax refund timing [37] - Answer: Easter timing affected April volumes, but growth rates adjusted for the holiday are not meaningful. Tax refund timing has been consistent year-to-date [38] Question: Sizing of faster-growing cross-border segments like remittances and marketplace payouts [39] - Answer: The company does not provide specific breakouts but notes strong e-commerce growth and positive yields across cross-border business [40] Question: US debit trends and guidance for Q3 and full year [41] - Answer: US debit and credit volumes remain stable, with no significant changes in consumer behavior or Reg II impacts [42] Question: Recovery in new flows growth and key drivers [43] - Answer: New flows revenue grew 14% YoY, driven by Visa Direct transactions (up 31%) and stable commercial volumes (up 8%) [44] Question: Incentives and ticket size trends in the US and globally [46] - Answer: Incentive growth is expected to slow in H2, with Q4 being the lowest growth quarter. US ticket sizes are expected to turn positive in H2, while global ATS will remain slightly negative due to Asia [47] Question: Uptick in value-added services growth [48] - Answer: Growth in value-added services is driven by deepening product penetration with existing clients, new product launches, and geographic expansion [50] Question: Open banking opportunity in the US vs Europe [52] - Answer: The US market is less developed than Europe, but Visa is leveraging its Tink platform to expand open banking solutions in the US [53] Question: Visa Deep Authorization and its impact on e-commerce [55] - Answer: Visa Deep Authorization is a transaction risk scoring solution tailored for the US e-commerce market, aimed at reducing fraud and improving authorization rates [57] Question: Middle East deal activity and growth opportunities [59] - Answer: The company is seeing strong execution in the Middle East, with recent deals like Emirates Skywards and Qatar Airways co-brand cards [60] Question: Impact of US merchant settlement on Visa and issuing banks [61] - Answer: The settlement provides clarity and stability, with reduced interchange rates and no increases for five years, allowing the market to focus on growth [62] Question: Evolution of value-added services penetration and pricing [65] - Answer: The company is focused on deepening penetration of value-added services with existing clients, with pricing models varying by product and market [66] Question: Strategies for taking share from domestic card networks [67] - Answer: The company focuses on demonstrating the value of Visa cards over domestic schemes, particularly in e-commerce, cross-border travel, and fraud prevention [68] Question: Prosa's performance and opportunities in Mexico [71] - Answer: Prosa is a strong asset in Mexico, and Visa is leveraging its capabilities to bring value-added services to the market, with significant growth potential [72] Question: Cross-border revenue and volume trends, including FX volatility [74] - Answer: Cross-border revenue growth is impacted by low FX volatility, but the underlying business remains strong, with expectations for mid-teens growth in H2 [75] Question: Expectations for new flows, VAS revenue, and cross-border travel in H2 [77] - Answer: New flows and VAS revenue are expected to grow strongly in H2, with cross-border travel volumes moderated due to slower recovery in Asia-Pacific [78] Question: Service yields and client incentives trends [80] - Answer: Service yields remained stable in Q2, with client incentives lower than expected due to deal timing and performance [81] Question: Quantifying ACH vs domestic network conversion opportunities [84] - Answer: The company is seeing success in converting ACH and domestic network transactions, with significant opportunities in all three areas (cash/check, ACH, domestic networks) [85]