Visa, Inc. (NYSE: V)

GAAP net income in the fiscal second quarter was $4.6 billion or $2.32 per share, a decrease of 2% and an increase of 1%, respectively, over the prior year’s results. The current year’s results included a special item of $992 million for a litigation provision associated with the interchange multidistrict litigation (“MDL”) case, as well as $23 million of net losses from equity investments and $96 million from the amortization of acquired intangible assets and acquisition-related costs.

Excluding these items and related tax impacts, non-GAAP net income for the quarter was $5.4 billion or $2.76 per share, representing increases of 6% and 10%, respectively, over prior year’s results. GAAP earnings per share growth was approximately 3% on a constant-dollar basis, while non-GAAP earnings per share growth was approximately 11% on a constant-dollar basis.

Net revenue in the fiscal second quarter was $9.6 billion, an increase of 9%, driven by the year-over-year growth in payments volume, cross-border volume, and processed transactions. Net revenue increased 11% on a constant-dollar basis.

By revenue category:

• Service revenue: $4.4 billion, up 9% (based on Q1 payments volume)
• Data processing revenue: $4.7 billion, up 10%
• International transaction revenue: $3.3 billion, up 10%
• Other revenue: $937 million, up 24%
• Client incentives: $3.7 billion, up 15%

GAAP operating expenses were $4.2 billion for the fiscal second quarter, a 22% increase over the prior year’s results, primarily driven by the increase in the litigation provision. Excluding special items, non-GAAP operating expenses increased 7% over the prior year, primarily due to increases in personnel, marketing, and depreciation and amortization expenses.

Payments volume for the three months ended March 31, 2025, increased 8% over the prior year on a constant-dollar basis. This growth demonstrates resilient consumer spending despite macroeconomic uncertainties.

Cross-border volume excluding transactions within Europe, which drives Visa’s international transaction revenue, increased 13% on a constant-dollar basis for the three months ended March 31, 2025. Total cross-border volume on a constant-dollar basis also increased 13% in the quarter, indicating robust international spending and travel recovery.

Total processed transactions, which represent transactions processed by Visa, reached 60.7 billion for the three months ended March 31, 2025, a 9% increase over the prior year. This growth reflects continued digital payment adoption and transaction migration from cash.

The strong performance across all key business drivers highlights Visa’s ability to capitalize on the ongoing shift to digital payments, even in an environment with varying regional economic conditions. The company’s global presence and diversified business model have allowed it to maintain growth momentum despite currency headwinds, as evidenced by the difference between constant-dollar and nominal growth rates.

Cash, cash equivalents and investment securities were $15.2 billion at March 31, 2025, representing a strong liquidity position despite significant capital returns to shareholders. The company continues to generate substantial operating cash flow, with $10.1 billion for the six months ended March 31, 2025, a 24% increase over the prior year.

Capital allocation remains focused on shareholder returns while maintaining strategic investment flexibility:

• During Q2 2025, Visa repurchased approximately 13 million shares of class A common stock at an average cost of $340.26 per share, totaling $4.5 billion.
• The company had $4.7 billion of remaining authorized funds for share repurchases as of March 31, 2025.
• In April, the board of directors authorized a new $30.0 billion multi-year class A common stock share repurchase program, demonstrating confidence in the company’s future prospects and commitment to returning capital to shareholders.
• The board also declared a quarterly cash dividend of $0.590 per share of class A common stock, payable on June 2, 2025.

On March 27, 2025, Visa deposited $375 million into its litigation escrow account, which was previously established under the Company’s U.S. retrospective responsibility plan to insulate the Company and class A common stockholders from financial liability for certain litigation cases. This deposit has the same economic effect on earnings per share as repurchasing the Company’s class A common stock.

The company’s strong balance sheet and cash flow generation provide it with significant financial flexibility to invest in growth opportunities, return capital to shareholders, and navigate potential economic uncertainties.

Visa uses non-GAAP financial measures to provide a clearer view of its underlying business performance by excluding items that may distort longer-term operating trends. For Q2 2025, the primary reconciling items between GAAP and non-GAAP results include:

• Litigation provision ($992 million): Associated with the interchange multidistrict litigation (“MDL”) case. This significant item was the primary reason for the difference between GAAP and non-GAAP results in Q2 2025.
• Equity investment losses ($23 million): Net losses from equity investments that are primarily strategic in nature and do not correlate to Visa’s underlying business performance.
• Amortization of acquired intangible assets ($64 million): Non-cash charges related to intangible assets acquired in business combinations.
• Acquisition-related costs ($32 million): One-time transaction and integration costs associated with business combinations.

The reconciliation from GAAP to non-GAAP results for Q2 2025:

In addition to these adjustments, Visa presents constant-dollar growth rates to eliminate the impact of foreign currency fluctuations. For Q2 2025, non-GAAP EPS growth was 10% as reported but approximately 11% on a constant-dollar basis, providing a clearer picture of underlying earnings growth.