Visa Inc. (NYSE: V)

Visa's fiscal second quarter 2025 net revenue was $9.6 billion, an increase of 9% over the prior year, driven by year-over-year growth in payments volume, cross-border volume, and processed transactions. On a constant-dollar basis, net revenue increased by 11%, demonstrating strong underlying business performance excluding foreign exchange impacts.

GAAP net income for the quarter was $4.6 billion, a decrease of 2% from the prior year, while GAAP earnings per share increased 1% to $2.32. The current year's results included several special items that affected comparability, including a $992 million litigation provision associated with the interchange multidistrict litigation case, $23 million of net losses from equity investments, and $96 million from the amortization of acquired intangible assets and acquisition-related costs.

Excluding these special items, non-GAAP net income for the quarter was $5.4 billion, or $2.76 per share, representing increases of 6% and 10%, respectively. Non-GAAP earnings per share growth was approximately 11% on a constant-dollar basis, reflecting the company's strong underlying profitability.

Operating income increased to $5.4 billion, up 2% from the prior year despite a 22% increase in operating expenses primarily driven by the litigation provision. Excluding special items, non-GAAP operating expenses increased 7% over the prior year, primarily due to higher personnel, marketing, and depreciation and amortization expenses.

The company's effective income tax rate was 15.8% for the quarter, while the non-GAAP effective income tax rate was 16.9%. Cash, cash equivalents, and investment securities totaled $15.2 billion at the end of the quarter, providing the company with significant financial flexibility to invest in growth opportunities and return capital to shareholders.

Service revenue, which is recognized based on payments volume in the prior quarter, was $4.4 billion for the fiscal second quarter, an increase of 9% over the prior year. This growth was driven by the 9% increase in constant-dollar payments volume for the three months ended December 31, 2024.

Data processing revenue rose 10% over the prior year to $4.7 billion. This growth was supported by the 9% increase in processed transactions, which totaled 60.7 billion for the three months ended March 31, 2025.

International transaction revenue grew 10% over the prior year to $3.3 billion, driven by the 13% increase in constant-dollar cross-border volume excluding transactions within Europe. Total cross-border volume on a constant-dollar basis also increased 13% in the quarter.

Other revenue showed the strongest growth at 24% over the prior year, reaching $937 million. This category includes revenues from value-added services, consulting, and other non-transaction-based services that Visa offers to its clients.

Client incentives, which are a contra-revenue item, were $3.7 billion, up 15% over the prior year. The increase was driven by new client agreements, renewals of existing client agreements, and performance-based incentives. Client incentives as a percentage of gross revenues were 28.0%, up from 26.7% in the prior year quarter.

Payments volume for the three months ended March 31, 2025 increased 8% over the prior year on a constant-dollar basis. This growth reflects the continued resilience in consumer spending despite macroeconomic uncertainties in various markets. On a nominal basis, payments volume increased 5%, with the difference primarily attributable to currency depreciation against the U.S. dollar in certain markets.

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 also increased 13% on a constant-dollar basis. The strong growth in cross-border volumes was driven by continued recovery in international travel and the sustained growth of cross-border e-commerce. On a nominal basis, both metrics increased 10%, reflecting some foreign exchange headwinds.

Processed transactions, representing the total number of transactions processed by Visa, increased 9% year-over-year to 60.7 billion for the three months ended March 31, 2025. This growth was consistent with the overall trend of increasing electronic payment adoption and the ongoing shift from cash to digital payments across Visa's markets.

As noted by CEO Ryan McInerney: "Visa's strong 9% fiscal second quarter net revenue growth was driven by healthy trends in payments volume, cross-border volume and processed transactions. Consumer spending remained resilient, even with macroeconomic uncertainty." These key business drivers reflect the fundamental strength of Visa's business model and its ability to generate growth across different economic conditions and geographies.

Visa maintained a strong balance sheet and demonstrated its commitment to returning capital to shareholders during the fiscal second quarter of 2025:

Share Repurchases and Dividends

• Share Repurchases: During the three months ended March 31, 2025, Visa repurchased approximately 13 million shares of class A common stock at an average cost of $340.26 per share for a total of $4.5 billion
• Litigation Escrow Deposit: On March 27, 2025, Visa deposited $375 million into its litigation escrow account, which has the same economic effect on earnings per share as repurchasing class A common stock
• Quarterly Dividend: The board of directors declared a quarterly cash dividend of $0.590 per share of class A common stock, payable on June 2, 2025, to all holders of record as of May 13, 2025
• New Repurchase Authorization: In April, the board of directors authorized a new $30.0 billion multi-year class A common stock share repurchase program

Balance Sheet Highlights

• Cash Position: Cash, cash equivalents, and investment securities totaled $15.2 billion as of March 31, 2025
• Total Assets: $92.9 billion as of March 31, 2025, compared to $94.5 billion as of September 30, 2024
• Total Liabilities: $54.8 billion, including $20.8 billion in debt ($3.9 billion classified as current)
• Total Equity: $38.0 billion, down from $39.1 billion at the end of fiscal 2024

The company's strong cash flow generation and robust balance sheet continue to provide financial flexibility to invest in growth initiatives while returning significant capital to shareholders. The new $30.0 billion share repurchase authorization underscores the board's confidence in Visa's long-term business prospects and commitment to delivering shareholder value.

As of March 31, 2025, Visa had $4.7 billion of remaining authorized funds for share repurchases under the previous program, which will be available in addition to the newly authorized $30.0 billion program. This positions the company to continue its significant capital return program in the coming years.

Visa continues to execute on its strategic priorities across consumer payments, commercial and money movement solutions, and value-added services:

Key Strategic Focus Areas

• Digital Transformation: Expanding digital payment capabilities and enhancing the digital payment experience across channels and devices
• Value-Added Services: Growing the suite of services beyond core payment processing, as evidenced by the 24% growth in other revenue
• Commercial Payments: Focusing on corporate and B2B payment solutions to capture the significant opportunity in the commercial payments space
• Cross-Border Solutions: Enhancing cross-border capabilities to facilitate seamless global commerce and money movement
• Security and Fraud Prevention: Continuing to invest in advanced security technologies to protect the payment ecosystem

CEO Ryan McInerney highlighted the company's strategy in his statement: "Our strategy across consumer payments, commercial and money movement solutions and value-added services, our diversified business model, and our focus on innovation position us well for the rest of the fiscal year and beyond." This strategic approach leverages Visa's global network and technological capabilities to drive growth across multiple dimensions.

The company's investment in innovation continues to be a key focus, with increased spending on product development and technology infrastructure. Operating expenses related to personnel and technology reflect Visa's commitment to maintaining its leadership position in the evolving payments landscape through ongoing innovation and talent acquisition.

Visa's approach to partnerships and acquisitions also remains an important element of its strategy, with the company making selective investments to enhance its capabilities and expand its reach. During the first six months of fiscal 2025, Visa reported $887 million in acquisitions (net of cash and restricted cash acquired), demonstrating its continued focus on strategic inorganic growth opportunities that complement its organic initiatives.