Q4 2024 Visa Inc Earnings Call
Speaker Change: Welcome to VISA's Cisco fourth quarter in full year 2024 earnings conference call.
Speaker Change: Information concerning those factors is available in our most recent interim report on Form 10-K, and any subsequent reports on forms 10-Q, and 8-K, which you can find on the Sec's website and the Investor Relations section of our website.
Speaker Change: Our comments today regarding our financial results will reflect revenue on a GAAP basis and all other results on a non-GAAP nominal basis, unless otherwise noted.
Speaker Change: The related GAAP measures and reconciliation are available in today's earnings release and related materials available on our IR website.
Speaker Change: And with that let me turn the call over to Ryan.
Ryan: Good afternoon, everyone. Thank you for joining us.
Ryan: Our fourth quarter results were very strong with $9.6 billion in net revenue up 12% year over year and EPS up 16%.
Ryan: Our key business drivers were relatively stable compared to Q3.
Ryan: In constant dollars overall payments volume grew 8% year over year.
Ryan: U S payments volume grew 5% and international payments volume grew 10%.
Ryan: Cross border volume, excluding intra Europe rose 13%.
Ryan: And processed transactions grew 10% year over year.
Ryan: As I reflect on this quarter and the full fiscal year I'm incredibly proud of the more than 31000 visa employees, who have been focused on delivering our strategy and enabling our clients with compelling solutions, which resulted in the company's strong performance.
Ryan: We have continued to grow our consumer payments business through an intense focus on product design and innovation.
Ryan: And new flows are targeted strategy for non consumer payments is paying off.
Ryan: And in value added services, we have deepened our relationships with our clients through multiple different solutions.
Ryan: And continued to expand our services to non visa transactions.
Ryan: We have done all this while further increasing our suite of solutions.
Ryan: Now, let's dive into some of the highlights for the fourth quarter and the year.
Ryan: In consumer payments, we continued to increase credentials and acceptance.
Ryan: We have over $4 6 billion credentials up 7% year over year, and 11.5 billion tokens with more than 30% of our total transactions token eyes.
Ryan: Global merchant locations crossed $150 million.
Ryan: The Olympics and Paralympic certainly helped.
Ryan: With more than 7 million Paris, 2020 for branded cards issued and more than 130000 merchant locations added in Europe.
Ryan: And I am, particularly excited about new acceptance use cases.
For example, we renewed an agreement with cantaloupe, a leading provider of self service commerce across sectors, such as food and beverage automated retail with over a million active devices globally.
Ryan: And more than a 1 billion transactions annually.
And in the Netherlands, we reached an agreement with the country's largest grocer Albert Hein to expand in store acceptance to all visa products.
Ryan: We also recently renewed our agreement with App folio in the U S for rental payments acceptance.
Ryan: <unk> is one of the largest software providers in the property management space and services 8 million plus units across more than 20000 clients.
Ryan: Throughout the year, we have continued to innovate in order to expand visa's capabilities to non card payments.
Ryan: This quarter, we announced visa Ada a bringing the power of Visa's brand infrastructure and rules as well as consumer protections to enable simpler safer and more secure account to account payments.
Ryan: We are excited to be collaborating with several banks, including Natwest and nationwide building society, and several leading fintech, including modular to deliver an industry driven solution to unlock the full potential of our account to account transactions in the U K.
Ryan: And visa AIA is open open to any eligible bank open banking provider and verified biller.
Ryan: Initially this is targeted at bill payments and we plan to launch in 2025 in the UK.
We are very excited to bring this to market.
In prior quarters.
Ryan: I've mentioned, our account to account fraud risk, scoring solution visa protect for Ada a payments.
Ryan: It was recently announced as Juniper researches platinum winner for fraud and security innovation of the year Award and we will be piloting on 10, new RTP networks in 2025.
Ryan: We're also seeing very strong interest in our new flexible credential, which enables multiple payment options from one visa credential.
Ryan: We have hundreds of issuers in the pipeline and several launches planned for 2025 in the U S Asia Pacific Europe and EMEA.
Ryan: Last quarter I mentioned the expansion of tapping use cases on a mobile device.
Ryan: Tap to add card is now enabled by issuers in more than 15 countries across our five regions.
Ryan: We know that transit is a key activator for tapping and global tap to ride transactions exceeded $2 billion for the first time in fiscal year 2024 up 25% year over year.
Ryan: We added more than 110, new transit systems throughout the year in cities, such as Boston Athens, Beijing, Las Vegas in Lima to total over 870 globally and more than 40% of these new systems also use our value added services acceptance.
Ryan: <unk>.
Ryan: Tap to pay penetration globally, excluding the U S was at 82% up six points from 2023 and.
Ryan: And in the U S. It was at 54% up 13 points from last year with 29 out of the top 30 U S merchants accepting tap to pay.
Ryan: Now pivoting to some deal highlights we had some significant renewals this quarter around the globe.
Ryan: First with one of our largest clients in Latin America, Grupo Pro America, and credit debit and commercial across eight countries.
Ryan: Second with our largest Asia Pacific client SMC across consumer and commercial credit.
Ryan: Third with our largest <unk> client all rajiv across consumer commercial and value added services, including Cybersource and visa risk manager our network agnostic risk product.
Ryan: And across both Asia Pacific in EMEA with standard chartered Bank, a credit renewal across key markets in Asia, a debit renewal with key markets in Africa, as well as a new expansion in the middle East for credit.
Ryan: In addition, they will continue to use our value added services.
Ryan: In North America, we had three very important renewals.
Ryan: In Canada, we renewed our relationship with the country's top issuer RBC across consumer credit and debit small business credit and commercial credit.
Ryan: In the U S. We recently extended our long standing partnership with U S bank to grow our relationship across their consumer and commercial portfolios.
Ryan: And we have renewed with USAA across both their consumer debit and credit portfolios.
Ryan: Finally in Europe building upon our strong relationship in Italy and across 11. Other markets. We are pleased to have renewed the strategic agreement with Intesa Sanpaolo.
Ryan: Expanding our collaboration in Italy, with the largest bank in the country for innovative solutions amongst businesses and consumers.
Ryan: In addition, together we will enable new value added services for their visa customers.
Ryan: Across all of our regions and all of our Fintech partners from early stage to mature we signed over 650 commercial partnerships up 30% from last year.
Ryan: As you can see we have continued to grow our businesses through active engagement with our clients and a relentless focus on new product innovations.
Ryan: Now moving to new flows where our targeted strategy for capturing newer areas of growth is paying off.
Ryan: This quarter, New flows revenue grew 22% year over year in constant dollars.
Ryan: Visa direct transactions grew 38% for the quarter to $2 8 billion and commercial volumes grew 5% year over year.
Ryan: We finished the year with almost 10 billion visa direct transactions and $1 seven trillion in commercial payments volume.
Ryan: Commercial credentials grew at 18% year over year significantly faster than the 7% growth for total credentials that I mentioned earlier.
Ryan: We are very focused on growing <unk> to be in new verticals such as travel.
Ryan: We are pleased to announce that we signed a virtual card issuing deal with JP Morgan Chase in Europe.
Ryan: This is a significant opportunity for visa to further build on our strong issuing relationship in North America as well as further grow in the BTB travel vertical.
Ryan: Additionally, in Europe, we will be partnering with audience. So that they can offer online travel agencies or otas visa virtual cards as part of their <unk> travel solution.
Ryan: Another area of focus is the cross border <unk> space, where we offer significant value for complex payments through both card and visa <unk> connect.
Ryan: For visa BTB connect we increase the number of banks that have signed on by almost 40% year over year and the number of transacting banks is up nearly 60%.
Ryan: In Korea, we reached two agreements with Hana card the.
Ryan: The first is a commercial and consumer credit and debit issuance partnership with enhanced multi currency capabilities targeted towards the cross border needs of its customers.
Ryan: The second is an agreement with Hana card and the government trade agency culture. So that small business ex borders can receive cross border BTB payments via card.
Ryan: In Canada. We are very pleased to have won the multi currency credit issuance with Fintech loop, a cross border banking platform for Canadian based Smbs.
Ryan: In addition, our cross border capabilities through currency cloud will provide FX solutions across accounts digital wallets and international payments.
Ryan: In Australia, we reached a multi currency commercial debit agreement with <unk>, a leading global money transfer company that offers foreign exchange services international payment and spend management controls.
Ryan: Now moving to visa direct where we have continued to grow through new and expanded relationships.
Ryan: In Europe, we expanded our existing cross border PDP partnership with Revolute to now allow real time card transfers for their business customers via the visa direct platform in over 78 countries supporting over 50 currencies.
Ryan: In the U S. We're excited about an expanded partnership with daily pay who as users are currently accessing earnings on demand via visa direct to now seamlessly send those earnings as international remittances to friends and family around the world.
Ryan: In Brazil, we reached a new agreement with Travelex Banco de <unk>, one of the largest foreign exchange banks in the country and the first to specialize in FX operations regulated by the Central Bank.
Ryan: The client will use visa direct for import and export payments and for remittances to a broad range of destinations.
Ryan: So across our new flows we have seen our specific strategies succeeding in the marketplace.
Ryan: And now on to value added services, where revenue was up 22% in the fourth quarter and full year in constant dollars.
Ryan: Let's look at the progress we have made across our value added services.
Ryan: In our issuing solutions, our core banking and issuer processing platform Pismo has a good pipeline and its solutions are resonating with clients with nearly 12 billion API calls a month.
Ryan: Recently Pismo renewed its agreement with <unk> in Brazil.
Ryan: And in 2025, we plan to expand pismo offerings to clients in more than five countries across four regions.
Ryan: In risk and identity solutions, we recently announced our intent to acquire feature space a developer of real time artificial intelligence payments protection technology.
It will enable visa to provide enhanced fraud prevention tools to our clients and protect consumers in real time across various payment methods.
Ryan: And worldwide.
Ryan: Already a visa partner and leading European acquirer will soon be launching an optimized fraud management solution utilizing decision manager to provide businesses with AI based e-commerce fraud detection capabilities.
Ryan: In acceptance.
Ryan: Food delivery platform food Panda has been a long standing cybersource clients in Asia across several markets.
Ryan: They will also soon be using our AI powered data token solution, which we announced earlier this year, enabling customers to control how their data is used to experience tailored shopping experiences.
Ryan: In advisory services visa consulting and analytics delivered more than 3000 consulting engagements during the year and we estimate that we helped clients realize over $5 billion of incremental revenue as a result.
Ryan: So our value added services have continued to show strong momentum.
Ryan: Across both visa and non visa transactions and nonpayment value added services.
Ryan: Before I close I.
Ryan: Wanted to make a few comments on the recent lawsuit by the department of Justice.
Ryan: We believe the lawsuit is meritless and shows a clear lack of understanding of the payments ecosystem in the United States.
Ryan: We will defend ourselves vigorously and are confident in our ability to demonstrate that visa competes for every transaction and a thriving debit space that continues to grow and see new entrants.
Ryan: In closing I am proud of our team and all that we've accomplished.
Ryan: We delivered on our financial expectations, while also investing in visa's future through important product innovation.
Ryan: Back at 2020 at our Investor Day, we set a goal for new flows and value added services revenue to represent more than 30% of net revenue by the end of 2024 I am pleased to say that we have exceeded that goal.
Ryan: And we will be hosting another investor day on February 22025 here in San Francisco, when we can talk more about our strategy to continue growing value added services, new flows and consumer payments.
Ryan: I see tremendous opportunity ahead and feel confident in our plans to get us there now.
Chris: Now over to Chris.
Chris: Thanks, Brian Good afternoon, everyone.
Chris: We closed the year with another strong quarter in Q4, we saw relatively stable growth across payments volume cross border volume and processed transactions when compared to Q3.
Chris: In constant dollars global payments volume was up 8% year over year and cross border volume, excluding intra Europe was up 13% year over year.
Chris: Processed transactions grew 10% year over year.
Chris: Fiscal fourth quarter net revenue was up 12% above our expectations, primarily due to lower than expected incentives.
Stronger than expected other revenue and FX being less of a drag than expected.
Chris: Net revenue was also up 12% in constant dollars.
Chris: EPS was up 16% year over year and 17% in constant dollars higher than expected from the strong net revenue performance and a lower than expected tax rate.
Chris: Let's go into the detail.
In the U S total payments volume grew 5% year over year in line with Q3.
Chris: Credit and debit also each grew 5%.
Chris: Card present volume grew 2% and card not present volume grew 6%.
Chris: Consumer spend across all segments from low to high spread has remained relatively stable to Q3.
Chris: Our data does not indicate any meaningful behavior change across consumer segments from last quarter.
Chris: Moving to international markets total payment volume was up 10% in constant dollars stable to Q3.
Chris: In most major regions payments volume year over year growth rates in constant dollars were strong for the quarter with Latin America up 24%.
Chris: EMEA up 19% and Europe up 12%.
Chris: Asia Pacific payments volume.
Chris: Marginal improvement from Q3 in constant dollars for the quarter, but was still less than 1% year over year growth, primarily due to the macroeconomic environment, most notably in mainland China.
Chris: Asia Pacific payments volume growth, excluding mainland China was relatively consistent to Q3.
Chris: Now the cross border volume, which I will speak to today in constant dollars and excluding intra Europe transactions.
Total cross border volume was up 13% in Q4 below Q3 in line with our expectations.
Chris: Q4 Cross border e-commerce measured as card not present volume, excluding travel and crypto purchases grew 15%.
Chris: Which was faster than cross border travel volume growth at 12% in line with our expectations.
Indexed to 2019 cross border travel was relatively consistent with Q3.
Chris: As we look at the travel corridors. The primary driver of the lower year over year Cross border travel volume growth with Asia Pacific inbound and outbound, which continued to be impacted by the same primary factors, we've been mentioning all year macroeconomic conditions currency weakness and flight bookings being below pre.
Covid levels.
Chris: We also saw a step down in Samira outbound travel volume growth compared to Q3 due to Ramadan timing.
Chris: Normalized for this this EMEA growth was stable.
Chris: Now, let's review, our fourth quarter financial results I'll start with the revenue components.
Chris: Service revenue grew 8% year over year versus the 7% growth in Q3 constant dollar payments volume due to mix and improving utilization of card benefits.
Chris: Data processing revenue grew 8% versus 10% processed transaction growth, primarily due to fees and penalties being lower than the prior year.
Chris: International transaction revenue was up 9% versus the 13% increase in constant dollar cross border volume, excluding intra Europe impacted by lapping higher currency volatility from last year, even with the average quarterly volatility being slightly higher in Q4 versus Q3.
Chris: Other revenue grew 30%, primarily driven by strong marketing services revenue growth related to the Olympics consulting and to a lesser extent pricing.
Chris: Client incentives grew 6% as expected Q4 was the annual low point for year over year growth due to lapping significant renewals from the prior year.
Chris: In addition, it was further lowered from some onetime adjustments due to client performance.
Speaker Change: While Brian mentioned, a significant amount of renewal activity in his remarks, the majority of that impact will begin in Q1 of 'twenty five.
Speaker Change: Now onto our three growth engines consumer payments revenue growth was driven by relatively stable payments volume cross border volume and processed transaction growth.
Speaker Change: New flows revenue grew 22% year over year in constant dollars helped by a one time rebate adjustment due to deal timing.
Speaker Change: Visa direct transactions grew 38% year over year helped by growth in Latin America for interoperability among PDP apps.
Speaker Change: Commercial volume rose, 5% year over year in constant dollars below Q3, primarily due to today's mix.
Value added services revenue grew 22% in constant dollars to $2 4 billion.
Speaker Change: Led by strong growth in marketing services, and consulting and issuing solutions.
Speaker Change: Operating operating expenses grew 11% led by increases in marketing and personnel expenses.
Speaker Change: <unk> was a minimal drag.
Speaker Change: Instead of the half point benefit we had expected.
Speaker Change: Our acquisition of <unk> represented an approximately half point drag as well.
Speaker Change: Non operating income was $69 million.
Speaker Change: Our tax rate was 16, 5% due to an update in our tax position across jurisdictions.
Speaker Change: EPS was $2 71.
Speaker Change: Up 16% over last year within approximately one point drag from exchange rates and an approximately half point drag from piecemeal.
Speaker Change: In Q4, we bought back approximately five 8 billion in stock and distributed over 1 billion in dividends to our stockholders.
Speaker Change: We also funded the litigation escrow account by $1 5 billion, which has the same effect as the stock buyback.
Speaker Change: At the end of September we had $13 $1 billion remaining in our buyback authorization.
Speaker Change: As we closed out fiscal 2024 and readied for fiscal 2025, I reflected on our full year performance relative to what we had expected at the start of the year.
Speaker Change: With a strong Q4 full year net revenue grew 10% in line with our expectations and EPS grew 15% above our expectations, a testament to visa diversified business model.
Speaker Change: Volatility has started strong in Q1, but then declined and remained at lower than expected levels throughout most of the year.
Speaker Change: For incentives, we anticipated year over year growth will be lower than fiscal 2023, due primarily to smaller impacts from renewals in fiscal 2024.
Speaker Change: The growth rate ended up being even lower than we expected due to client performance adjustments and deal timing.
Speaker Change: On the business driver front process transactions grew 10% as expected.
Speaker Change: Payments volume grew 8% in constant dollars below expectations due to a combination of weakness in Asia Pacific as we have discussed and in the U S from ticket size, not improving as expected and to a lesser extent from the Red II impact.
Speaker Change: Total cross border volume growth, excluding intra Europe was 15% in constant dollars generally in line with our original expectations, though the growth in cross border travel volume was lower primarily due to Asia Pacific travel and card not present, excluding travel volume growth performed better than we expected.
As we've seen this year volumes and transactions can swing quarter to quarter. As these drivers fluctuate we work carefully to manage our business to deliver on our expectations.
Speaker Change: So as we thought about our budget and guidance philosophy going into fiscal 2025, it's largely the same approach and represents our best view based on today.
Speaker Change: So let's get into the guidance details and a quick note when I referenced 2024, and 2025 I'm, referring to our fiscal years.
Speaker Change: As we regularly say we are not economic forecasters, so where.
Speaker Change: Assuming the macroeconomic environment stays generally where it is today.
Speaker Change: As such we expect payments volume and processed transactions growth to remain strong and generally in line with full year 2024 levels.
Speaker Change: For cross border volumes, we expect the Q4 2004 trend to generally continue with card not present, excluding travel volume growing slightly more than travel volume.
Speaker Change: Now, let's cover our underlying assumptions for net revenue growth first volatility.
Speaker Change: We're expecting that the full year currency volatility levels are roughly in line with the Q4, 2004 average, which implies that volatility will no longer be a drag starting with Q2 25.
Speaker Change: Next pricing, we will continue to price to value in 2025.
Speaker Change: With the pricing impact being generally the same as 2024. However, the cadence is expected to be different as we expect the vast majority of the incremental pricing impact will take effect in April versus being more balanced between October and April as it was in 2024.
Speaker Change: On incentives first there were a significant amount of renewals and Ryan's remarks that will be impacting Q1, 'twenty five incentives in total we expect more than 20% of our payments volume to be impacted by renewals in 2025 compared to less than 15% that was impacted in 2024.
Speaker Change: Second remember that in the first and second quarters of 2024, we called out client performance and deal timing is helping incentives and in Q4, we had additional onetime performance adjustments adding.
Speaker Change: Adding this up 2025 year over year incentives growth is expected to be significantly higher than 2024.
Speaker Change: We expect to close on process and feature space in 2025, and when we do we will update our estimates for the acquisition impacts.
Speaker Change: We pulled these assumptions together on an adjusted basis defined as non-GAAP results in constant dollars and excluding acquisition impacts you can review these disclosures in our earnings presentation for a more detail.
Speaker Change: In 2025, we expect full year adjusted net revenue growth to be in the high single to low double digits with incentives being the key driver of the difference between 24 and 2025.
Speaker Change: As always revenue performance is sensitive to several factors so to the extent that there are deal delays or significant deal performance adjustments.
And or macro volatility and driver performance that is better than expected adjusted net revenue growth would be on the higher end of the range in terms of quarterly variability. We expect the second half revenue performance to be better than the first due to some of the dynamics I have spoken about volatility pricing and to a.
Speaker Change: A lesser extent incentive.
Speaker Change: Now moving to expenses, we currently expect to grow adjusted operating expense in the high single digit to low double digits. As we continue to fund new flows and value added services projects, our sales efforts and growth initiatives in specific countries.
Speaker Change: Non operating income is expected to be between 150 and $200 million as a result of lower interest rates.
Speaker Change: Our tax rate is expected to be between 18% and 18, 5%.
Speaker Change: On capital return the board has declared an increase to our quarterly dividend by 13% and we intend to return excess free cash flow to shareholders through buyback.
All of this results in adjusted EPS growth to be in the high end of low double digits.
Speaker Change: Now moving to Q1 for the first three weeks of October through the 21 with volume growth in constant dollars U.
Speaker Change: U S payments volume was up 6% with debit up 7% and credit up 6% year over year.
Speaker Change: Cross border volume, excluding intra Europe grew 13% year over year.
Speaker Change: Processed transactions grew 11% year over year.
Speaker Change: Now the financial expectations.
Speaker Change: We expect Q1 adjusted net revenue growth in the high single digits.
Speaker Change: Three things to note when we look at the step down in adjusted net revenue growth from the fourth quarter in 2024 to the first quarter in 2025.
Speaker Change: First incentives there are a number of factors impacting incentives, especially in Q1 in each one so let me go through each part.
As I mentioned earlier Q4 incentives growth was even lower than expected with the combined impact of the lapping of significant renewals in 2023, and the one time adjustments due to client performance.
Speaker Change: As I also mentioned in 2025, we expect a significantly higher amount of our payments volume to be impacted by renewals approximately 20% compared to under 15% in 2024.
Speaker Change: This is a combination of the large amount of renewals in Q4 24 that will go into effect plus the amount of renewals we expect in 2025.
Speaker Change: In addition, the timing of the deal terms in 2025 is such that we expect about 60% of the 2025 renewal volume to go into effect in Q1.
Speaker Change: Putting those all together, we expect a significant step up in the dollar amount of incentives from Q4 of 24 to Q1 of 'twenty five.
Speaker Change: Second the timing of pricing actions as.
Speaker Change: As I mentioned, whereas in 2020 for the pricing impact was similar quarter to quarter. This year, we expect less pricing impact in the first half than the back half with Q1, having the smallest impact.
Speaker Change: Third other revenue as we do not have a major event in Q1 like the Olympics or FIFA, we anticipate lower growth in consulting and marketing services related revenue compared to Q4.
Speaker Change: We expect adjusted operating expense growth to be in the high single digit to low double digits on a year over year basis remember that the first quarter of 2024 had a lower operating expense growth rate both from lapping FIFA related expenses in 2023 and from the allocation.
Speaker Change: Of Olympic related marketing spend to other quarters.
Speaker Change: Non operating income is expected to be between 35% and $45 million and our tax rate is expected to be around 18, 5%.
Speaker Change: This puts our first quarter adjusted EPS growth in the low double digits.
Speaker Change: As always if the environment changes and there are events that impact our business, we will remain flexible and thoughtful on balancing short and long term considerations.
Speaker Change: As we are several weeks into fiscal 2025.
Speaker Change: Pieces underlying business continues to be healthy and the growth opportunities are significant we look forward to discussing this and our long term growth algorithm at the upcoming Investor day and.
Speaker Change: Now Jennifer I'll hand, it back to you.
Jennifer: Thanks, Chris and with that we're ready to take questions.
Speaker Change: If you would like to ask a question. Please press star and one clearly and clearly record. Your name you will be announced prior to asking your question to ensure all questionnaires are hard we ask that you. Please limit yourself to one question once again to ask a question. Please press Star then one to withdraw your question Press Star two.
Speaker Change: Our first question comes from Rishi that Hershey would ever what from Bernstein. Please go ahead.
Rishi Bernstein: Good afternoon, and thank you for taking my question.
Rishi Bernstein: What is going on in the U S.
Speaker Change: It should be fun.
Speaker Change: The Doj lawsuit.
Speaker Change: Yes.
D a.
Speaker Change: Can you share your overall positive.
Litigation environment.
Speaker Change: Yes.
Speaker Change: Chris just.
Speaker Change: Just as a follow up.
Speaker Change: Can you help us maybe size yes.
Speaker Change: Do you have any exposure to U S debit including benefits.
Speaker Change: Thank you.
Speaker Change: Yes. Thanks for the question as you know a lot going on not just in the U S. But all over the world I think.
Speaker Change: Regulators appropriately.
Speaker Change: Looking at the payments ecosystem and want to ensure that.
Speaker Change: Theres fair competition that.
Speaker Change: There's multiple options for consumers and merchants in Prague.
Speaker Change: Process of engagement that we have in the U S to your question, but also with regulators elected officials all around the world.
Speaker Change: We feel very good about our ability to manage through that complexity, we feel very good about the ability to continue to run and grow our business and we feel very good about the ability to continue to innovate and to continue to serve our clients.
Speaker Change: And in terms of revenue exposure, that's not something that we we disclose and as it relates to the U S debit or other.
Speaker Change: Other parts of the business like that but.
Speaker Change: In terms of our ability to compete we felt really really good about it.
Speaker Change: Next question.
Speaker Change: Next we'll go to the line of Ramsey El <unk> from Barclays. Please go ahead.
Speaker Change: Hi can you give us your updated thoughts on the competitive environment, especially as it pertains to us specifically as it pretends to pay by bank, we're seeing Walmart move forward with a new product and chatter around some other offerings with finished products in the past, but I'm just wondering if there's anything that sort of changed on the ground to make these a little more <unk>.
Speaker Change: Resting for consumers I know you guys are involved as well serving that part of the market now so curious to get your comment.
Speaker Change: Yes, there is a lot going on with account to account payments in the U S and around the world as you note as well.
Speaker Change: Pay by bank is not a new capability.
Speaker Change: It's not a new capability in United States is not a new capability for Walmart.
Speaker Change: I think as of today, you can load three different bank accounts into your Walmart Dot com wallet to pay for things and as you alluded to David also put some news out that theyre going to have a new partnership that I think is going to further enhance that.
Speaker Change: We expect that account to account payments will continue.
Speaker Change: Proliferate here and around the World, We think Theres a lot that we can add in terms of value to account to account payments I mentioned some of those things in my prepared remarks, but as I've talked about several times on this call. It is a very very competitive environment in which we operate but we feel very very good about our.
Speaker Change: Products, our innovation, our ability to provide value to end users in terms of buyers and also sellers and therefore, our ability to continue to grow the business.
Speaker Change: Next question.
Speaker Change: Next we will go to the line of Sanjay <unk> from <unk>. Please go ahead.
Speaker Change: Thank you had a question on commercial volumes I know they decelerated. These days I'm, just wondering what kind of growth rate, we should expect on a go forward basis.
Speaker Change: And are there some macro impact, but maybe just talk about that.
Speaker Change: Thanks.
Chris: Sanjay This is Chris.
Chris: As you noted we did see Dave mix impact in Q4 with commercial volumes, but if I just back way up.
Chris: Excited about the opportunity in new flows.
Chris: We're optimistic about the big opportunity ahead and over time, we do anticipate that we'll see continued growth of commercial volumes ahead of consumer our consumer volumes overtime.
Speaker Change: Next question.
Speaker Change: Next we'll go to the line of Paul Golding from Macquarie. Please go ahead.
Paul Golding: Thanks, so much with the feature space acquisition and process I just wanted to ask how you see AI playing into the business model do you see it more as driving bass are incremental.
Paul Golding: This model uplift revenue or cost improvement or is it more of a competitive differentiator that will just keep you ahead.
Ahead of your competition.
Yes. Thank you.
Speaker Change: In short I see it as both but let me unpack a couple of things that you said first in terms of feature space. We're very excited about the opportunity to close on the feature space acquisition as I travel around the world financial.
Speaker Change: <unk> fraud is at the top of mind of clients partners regulators all around the world and feature space is a world leader in providing AI driven solutions to combat that fraud to reduce that fraud to enable our clients and partners.
Speaker Change: To continue to serve their customers in a safe way. So we're very excited about that.
Speaker Change: As it relates more broadly to especially generative AI at visa.
Speaker Change: See it really in two different buckets the first.
Speaker Change: As we are adopting it aggressively across our company to drive productivity.
And we've seen some great results.
Speaker Change: From everywhere to our engineering teams to our accounting team to our sales teams our client service teams.
Speaker Change: And we're still in the early stages of I think the very significant impact this will have.
Speaker Change: On the productivity of our business I also see it as a real differentiator to the products and services that we're putting in market.
Speaker Change: You've heard me talk about some of the new risk capabilities risk management capabilities. For example that we've deployed in the account to account space, which are all enabled with generative AI you mentioned feature space. We've had some really good success in other parts of both our value added services business and the broader.
Speaker Change: Consumer payments business as well and we've got a product pipeline that is very heavily tilted towards we think very exciting generative AI capabilities that hopefully you'll hear more from us on soon one of those I mentioned in my prepared remarks, which was the data token that we're starting to pilot with food Panda, which is one example.
Speaker Change: With that thank you next question.
Speaker Change: We will go to the line of Tien Tsin Huang from Jpmorgan. Please go ahead.
Speaker Change: Okay.
Thank you I just wanted to ask how growth and 25 might look different than 24 across.
Speaker Change: Consumer payments, new flows and value added services.
Speaker Change: Yes, Hi, Tim.
Speaker Change: So we don't guide by consumer payments, new flows and value added services, but let me just give you a little bit more color on how we think about the guide that we did get.
Speaker Change: At the highest level, we took the same approach to guidance as we did a year ago, which is really to provide guidance based on our best estimate of what we expect to happen throughout the year and so.
Speaker Change: If we take all our assumptions and those assumptions play out as we've articulated we would expect total revenue growth adjusted net revenue growth to be in the middle of the range that we provided and obviously if those.
Speaker Change: <unk> those variables turned out to be better that could push us to the high end of revenue growth.
Speaker Change: And vice versa, if those assumptions turn out to be slightly worse, the key variables that I would call out or there's three there's probably four here to talk about one is incentives. Our plan is based on our best estimate of renewals in deal activity, but as we saw in FY 'twenty for those results can vary quarter to quarter.
Speaker Change: With client performance and timing of deals and lower growth could push revenue growth toward the upper end of the range two would be cross border volumes higher or lower growth in cross border volumes would also contribute toward higher lower.
Speaker Change: That revenue range.
Speaker Change: Third there will be volatility we've assumed FY.
Speaker Change: FY 'twenty five full year on average to the levels that we saw in Q4 and any significant swing could impact revenue and 25.
Speaker Change: And of course across all of it is the assumption on macro on the macro economy. As we've always said, we're not forecasters of the economy, but in the event. The U S. In the U S or globally of PCE grows faster than currently forecasted then we should also see stronger growth as well and so all of these factors can play a role.
Speaker Change: We feel good about the plan that we've shared here for the full year at the start of the year end and we'll obviously continue to update you as the year unfolds.
Speaker Change: Next question.
Speaker Change: Next we will go to the line of Reena Kumar from Oppenheimer. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking my question.
Reena Kumar: Lastly, the CFPB issued a final open banking role for the U S. Can you talk about what opportunities that could prevent that from king.
Reena Kumar: Perspective on the potential headwinds that are cool. Thank you.
Speaker Change: My understanding is that the new rules that they I guess finalized are largely consistent with the Cfpb's initial proposal.
Speaker Change: We are strong advocates for consumers, having more control and more access to the financial data, but ensuring that it is in a safe and secure way.
Speaker Change: We're still evaluating all the details of the potential impacts from the more detailed regulations across the industry, but.
Speaker Change: It goes without saying our own capabilities will comply with the CFPB rules as well as our clients very high bar for security and privacy.
Speaker Change: Widening the aperture a little bit to the opportunities that it creates I think.
Speaker Change: In an environment that open banking is even more available in the United States like it is in places like Europe. What we've found is that the visa brand can be a meaningful differentiator. The visa brand can give confidence to end users and data providers.
And that if we can bring our capabilities to market like we've done in Europe.
Speaker Change: With visa Ada a we can give more confidence to the whole ecosystem and help resolve a lot of the complexities that exist.
Speaker Change: Open banking, so we remain excited about the opportunities to add value.
Speaker Change: Especially in the U S, where we're still in the pretty nascent stages of all this next question next.
Speaker Change: Next we'll go to the line of Andrew Schmidt from Citi. Please go ahead.
Andrew Schmidt: Hey, Brian Hey, Chris Thanks for taking my questions. This afternoon.
Andrew Schmidt: Had to ask about value add services growth, it's really good to see the consistency there.
Maybe you could just talk about the predictability and then maybe comment a little bit more on the planning process of how you sort of see the engine and continue to drive that growth I know there is organic and inorganic components penetration aspects to this but if you could help unpack that I know, it's a lot of things and there are big help unpack that.
Andrew Schmidt: It would be great. Thanks, so much.
Speaker Change: Yes, we too are very excited about the consistent growth, we've been able to deliver year after year with the value added services businesses.
Speaker Change: And we deliver that.
Through planning sales planning client planning product road mapping all the things that you would expect we do.
Speaker Change: Business by business and the issuer solutions business, the acquirer solutions business risk and advisory business and so on and so forth.
Speaker Change: When you think about the opportunity here is how I would encourage you to think about it which is the same way we kind of plan to go to market.
We deliver value added services for visa transactions and these are offerings that are built to enable visa to be the best way to pay and be paid market by market around the world and we're continuing to invest to add new functionality to improve the payment success and the security on the network. So these are products and services like.
Visa account update or the risk products that we talk a lot about like visa secure the dispute tools that we deliver like visa resolve online the benefits that we offer so that's kind of one component of the opportunity.
Speaker Change: The second part of the opportunity is services for non visa transactions.
Speaker Change: This is an area you've heard me and us talking a lot more about in recent quarters.
Speaker Change: This includes acceptance services like Cybersource authorize that net verify risk tools like decision manager.
Speaker Change: Processing solutions.
Speaker Change: Dps like Pismo.
Speaker Change: And again these are all capabilities that we're bringing to market for our clients that add value for all different types of payment transactions.
And then the third set of opportunities that we're going after our services beyond payments.
Speaker Change: This is a much broader category. It includes things like our consulting and analytics teams our marketing services teams.
Speaker Change: Open banking services, such as <unk>, we were talking about earlier in terms of their data aggregation solutions, we're now offering core banking.
Speaker Change: Platform services as part of the Pismo acquisition as well so that hopefully gives you a sense of how we.
Speaker Change: We look at the opportunities we look at the competitive sets, we build and deliver products, we build and deliver our sales motions and go to market and ultimately deliver the consistent growth that you referenced next question.
Speaker Change: We will go to the line of Dave Koning from Baird. Please go ahead.
Dave Koning: Yeah, Hey, guys. Thank you on the cross border line revenue growth was stable at 9%. This quarter same as last quarter, but reported volumes accelerated a percent and I would think FX volatility was less bad so that probably helped a little bit and mixing it about the same. So I was wondering is there anything else any other little headwinds emerging.
Dave Koning: What maybe what created the gap.
Speaker Change: Yes sure.
Speaker Change: So a couple of things so as you pointed out.
Speaker Change: International revenue grew slower than <unk>.
Speaker Change: Total cross border volumes. It really did have to do with the volatility. So Q4 volatility did improve from Q3, a bit but it was lower than the volatility that we saw last year.
Speaker Change: And secondly, the associated volume cross border volume, 13% in Q4 as expected, but also lower than the volume growth that we saw in Q4, a year ago and so when you combine those things.
Speaker Change: That had the impact of the differential that you see between volumes and revenue.
Speaker Change: Next question next.
Speaker Change: Next we'll go to the line of Tim <unk> from UBS. Please go ahead.
Speaker Change: Great. Thank you for taking my question. So I wanted to dig into too specific aspects of value added services, So first being TPS and the second being cybersource.
Speaker Change: And believe those two combined make up a reasonably large portion of the transaction date.
Speaker Change: It services.
Speaker Change: A lot of disclosure on Dps was about $2 five trillion in volume.
Speaker Change: <unk> cyber sources in the roughly one trillion I was hoping you could give us sort of relative growth rates.
Speaker Change: To the rest of the value added services.
Speaker Change: And maybe some updated stats if possible. Thanks.
Speaker Change: Yes. Thanks for the question, we're Super proud about the progress that we're making in Dps and Cybersource.
Speaker Change: Being primarily in the U S and Cybersource being a really at scale global platform now, but we don't provide.
Speaker Change: Transaction volume growth or breakout other metrics at that level reporting. So I appreciate the interest sorry, not to be able to Friday more detail.
Speaker Change: Next question next we'll go to the line of Bryan Keane from Deutsche Bank. Please go ahead.
Bryan Keane: Hi, guys. Good afternoon wanted to ask about the pickup you've seen in October for volume growth, especially in debit looks like it's picked up a little bit to 7%.
Bryan Keane: Anything youre seeing there are new wins or is that potentially a better economic environment driving that and then just quickly secondly on the price to value just the change in timing what was the reason for the change what why is the timing different this year.
Speaker Change: Sure. Okay I'll start with your question about October and then and then I think Brian will.
Speaker Change: Handle your second part of your question. So in terms of October so as we've consistently said three weeks don't make a trend. It was true in July when we started a little bit slower and then Q4 ended up being stable and it's.
Speaker Change: And we think it is true now as we see a strong start to October now that said.
Here's a couple of things that we see in terms of relative strength between the month of October and how we ended Q4, two things that I'd point to one is mix. So the growth in the month of September was lower due today's mix last year September had an extra Friday and Saturday.
Speaker Change: Two of the highest spend days of the week and this September that was replaced with a Sunday and Monday, which are two of the lower spend days and so that had an impact on September growth and then secondly in the U S.
Speaker Change: In addition to that Dave <unk> point, we are starting to lap the modest impact of Reg II that we started to talk about.
Speaker Change: Year ago in Q1 and so.
Speaker Change: Those combined things are contributing to what.
Speaker Change: What we see is the start of October but as we said, it's three weeks, let's see how the quarter plays out Hey, Brian.
Yes.
Bryan Keane: As you noted and we've said many times, we price to value so when we price to value.
Bryan Keane: We have to ship products, we have to ship services, we have to deliver solutions that are adding value and increasing value to our clients.
Bryan Keane: Our product pipeline in 2025 is a bit more back loaded, especially as we bring some new and exciting products and services to the market and so that really drives the difference in pricing cadence in 2025 next question next.
Speaker Change: Next we will go to the line of Jason Kupferberg from Bank of America. Please go ahead.
Jason Kupferberg: Thanks, guys just looking at the U S card present volume growth I think we've been in the 2% range here for the past two or three quarters. So wondering if youre expecting that to accelerate in fiscal 'twenty.
Speaker Change: And Chris can you just quantified what that favorable adjustment to Q4, new flows revenues were thank you.
Speaker Change: Got it Jason you cut out a little bit at the end what was the second part of your question Jason.
Speaker Change: The one.
Jason Kupferberg: One time help her to new flows revenue in Q4, if you could quantify that.
Speaker Change: Okay got it I'll start with the second one since you just just asked it yes.
Speaker Change: Yes, we feel great about the momentum of new flows Q3 was 18% now the 22% in Q4.
Speaker Change: As I said on the call, though Q4 was helped by this one time rebate adjustment due to deal timing. So we had expected the client to earn a rebate, which was contingent on them achieving milestone.
Speaker Change: They didn't achieve it so as such we recorded a onetime adjustment to that rebate, which landed in Q4.
Speaker Change: And I think your first question was was around card present, and just sort of volumes as we look forward.
Speaker Change: Into FY 'twenty, five and maybe that's where I'll go I'll, just broaden it a little bit.
Speaker Change: The protocol, we are overall assumptions on underlying drivers is that in 25, they remain relatively stable to the trends that we see.
Speaker Change: Both for the full year on payment volume and payment transactions relative to 'twenty four and then on cross border to the trends that we see in in Q4, and so they will remain relatively strong and healthy and like I said, we'll continue to update you throughout the course of the year.
Speaker Change: Next question.
Speaker Change: Next we'll go to the line of Craig Maurer from Ft Partners. Please go ahead.
Craig Maurer: Alright, thanks, everybody for taking my questions.
Craig Maurer: Wanted to ask first.
Craig Maurer: Haven't asked in a long time about your thoughts on operating leverage and.
Craig Maurer: Youre growing expenses at a similar rate to revenue and the forecast for fiscal year 'twenty five and.
Going forward long term is there a commitment to grow revenue faster than expenses or are we looking at limited operating leverage in the future and secondly.
Craig Maurer: Concerning the fiscal year 'twenty five guide.
Craig Maurer: What are your assumptions around APAC.
Craig Maurer: Embedded in the guide you need acceleration in China to achieve that or is it basically assuming the same <unk>.
Craig Maurer: Steady no growth situation there. Thanks.
Speaker Change: Well I'll take the first question you can take the second question Chris on your first question.
Speaker Change: As I've said on this call in earlier calls.
We have an enormous set of opportunities that we're pursuing and the way we're running the business day in and day out quarter in quarter out year in year out is it will.
Speaker Change: Going through the assessment of those opportunities, we're figuring out the product pipeline that we can deploy we're looking at inorganic and organic opportunities.
Speaker Change: And we're putting together a plan that we think maximizes the long term growth that we can deliver that's the way we approach. It that's the way we think about it.
Speaker Change: And you see the results that we've delivered and you heard what Chris's comments, we are in the guide for this year. So that's kind of where we are with that ill address your comments on AP, specifically so again.
Speaker Change: At a global basis, we expect overall trends to be relatively similar to where we are ending.
FY 'twenty four.
Speaker Change: And the situation in AP. So much of that has been driven by the macroeconomic conditions in China and as we've consistently said, we don't forecast the economy.
Speaker Change: So again in the context of relatively stable drivers.
Speaker Change: We'll see how it performs but again it will really be dependent on on the health of the overall economy.
Speaker Change: Question next.
Speaker Change: Next we'll go to the line of Trevor Williams from Jefferies. Please go ahead.
Trevor Williams: Great. Thanks, a lot, yes, I wanted to follow up on value added services I think the general framework, you've given is roughly two thirds of Vas revenue is transaction linked in some form of that portion that is tied to transactions or volume how much of that today it needs to be running over visa net for you to be earning those SaaS revenue streams Ryan it.
Speaker Change: Sounds like most of it today is still running over your network, but maybe the off network piece should be increasing as a percentage of the mix overtime, but anything more specific that would be helpful. Thanks.
Speaker Change: Yeah.
Speaker Change: The largest component of our Vas revenue today is that first bucket of services I mentioned for visa transactions and obviously, we've been doing that the longest time.
Speaker Change: And just to comment on that.
Speaker Change: What that really does is it drives additional yield on top of our visa transactions. So we're adding more value to the transaction, we're adding more value to the client and ultimately driving additional yield on top of the visa payment volume growth that we see but as I said, we also see we made meaningful progress building out our platforms to.
Speaker Change: Service non visa trends out <unk>.
Speaker Change: Cybersource I mentioned verify I mentioned.
Speaker Change: Pismo I mentioned decision manager I mentioned these are all becoming meaningful platforms for us with.
Speaker Change: Meaningful opportunity and can you just imagine the Tam.
That we are able to go after when we're not just delivering services for visa transactions, but we're able to work with clients to deliver services on top of a much broader array.
Speaker Change: Of payment transactions is just significant so we remain very excited about both.
Speaker Change: Last question please.
Speaker Change: Our final question goes to the line of Darrin Peller from Wolfe Research. Please go ahead.
Speaker Change: Hey, Thanks, guys.
Darrin Peller: Just coming off of the I think it was 12% growth in incentives and rebates in 'twenty four and now Youre seeing obviously higher 25.
Darrin Peller: Great to see the activity should also as being growth, maybe just help us understand a little more around you mentioned a lot of renewals, but what about just net new business and market share gains how does that build in and I guess related to that it looks like this year is a big year of that Contra revenue growth right. So does that have an impact on how you think about this year's growth versus long term.
Darrin Peller: Thank you it could be actually more sophomore, even better this year being a little bit of an outlier here in terms of growth and incentives and rebates. If we're thinking about that correctly. Thanks, guys. Yeah. I mean, I don't think were going to get into like the outer years, but.
Speaker Change: I would say a couple of things one is we're winning.
Speaker Change: We're winning region by region and market by market around the World you look at the size and sophistication of some of those names that I mentioned in my prepared remarks that I've mentioned for the last couple of quarters.
Speaker Change:
Speaker Change: We are winning and we feel really good about that market by market around the world Second thing is as we've also talked about in the past we can't necessarily predict the time of when these renewals are going to happen when the competitive situation is going to happen in our client we have to be ready at any given time to give our best and hopefully.
Speaker Change: <unk> win.
Speaker Change: As you were alluding to there has been kind of a string of those recently and more of them. This quarter that we're excited about.
Speaker Change: So we'll continue to deploy a great product, we'll continue to we've got a great team that I acknowledged during the prepared remarks that serving these clients, which is ultimately a big reason they choose to both continue to do business with us and expand the business that they're doing with us.
Speaker Change: Spanned the consumer business expand in the commercial business expand into new flows and we feel really good about it.
Speaker Change: And with that we'd like to thank you for joining US today. If you have additional questions. Please feel free to call or E Mail, our investor Relations team. Thanks, again and have a great day.
Speaker Change: Thank you all for participating and visa fiscal fourth quarter and full year 2024 earnings Conference call that concludes today's conference. You may disconnect. At this time I am please enjoy the rest of your day.