Q1 2025 Visa Inc Earnings Call
Thank you good afternoon, everyone and welcome to Visa's fiscal first quarter 2025 earnings call. Joining us today are Ryan Mcinerney, Visa's, Chief Executive Officer, and Chris saw visas Chief Financial Officer.
This call is being webcast on the Investor Relations section of our website at Investor Dot visa Dot com.
A replay will be archived on our site for 30 days.
A slide deck containing financial and statistical highlights has been posted on our IR website.
Let me also remind you that this presentation includes forward looking statements. These statements.
<unk> are not guarantees of future performance and our actual results could differ materially as a result of many factors additional.
Information concerning those factors is available in our most recent annual report on Form 10-K, and any subsequent reports 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.
Our comments today regarding our financial results will reflect a revenue on a GAAP basis and all of the results on a non-GAAP nominal basis, unless otherwise noted.
The related GAAP measures and reconciliation are available in today's earnings release and related materials available on our IR website.
And with that let me turn the call over to Ryan good.
Good afternoon, everyone. Thank you for joining us.
Speaker Change: Before we begin I would like to take a moment to acknowledge last night's tragic air collision in Washington D C.
Speaker Change: Our Hearts go out to all those affected by this terrible event, particularly the families and friends of the victims.
Speaker Change: Turning now to our results.
We had a strong start to our fiscal year with $9 $5 billion in net revenue up 10% year over year and EPS up 14%.
Speaker Change: Our key business drivers improved from the fourth quarter.
Speaker Change: In constant dollars overall payments volume grew 9% year over year U S payments volume grew 7% and international payments volume grew 11%.
Speaker Change: Cross border volume, excluding intra Europe rose, 16% in constant dollars.
Speaker Change: And processed transactions grew 11% year over year.
Speaker Change: Our strategy across consumer payments, new flows and value added services continues to resonate with our clients and is reflected in our business results.
Speaker Change: Back in February 2020, when we articulated our strategy our total first quarter volume on our network had just crossed three trillion.
Speaker Change: Just five years later, our total quarterly volume was above four trillion.
Speaker Change: At the same time, Samir and Latin America had more volume from people using their cards to get cash than to make payments.
Speaker Change: Five years later as a result of double digit constant dollar payments volume growth in both regions. The situation has flipped and we now have more than 60% of our volume from digital payments.
Speaker Change: I'm looking forward to our Investor day next month to discuss our strategy and our plans for future growth.
Speaker Change: For now let's look at some of the quarterly highlights that have helped to deliver this impressive progress.
Speaker Change: In consumer.
Speaker Change: We now have $4 7 billion credentials up 7% year over year, and $12 6 billion tokens up 44% year over year.
Speaker Change: We continue to grow our credentials in an increasingly digital world.
Speaker Change: Interest in our visa flexible credential continues to grow.
Speaker Change: We have now launched with the affirm card in the U S expanded the funding options with FMC in Japan by adding small business cards and announced a multi currency solution with Fintech live in the UAE.
Speaker Change: Tap to add card is now live in the U S for nearly 60% of all visa consumer credit and debit cards.
Speaker Change: The launch millions of added their cards to their wallets by tapping eliminating the overwhelming majority of provisioning fraud as compared to manual entry into a phone.
Speaker Change: And 74% of all face to face transactions are now tap to pay a.
Speaker Change: A few countries I would like to call out Japan.
Speaker Change: Were tap to pay penetration grew 20 percentage points since last year to 44%.
Speaker Change: Argentina, where tap to pay penetration was up 22 percentage points to 78%.
Speaker Change: In the U S, where it was up 13 percentage points to 57%.
Speaker Change: Several key initiatives contributed to the growth in these countries, including targeted marketing campaigns. The launch of transit acceptance in certain cities and increased issuance of tap to pay enabled credentials.
Speaker Change: Finally tapped the phone is now live in 118 markets and in the last year. The number of phones enabled has more than doubled and the number of transactions has more than tripled.
Speaker Change: Now, let me turn to a few deal highlights from across the globe.
Speaker Change: First in mainland China, we renewed our partnership with ICP C. The largest bank in the world in terms of assets and the biggest credit card issuer in mainland China in terms of number of cards.
Speaker Change: In India, we renewed our long standing credit agreement with IC ICI Bank.
Speaker Change: <unk> card.
Speaker Change: And co Tech Mahindra Bank three of our largest issuers in the country with a focus on growing affluent and cross border volume.
We also renewed our debit agreement with co Tech Mahindra Bank.
Speaker Change: Also in our Asia Pacific Region, we signed a long term renewal with bank of New Zealand, one of the largest banks in the country across consumer debit consumer credit and business credit.
Speaker Change: In Argentina, and Uruguay, we renewed our portfolios with Santander for a long term agreement with a focus on growing affluent.
Speaker Change: Also in Latin America, we have deepened our partnership with box.
Speaker Change: To grow acceptance with a goal to enable 300000, nano and small merchants and to grow in new verticals.
Speaker Change: We also won the issuance of their largely cross border credit portfolio, Miass, plus offering our expertise and value added services.
Speaker Change: Similarly in Brazil, we extended our partnership with digital Bank Neon, which includes the launch of a new credit portfolio.
Speaker Change: We are also pleased to have renewed a pan European agreement with BNP Powerbar, which also includes the winning of additional portfolios in France and Belgium.
Speaker Change: When we talk about the total addressable opportunity in consumer payments, we often talk about the opportunity to win share from domestic networks.
Speaker Change: And we are continuing to have success converting credentials from domestic networks to visa.
Speaker Change: In Bangladesh, we secured nearly 6 million credentials with Dutch bank La Banque from their closed loop system.
Speaker Change: And Banco popular to Puerto Rico, the largest issuer and acquirer in Puerto Rico renewed a multiyear credit and debit partnership with visa that am aims to expand digital penetration in the country through the launch of new products, including a co badged card with the local network.
Speaker Change: And we have renewed our business with RBC Royal Bank in 10 countries across the Caribbean and we also expanded our relationship to include the transfer of debit credentials in the Dutch Caribbean to visa and are supporting the development of new credit and commercial products.
Speaker Change: And Cobra co brand cards remain a key area of strength for us and this quarter was no exception.
Speaker Change: In India, we launched two very important cards.
Speaker Change: The times Black IC ICI bank credit card catering to high net worth individuals with travel and lifestyle benefits.
Speaker Change: Second the HSBC Taj credit card Indias first premium co branded hospitality credit card.
Speaker Change: In our <unk> region, we signed with real estate developer Investor and manager Aldar for a co brand card for its darn our rewards by all of our loyalty program in the UAE with issuing bank Emirates NBD.
Speaker Change: We also launched a new co brand card in Saudi Arabia, with <unk> Bank and Marriott Bond Boy, the global travel program by Marriott International.
Speaker Change: In the airline category, we won the portfolio for Egypt Air Africa second largest airline.
Speaker Change: We also expanded our business in the Swiss card miles and more program.
Speaker Change: And in the retail segment, we signed with Casas Bahia, one of the top retailers in Brazil for co brand cards and.
Speaker Change: And with bolt, a leading ride hailing and food delivery operator in Ukraine.
Speaker Change: So through traditional issuance winning share from domestic networks, and leveraging our brand products and innovation to secure important co brands, our consumer payments business is strong.
Speaker Change: Now to new flows.
Speaker Change: Where revenue grew 19% year over year in constant dollars.
Speaker Change: Visa direct has now crossed the $10 billion transaction Mark over the last 12 months with nearly 3 billion transactions this quarter.
Speaker Change: We continue to expand visa direct in several ways, one of which is building and deepening partnerships directly with issuers in fintech.
Speaker Change: We are excited to partner with ex money for their much anticipated launch of the X money account, including PDP payment holiday set for later this year.
Speaker Change: Through the partnership ex money will utilize visa direct to enable secure an instant funding of their ex wallet with a user's debit card.
Speaker Change: Users will also have the option to instantly transfer funds back into their bank account via the same debit card.
Speaker Change: This quarter, we signed an agreement with one pay a fintech company with more than 3 million monthly active users for visa direct as the engine for wallet loads.
Speaker Change: In Ecuador, Banco <unk>, one of the country's largest issuers will begin using visa direct for cross border remittance payments.
Speaker Change: Our broad and deep cross border capabilities continue to be important differentiators and this quarter Libre Internet Bank in Romania launched a real time multi currency FX service for their business customers utilizing our currency cloud solution.
Speaker Change: In Asia Pacific Oc BC has launched a cross border PDP solution on the OCB see app, allowing their customers in Singapore to send money to Chinese wallets using visa direct.
Speaker Change: All they need is the recipients China national idea name and mobile number.
Speaker Change: Now moving to commercial where volumes were up 6% year over year this quarter in constant dollars.
Speaker Change: We had some notable progress in specific verticals.
Speaker Change: First in the food and grocery delivery vertical we had two recent wins.
Speaker Change: In the U S. We are pleased that door dashes shopper card program will soon be using visa virtual commercial credit cards to enable <unk> to pay for customer orders at physical merchant outlets.
Speaker Change: This is in addition to our visa direct relationship with door dash in the U S, Australia, and Canada to enable dasher payouts.
Speaker Change: In Brazil, we signed a commercial business card deal for commercial customers of eye food Pago.
Speaker Change: Fintech for the largest food delivery platform in the country.
Speaker Change: In the health care vertical we reached a virtual card agreement with and insure Tech company in France My Sophie.
Speaker Change: <unk> medical policy holders and easy way to pay for their health care.
Speaker Change: In the T&D vertical, we recently renewed and deepened our partnership with their wallets.
Speaker Change: Global financial platform, enabling more than 150000 businesses to manage payments and money movement across borders.
Speaker Change: Today visa and air Wallets have lied live card programs in Australia, Hong Kong, the UK, United States, Canada, Netherlands in Singapore to enable businesses to easily make digital card payments around the world and soon we will be expanding into new geographies across our use cases and expense cards and <unk>.
Speaker Change: Travel.
Speaker Change: And both visa direct and commercial we continued to develop innovative new solutions and use cases that helped us retain and secure business.
Speaker Change: Now to value added services, where in the first quarter revenue grew 18% in constant dollars.
Speaker Change: Across our solutions, we continue to grow revenue as we enhance visa payments.
Speaker Change: Enable services for all types of payments and go beyond payments.
Speaker Change: We often partner with acquirers, who utilize visa acceptance platform to offer their merchant clients compelling solutions.
Speaker Change: When this happens we generate revenue on both visa and non visa transactions.
Speaker Change: Three examples this quarter, our European acquirer E merchant PE, Guatemalan acquire neo net in Paraguay, and acquire bankcard, who will offer cybersource to their merchants.
Speaker Change: We are also partnering with Pfizer to include our Cybersource gateway as a solution for their acquirers and merchants in Europe and Asia Pacific.
Speaker Change: This is in addition to Pfizer are expanding their use of cardholder authentication from Cardinal Commerce to further extend our global partnership into enter into additional Pfizer platforms.
Speaker Change: In our risk solutions in 2024, we launched visa protect for AIA payments.
Speaker Change: With plans to expand to 10, new RTP networks in 2025.
Speaker Change: Powered by AI based fraud detection models. This new service provides a real time risk score that can be used to identify fraud and account to account payments.
Speaker Change: We are now piloting the solution with five significant players in Brazil.
Speaker Change: Who represent more than 20% of <unk> transactions.
Speaker Change: We are also very pleased to have closed our acquisition of feature space, enabling us to provide an expanded set of fraud prevention tools to our clients and protect consumers in real time across various payment methods.
Speaker Change: In advisory services, we continued to see strong demand.
Speaker Change: One example of a recent project is with a Rajeev bank, where we are expanding our advisory relationship into risk digital enablement and data analysis across their portfolios.
Speaker Change: So across our value added services portfolio, we are innovating with new solutions and deepening our partnerships with clients to drive growth.
Chris: To wrap it up we began our fiscal year with strong performance and ever growing obsession for our clients and a focus on continued innovation as we build the future of payments I look forward to seeing you in February at our Investor day, and now over to Chris.
Chris: Thanks, Ryan and good afternoon, everyone.
Chris: Our first quarter results reflected improving underlying drivers and effective execution of our business.
Chris: In constant dollars global payments volume was up 9% year over year.
Chris: And cross border volume, excluding intra Europe was up 16% year over year.
Chris: Processed transactions grew 11% year over year.
Chris: Fiscal first quarter net revenue was up 10% higher than our expectations, primarily due to strong international transaction revenue and value added services revenue.
Chris: Revenue was up 11% in constant dollars.
Chris: EPS was up 14% year over year, and 15% in constant dollars higher than expected, primarily due to revenue outperformance and a lower than expected tax rate.
Chris: Now, let's go into the details.
Chris: In the U S. Total payments volume grew 7% year over year up two points from Q4 credit grew 7% and debit grew 8%.
Chris: The U S benefited from a strong holiday shopping season, which is the period from November one through December 31, and the lapping of the impact of Reg II implementations, which had a modest drag in Q1 of last year.
Chris: Yeah.
Chris: In the U S consumer holiday spending growth was in the upper mid single digits on a year over year basis, the consumer categories with the strongest growth were discretionary categories, such as retail travel and entertainment.
Chris: Focusing on retail holiday spending growth with a couple of points higher than last year and retail spending growth on key shopping days from Thanksgiving to cyber Monday was several points higher.
Chris: E Commerce was a higher share of retail holiday spending versus last year.
Chris: In key countries around the globe, we saw similar trends with consumer retail holiday spending growth improving from last year.
Chris: Moving to international markets total payments volume was up 11% in constant dollars up from Q4.
Chris: In most of our regions payments volume year over year growth rates in constant dollars were strong for the quarter with Latin America up, 22%, EMEA up 18% and Europe up 13%.
Chris: Asia Pacific payments volume growth saw a slight improvement from Q4 in constant dollars to just above 1% year over year for the quarter, reflecting a still somewhat muted macroeconomic environment.
Chris: Now to cross border volume, which I'll speak to in constant dollars and excluding intra Europe transactions.
Total cross border volume was up 16% year over year in Q1 three points above Q4.
Chris: E Commerce measured as card not present volume ex travel and cross border travel volume were both up 16% year over year for Q1.
Chris: E Commerce volumes continued to benefit from the strength in retail in part due to the strong holiday shopping season.
Chris: Travel volumes performed well across our regional corridors due to broader strength in both consumer and commercial spending.
Chris: Outbound Europe and Asia Pacific travel volume growth also benefited from solid performance of client portfolios.
Chris: For the U S. Both outbound E Commerce and travel volume growth were also helped by the strong dollar.
Chris: Now, let's review, our first quarter financial results I'll start with the revenue components.
Chris: Service revenue grew 8% year over year versus the 8% growth in Q4 constant dollars payments volume.
Chris: Data processing revenue grew 9% versus 11% processed transaction growth.
Chris: Due largely to the back half loaded 2025 pricing impact that was included in our initial guidance had pricing been more evenly spread across the year.
Chris: As in the prior year. These two growth metrics would have been more in line for the first quarter.
Chris: International transaction revenue was better than expected benefiting from higher cross border volumes and higher currency volatility than we expected.
Chris: Year over year growth was up 14% below the 16% increase in constant dollar cross border volume, excluding intra Europe, due primarily to foreign exchange and lapping higher currency volatility from last year.
Chris: Other revenue grew 32%, primarily driven by better than expected consulting and marketing services growth and select pricing modifications.
Chris: Client incentives grew 13%, reflecting a strong renewal quarter.
Chris: Now to our three growth engines.
Chris: <unk> payments revenue growth was driven by improving payments volume cross border volume and processed transaction growth.
Chris: New flows revenue grew 19% year over year in constant dollars driven by better than expected commercial cross border performance across all regions and visa direct transaction growth.
Chris: Commercial payments volume rose, 6% year over year in constant dollars, mainly driven by favorable days mix impact as well as strong cross border volumes.
Chris: Visa direct transactions grew 34% year over year helped by growth in Latin America for interoperability among PDP apps.
Chris: Value added services revenue grew to $2 4 billion.
Chris: Our growth rate of 18% in constant dollars led by strong growth in consulting and marketing services issuing solutions and risks and identity solutions.
Chris: Operating expenses grew 11% in line with our expectations driven by increases in personnel and general and administrative expenses.
Chris: Yeah.
Chris: In our GAAP results we had.
Chris: $213 million in severance costs related to changes to our workforce, reflecting our efforts to focus investment on the highest growth opportunities for our business as well as accelerating our innovation to better serve our clients.
Chris: Our tax rate was 17, 7% better than expected due to various items, including a change in our geographic mix of earnings.
Chris: EPS was $2 75 up 14% over last year within approximately one point drag from exchange rates and an approximately half point drag from acquisitions.
Chris: In Q1, we bought back approximately $3 9 billion in stock and distributed $1 2 billion in dividends to our stockholders.
Chris: At the end of December we had $9 $1 billion remaining in our buyback authorization.
Chris: Now, let's move to what we've seen so far in Q2.
Chris: Through January 28th driver trends have remained strong.
Chris: U S payments volume was up 8% with debit up 9% and credit up 7% year over year.
Chris: Processed transactions grew 11% year over year.
Chris: For constant dollar cross border volume excluding transactions within Europe, we saw total volume grew 17% year over year.
Chris: Travel related cross border volume grew 17% year over year and cross border card not present ex travel volume grew 16%.
Chris: Now onto our expectations remember that adjusted basis as defined as non-GAAP result in constant dollars and excluding acquisition impacts you can review these disclosures in our earnings presentation for more detail.
Chris: For the second quarter, we expect adjusted net revenue growth to be in the high single digits to low double digits.
Chris: I would note that the primary difference between Q1 and Q2 adjusted net revenue growth is the lapping of leap year.
Chris: We expect second quarter adjusted operating expense growth to be in the high single to low double digits.
Chris: Non operating income in the second quarter is expected to be negligible.
Chris: And our tax rate in the second quarter is expected to be around 17, 5%.
Chris: As a result, we expect second quarter adjusted EPS growth to be in the high single digits.
Chris: We have now closed the acquisition of feature space and lap the impact of <unk> in January.
Chris: For acquisition impacts, we expect a minimal impact to net revenue growth and approximately one five point contribution to operating expense growth and then approximately half point headwind to EPS growth in the second quarter.
Chris: Now, let's cover our full year expectations, we now expect full year adjusted net revenue growth to be in the low double digits.
Chris: There are no material changes to our adjusted operating expense growth and non operating income expectations for the full year.
Chris: Based on our lower than expected tax rate in Q1, and an updated view for the rest of the year, we're lowering our expected tax rate to be between $17, 518%.
Chris: Taking all of this together, we now expect adjusted EPS growth to be in the low teens.
Chris: Feature space in Pismo are expected to have a minimal impact on full year net revenue growth and approximately one point contribution to operating expense growth and an approximately half point headwind to EPS growth.
Chris: In summary, we're off to a strong start to the year.
Chris: We remain focused on the execution of our growth strategy for the rest of 2025 and look forward to Investor day in a few weeks.
Chris: Now Jennifer it's time for some Q&A, thanks, Chris and with that we're ready to take questions.
Jennifer: If you would like to ask a question. Please press star one clearly record your name will be announced prior to asking your question to ensure all questionnaires are heard we ask that you. Please limit yourself to one question once again to ask a question. Please press star one to withdraw your question. Please press star.
Chris: Two sons.
Sanjay: Sanjay <unk> with <unk>. Please go ahead.
Chris: Thank you.
Chris: I had a question on the improved outlook, obviously the volumes did better in the accelerated does the improved outlook assume the growth rate sort of sustain themselves or or maybe you could just go through sort of what what the drivers are thanks.
Chris: Yes, Hi, Sanjay Thanks for the question Yeah, we feel great about the Q1 results as I indicate.
Chris: One quarter into the year and we'll have more of an update on half two as we get closer to it.
Chris: Next question please.
Nance: Thank you will Nance with Goldman Sachs. Please go ahead.
Nance: Hey, guys I. Appreciate you taking the question I also wanted to follow up on some of the stronger spending results that you've seen you've cut you called out the strong results that's been pretty evident in.
Nance: Some of the <unk>. So far this quarter I just wanted to know if theres anything kind of when you Peel back the onion and some of the data that you guys have anything obvious that you would attribute this acceleration over the past couple of months stores I know you called out some things around holiday spending and obviously theres been a lot of days mix things going on but we spent I think.
Nance: Youre talking about ticket size being a headwind. So I'm wondering how much of this is sort of a new run rate and lapping tougher comps over the last couple of years versus kind of an outright acceleration in kind of spending above trend I'm curious if you have any thoughts on that thanks.
Nance: Yes, thanks for the question well, let's try to breakdown unpack a little bit yet at a few things in there.
Nance: We talked about strength in the U S and international markets.
Nance: Strength in the U S. We did have a strong holiday I gave some of those numbers in the prepared comments that you heard about it also.
Nance: Helped discretionary categories retail travel entertainment and then the lapping of Reg I that was really the step up that we saw in the U S. We feel really good about that.
Nance: Then.
Nance: Like we talked about as well across the regions and so from a payment volume standpoint feel really good about that cross border.
Nance: Maybe the added commentary on cross border was if you look at E Commerce.
Nance: E Commerce was up a point from Q4.
Nance: Ross border e-commerce benefiting from the stronger retail and holiday.
Nance: And then travel, though did step up by four points from Q4, and and not just Q4, but maybe the last two quarters, which had been around that same level. We're seeing strong travel results from across all the regions and so again, we feel really good about that but but all all of that said, it's a quarter.
Nance: Into the year and we're going to obviously wait to see how Q2 plays out, but we feel pretty good about about looking to the second quarter.
Nance: Next question please.
Speaker Change: Darrin Peller with Wolfe Research. Please go ahead.
Nance: Okay.
Speaker Change: Guys. Thanks, just a couple of two parts to your question, but first one is really to do with the underlying trends were going to see through the year with regard to the.
Speaker Change: The moving parts on some of your easier lapping given that there was some business as you talked about that should that had come off last year that laps, how does that impact your volume trajectory in the U S.
Speaker Change: As the year progresses, we can think about that obviously <unk> started to help already.
Speaker Change: Hi.
Speaker Change: Then.
Speaker Change: Maybe just a quick follow up on rebates incentives I know you talked about this being the higher quarter.
Speaker Change: We're going to start the year off at maybe just if you could help US was this in line with your expectations in terms of the results that we saw.
Speaker Change: Does anything changing around timing on it.
Speaker Change: Did it really come in as expected. Thanks again guys.
Darren: Okay, Let me try to let me try to tackle all three of those things Darren.
Darren: In terms of the full year guide you are recalling correctly. When we started the year, we talked about sort of the dynamics in half one and half two and why we anticipated growth to be accelerating throughout the course of the year incentives was part of that story.
Darren: We are as we said before as expected this is going to be a big year.
Darren: Year for renewals with more than 20% of our payment volume impacted and.
Darren: Starting really meaningfully with that renewal cycle in the first half of the year that has.
Darren: Occurred you saw incentives grow 13% in Q1 versus the 6%. We saw in Q4 that will continue we anticipate Q2 incentives growth growth will continue to reflect that.
Renewal cycle.
Darren: You mentioned Reg II I think we've covered that we are lapping what was modest impact from a year ago and then there are some lapping benefits from portfolio as well that are more centered towards the second half of the year as well that all set again I just said.
Darren: <unk> said it before so the last question on will ask it's a quarter into the year, we reflected the Q1 upside and adjusted our Q2 outlook to reflect that and certainly talk about.
Darren: Talk about the half two as we get closer to it.
Darren: Next question.
Speaker Change: Thank you Andrew Jeffrey with William Blair You May go ahead.
Darren: Mike.
Mike: Andrew are you there.
Speaker Change: Operator, maybe we can go to the next caller and come back to Andrew in Tibet.
Mike: One moment please.
Mike: Okay.
Mike: And Andrew you May go ahead Sir.
Mike: Alright. Thank you can you hear me now.
Speaker Change: Yeah now we can.
Speaker Change: I apologize for that I'm sorry.
Speaker Change: Wanted to ask on.
Speaker Change: Value added services given the recent closure of feature space and I think some emphasis in pismo.
Speaker Change: Can you talk Brian is there been a philosophical change or a change in emphasis perhaps in visa's value added services initiatives and going forward as we think about greater opportunities in that area should we think about visa maybe emphasizing some more security offerings versus processing and gateway just trying to.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: We continue to be very excited about the progress that we're making in value added services across the board.
Speaker Change: There is no change in emphasis.
Speaker Change: As it relates to the priority or the prioritization of kind of the areas, where we've been building and building product serving clients. So we continue to be very focused on delivering solutions to merchants and acquirers very focused on delivering solutions to issuers are very focused on delivering fraud and risk solutions.
Speaker Change: Broadly across the ecosystem as well as advisory business I talked about some examples in my prepared remarks.
Speaker Change: We have.
Speaker Change: <unk> had some great acquisitions.
Speaker Change: The way that we.
Speaker Change: Think about acquisitions is we're constantly looking for companies around the world that we can bring into our ecosystem accelerate their growth accelerate our kind of products that we're bringing to our clients in pismo in feature space are two great examples of those.
Speaker Change: In terms of Pismo.
Speaker Change: We're having real good success kind of with our sales pipeline all around the world, we're having conversations with clients that I don't think pismo ever would've had.
Speaker Change: Certainly not this early in their evolution and the reason we're able to do that is we're bringing kind of the amazing capabilities that pismo offers together with the deep relationships and partnerships that we have as well is kind of our long track record of delivering resilient solutions to our clients and partners feature spaces early.
Speaker Change: But we're already having a ton of success I got a ton of great client and partner feedback once we close that acquisition.
Speaker Change: We've known feature space for many many years, we partnered with them. We also competed against them, we know their capabilities really really well.
Speaker Change: One of the things that youre seeing from us.
Speaker Change: Is that we're continuing to take the amazing capabilities that we have at visa, whether that's our fraud capabilities our network capabilities, our processing capabilities. We're unbundling those from the visa stack, we're enhancing them and then we are delivering them to a broader array of clients and partners many times unrelated.
Speaker Change: To visa transactions are the visa direct platform itself. So we continue to focus on all those areas and value added service. We continue to have good success and Youll continue to see us kind of move down this.
Speaker Change: This kind of program of unbundling, our capabilities enhancing them and delivering them to a much broader set of clients.
Speaker Change: Next question please.
Speaker Change: Thank you Harsha wallet from Bernstein, you May go ahead.
Speaker Change: Good afternoon, so Ryan I'd like to follow up on your comments John.
Speaker Change: Bundling capabilities and ask about visa HOA.
Speaker Change: You talked about New York is the network partnerships.
Speaker Change: Thanks, Amit issuer and merchant customers don't they've probably now gives you gave how should we think about like the roadmap with use cases monetization models and also the dynamics with a big debate in terms of capital allocation. Thank you.
Speaker Change: Yes.
You're right and it is this notion of unbundling our capabilities is very relevant in the value added services space for some of the reasons that I mentioned, it's also very relevant in the consumers consumer payment space and visa account to account is a great example, a great example, where we've unbundled kind of our brand.
Speaker Change: In acceptance our rules in terms of charge backs disputes and returns and how things work as well as kind of our risk management capabilities, we've unbundled that from the visa stack and now we're delivering that to our partners initially in the U K.
With visa AIA, and then more broadly across Europe, and other places over time.
We still are on track to launch visa AIA and in early 2025.
Speaker Change: After we announced it we've done what we always do which is have a bunch of great conversations with clients and partners and regulators in the U K.
Speaker Change: As you mentioned the initial use cases targeted at bill pay and what we found through those conversations as Theres a real need.
Speaker Change: There is a real need to add the types of <unk>.
Speaker Change: Processes and rules and the trusted brand that we have to account to account payments starting in bill pay to give consumers more confidence to use it merchants more reason and confidence to offer it.
Speaker Change: And we're excited about it I mean, obviously bill pay and UK is just the start.
Speaker Change: But we think the power of kind of taking some of these visa capabilities into the account to account space is going to be a great benefit for our clients and our partners in the ecosystem.
Speaker Change: You mentioned visa account to account.
Speaker Change: A similar story kind of on what we've been doing in account to account protect where we've taken our kind of decades of risk experience, our data, our scoring algorithms and unbundle that from kind of the visa stack and we're delivering that to as I said in my prepared remarks.
Speaker Change: We're targeting up to 10 RTP networks during the course of this year.
Speaker Change: I mentioned that the banks were now working with in Brazil to reduce fraud on picks transactions. We've had great success with paid out UK in the UK, reducing fraud on account to account transactions and you're going to hear a lot more.
Speaker Change: On from other partners and other networks around the world.
Speaker Change: These two examples are both driven by client needs.
Speaker Change: And that is what drives our innovation agenda, that's what drives our product delivery agenda, we've been hearing from clients all around the world that Theyre looking for visa to help them with these types of challenges, both driving account safe and secure account to account payments.
Speaker Change: Round the world So very excited about it and you'll continue to hear more from us on it.
Speaker Change: Next question.
Speaker Change: Thank you our next caller is Timothy Chiodo with UBS. Please go ahead Sir.
Timothy Chiodo: Great. Thank you I wanted to dig a little bit into the mix components of the cross border business. So you said in the past that roughly about 60% of it is travel and the other roughly 40% is e-commerce and I know that evolved a little bit throughout COVID-19 and now into the recovery period, but when we think about the e-commerce component I believe that.
Timothy Chiodo: Some of the visa direct related pieces are sitting there so whether it be the Rubin says that our cross border or the marketplace payouts I was hoping you could dig into those two or that broader bucket, if theres any rough growth rates or gross contribution our sizing and if not just any general comments around that aspect of the cross border business.
Timothy Chiodo: Okay.
Timothy Chiodo: Yes, thanks for the question Tim.
Timothy Chiodo: Yeah, let's unpack that as well we've been doing some unpacking here.
Timothy Chiodo: In terms of E. Commerce, you have the mix that you've shared is the is the mix that we've shared in terms of travel and E Commerce with e-commerce, having sustained slightly better over the last few quarters. Obviously this quarter. The two growth rates converge that was good to see.
Timothy Chiodo: And within that.
Timothy Chiodo: Visa direct does have a cross border component visa.
Timothy Chiodo: <unk> direct cross border, we talked about visa direct transactions growing 34%.
Timothy Chiodo: The cross border portion of that is growing much faster. Its obviously, a small portion of the total transactions, it's growing much faster than that and so we continue to.
Timothy Chiodo: I appreciate that visa direct and total the momentum is great and continues to be a really good opportunity, but when you add it altogether, we're seeing great growth across across E Commerce and cross border and as you know the yields are accretive as well.
Timothy Chiodo: The only thing I'd add is that given the.
Timothy Chiodo: The very big scheme of things.
Timothy Chiodo: With all the success, we're having in cross border visa direct which is great and we are having great success, it's still a very small portion of our cross border transactions and payment volume around the world.
Timothy Chiodo: In the big scheme of things.
Timothy Chiodo: Next question please.
James Faucette: Thank you James Faucette with Morgan Stanley. Please go ahead.
James Faucette: Hi, Thanks, I wanted to just follow up a little bit on the cross border question.
James Faucette: How much benefit in the past we've seen different periods when crypto currencies have done well, but that's also helped.
James Faucette: The cross border E Commerce component I'm wondering how much of an uplift you saw from that and I guess tied in with that as we've seen kind of growth rates decelerate a little bit here in January whats your current visibility on on particularly travel and what are you seeing around bookings there any color you can provide on those two thanks.
James Faucette: Thanks.
Speaker Change: Hi, Jeff.
So how and where does crypto impact their business. While there are a few ways that crypto can show up in our underlying drivers but.
Speaker Change: But typically when we see an impact we do see it in our cross border E Commerce volumes I talked about some of the drivers of that this quarter relative to Q4, but obviously given the recent demand and sort of activity around crypto. It is a it is a modest benefit I would say to our cross border e-commerce, but it's.
Speaker Change: But it is one of the smaller benefits.
Speaker Change: About sort of the other things that impact that and so that's where we do see it.
Speaker Change: Typically.
Speaker Change: Next question please.
Speaker Change: Jason Kupferberg with Bank of America. Please go ahead.
Jason Kupferberg: Thank you guys I wanted to touch on <unk> for a minute I think you said number of tokens were up 44% in the quarter.
Speaker Change: We see a pretty robust number. So you can just give us a general update on <unk> strategy and any potential timing or magnitude of actual monetization opportunity from <unk>, obviously understanding the benefits of it from a from a fraud and security perspective, but just wondering if theres any direct monetization we should be.
Jason Kupferberg: And about.
Jason Kupferberg: You're talking about tokens, you did get the number right and we agree that it's significant let me just step back and maybe put the whole token.
Jason Kupferberg: Kind of roadmap in perspective.
Jason Kupferberg: Network tokens have been and will be one of our most important investment priorities across the company.
Jason Kupferberg: In many ways, we led the wave of token innovation and adoption. It's Ben I think it's been about a decade since we issued the first visa token.
Jason Kupferberg: I remember I think in 2020, we got to 1 billion tokens.
Jason Kupferberg: And that was a big milestone, but in hindsight I think we were really just approaching the beginning of the steep part of the S curve.
Jason Kupferberg: You go back to what you said about 44% growth. So we've now got more than $12 5 billion tokens across the ecosystem. We've got 8400 issuers around the world that are issuing on min two.
Jason Kupferberg: 200, plus markets around the world.
Jason Kupferberg: And we've got a third of all visa transactions that are now <unk>. We did 21 22 billion token transactions in the last quarter.
Speaker Change: And as you alluded to the adoptions proliferating because the performance is.
Jason Kupferberg: Proven is meaningful.
Jason Kupferberg: If you just look at ecommerce on <unk> transactions, we have six percentage point higher approval rates that is significantly higher sales for our merchant partners and 30% reduction in fraud rates, which is good for everybody in the ecosystem.
Jason Kupferberg: It's also tokens to become one of our most important platforms for enabling innovation.
Jason Kupferberg: For example, I think it was last quarter I talked about in Europe, we are using tokens to simplify the ecommerce checkout experience, we've embedded phyto past keys via visa tokens in the click to pay and we're making e-commerce checkout as easy as it is.
Jason Kupferberg: And iron unlock our phone with our phase our fingerprint. So that's an example of tokens being a platform to drive innovation around the world.
Jason Kupferberg: There are also a critical enable enabler of our value added services and those we deepen relationships with our partners and we also grow revenue.
Jason Kupferberg: To your question around monetization.
Speaker Change: What would be a couple of examples we've got merchants that are using.
Jason Kupferberg: Our token credential enrichment service.
Jason Kupferberg: We embed this in visa tokens, so that we continually update visa credentials for merchants that subscribe to this service and then they don't have to worry about consumers updating their credentials when their cards expire so they don't Miss a subscription subscription renewal or a sale.
Jason Kupferberg: And we have revenue for that service. We also offer a service. If you think about on the issuer side that allows our issuers to create a heat map of all of their consumers tokens across the entire ecosystem.
And they pay for this service from us so that they can enable their customers to add view and manage their visa cards across merchants that they use in their daily lives. So.
Jason Kupferberg: We have a vast array of services that we both ship and that we're building and plan to ship built on our tokens and the revenue that we generate from these token enabled services is meaningful and it will be even more meaningful going forward.
Jason Kupferberg: Next question please.
Jason Kupferberg: Thank you Bryan Keane with Deutsche Bank. Please go ahead.
Bryan Keane: Hi, Thanks for taking my question Ryan I, just wanted to ask about ex money, how long does a project like that take for you guys to implement with ex any kind of idea on how fast and how much volume that might ramp and any thoughts on economics I assume it's just kind of visa direct type transactions.
Speaker Change: Yes, I think the ex partnership is a great example, in what's been a kind of a long list of Fintech and Big Tech.
Bryan Keane: <unk> digital wallets.
Bryan Keane: Social messaging apps and the like that have looked around at their options.
And concluded that the visa platform the visa network and the visa network of networks is kind of the best most reliable biggest money movement platform, that's really engineered to enable their developers to quickly implement the types of solutions that they are looking to implement.
Bryan Keane: And as you say, it's another great step in that journey that we've been taking.
Bryan Keane: As you said.
Bryan Keane: The partnership is built on the visa direct platform, it's going to allow the $600 million or so active monthly users of <unk> to two <unk>.
Bryan Keane: Fund their ex money account, so to move money into it theyre going to be able to transfer funds back to their bank account instantly from their ex money account.
Bryan Keane: There's going to be creators on the X platform that can now get paid much faster when they they use visa direct it to move money back into their to their bank accounts. So it's.
Bryan Keane: It's a great credit to.
Bryan Keane: The partnership between our team and the <unk> team and I think building out those use cases, and we're just excited to continue to expand the number of use cases on our platform next question. Please.
Speaker Change: Thank you Dominick Gabriele from Compass point, you May go ahead. Please.
Dominick Gabriele: Hey, Thanks, so much for taking my question.
Dominick Gabriele: I was actually just curious if you've heard through your partners on either the consumer or commercial side, if the threat of tariffs pushed up any commercial spending or consumer spending and if you've tracked that in the past. Thanks. So much.
Dominick Gabriele: Yeah, we haven't we haven't seen anything directly related to that.
Dominick Gabriele: And I think just like I guess broadening.
Dominick Gabriele: Question a bit.
Dominick Gabriele: On tariffs broadly, we're going to have to wait and see what happens I think.
Dominick Gabriele:
Dominick Gabriele: It's going to be very difficult to predict.
Dominick Gabriele: Whats going to get implemented where it's going to get implemented and as we see these things potentially get implemented we'll have a better sense on what impact it has for our business and we can let you know then.
Speaker Change: Next question please.
Speaker Change: Thank you Bryan Bergin with TD Cowen. Please go ahead.
Speaker Change: Hi, Good afternoon. Thank you I wanted to ask on commercial side. Thank you.
Speaker Change: 6% growth so at one point improvement quarter on quarter can you talk more about the trends in commercial spend in <unk> and <unk>.
Speaker Change: Other improvement expected or I guess sustainable here in the 25 outlook relative to what you saw in 2004.
Speaker Change: Thanks for the question you've got the numbers right commercial volumes were up from Q4, a little over a point.
Speaker Change: And that Q1 growth was aided by a couple of things favorable Dave mix in the U S and internationally.
Which was the inverse of what I talked about in Q4 were days mix was a little bit of a headwind.
Speaker Change: I also referenced stronger commercial cross border volumes as well.
Speaker Change: And the maybe the third one it's small but there was less of a drag from Ats as it continues to evolve.
Speaker Change: I also referenced strong results from client portfolios.
Speaker Change: That helped cross border volumes in Europe, and AP that also benefited commercial this all contributed nicely to our strong new flows revenue performance.
Speaker Change: Ah.
Speaker Change: A trend that we in terms of commercial volumes that is.
Speaker Change: Embedded into our expectations are embedded into our Q2 guidance, we anticipate they remain steady stable and strong through the remainder of the year next.
Speaker Change: Next question please.
Speaker Change: Dan Perlin with RBC capital markets. Please go ahead.
Dan Perlin: Thanks, I was wondering if you could just speak to the point around the strength of the dollar and really like the purchasing power parity associated with that so for.
Dan Perlin: I guess it plays into cross border, obviously for outbound U S.
Dan Perlin: Higher for people to come in the United States, but also just in terms of spending.
Dan Perlin: Spending patterns I mean, obviously, it's going to be strong.
Dan Perlin: Period for a little while and I'm just wondering to what extent there is a proportional benefit to your business. Thank you.
Dan Perlin: Yes.
Dan Perlin: Clearly the dollar has strengthened meaningfully in quickly.
Dan Perlin: You got it right, which is all else equal.
Dan Perlin: With a stronger dollar you have stronger purchasing power for Americans outside of America.
In kind of the historical periods, where we've had a stronger dollar.
Dan Perlin: We have ultimately seen that lead to some travel patterns for.
Dan Perlin: For outbound from the U S.
Dan Perlin: The opposite of that is obviously, it's more expensive for people to travel to the U S.
Dan Perlin: Again historical periods of relatively stronger dollars, we've seen some shift in travel patterns.
Dan Perlin: People, who might otherwise have traveled to the U S going to other places around the world, having said that it's still early.
Dan Perlin: This particular situation, we're going to have to monitor.
Dan Perlin: And even though.
Dan Perlin: In past times, you have seen some changes in travel corridors as a result of the strengthening dollar we typically have seen the travel spending overall.
Dan Perlin: <unk> remained consistent people just plan their holidays and different places around the world, but that takes time.
Dan Perlin: We're only we're pretty short period into this stronger dollar periods. So far so assuming we stay at this point, we'll be able to give you more insight next quarter and future quarters next question. Please.
Andrew Schmidt: Andrew Schmidt with Citi Global markets. Please go ahead.
Andrew Schmidt: Hey, Brian Hey, Chris Thanks for taking my questions.
Speaker Change: Just wanted to ask on the regulatory regulatory environment. The U S. Obviously, a new regulatory regime here I'm wondering just your view on that and just conversations <unk> had with issuers or other parties.
Speaker Change: Just trying to get a better sense I know, there's a few things going on in the U S. Obviously.
Speaker Change: Curious how youre feeling thanks, so much.
Speaker Change: Yeah.
Speaker Change: We're optimistic our clients are optimistic.
Speaker Change: Yes, I think what we've heard so far is that.
Speaker Change: The administration wants to move quickly to reduce and simplify regulation regulations and they're doing it with a goal of spurring economic growth efficiency innovation all very good things. So we are optimistic that these changes are going to reduce the regulatory burden for businesses in general in America, which is good for.
Speaker Change: Erika and ultimately should be good for visa.
Speaker Change: We're optimistic as our clients are that they are going to reduce the regulatory burden.
Speaker Change: Specifically in the financial sector.
Speaker Change: Which will in turn help our Fi clients accelerate digital payments and in general run their businesses more efficiently and more effectively which is very good for them, which is in turn good for us. So we're optimistic but again, it's early and we just have to see what gets implemented where it gets implemented and how quickly it does.
Speaker Change: Next question please.
Speaker Change: Greg Mauer with Ft partners. Please go ahead.
Greg Mauer: Yeah, Hi, Thanks for taking the question I wanted to go back to some of the Big deal renewals you discussed early in the call and ask about the interplay of the different revenue lines in these renewals what I'm trying to understand as you're obviously, making pricing concessions when you make these lore.
Greg Mauer: You enter into these large renewals or expansions to what degree are you able to make up for that.
Greg Mauer: Other revenue or Vas being sold into these issuers and.
Greg Mauer: I know this is complicated but how much is that accounting for the expansion we're seeing in some of the other revenue.
Greg Mauer: The other revenue thanks.
Greg Mauer: Yes.
Greg Mauer: First just reflecting on this quarter the last quarter as you've seen we've just been having great tremendous success with clients all over the world.
Greg Mauer: And they continue to choose visa because of our brand because of our products because of our innovation because of our people, but increasingly because of our value added services and because of our CMS new flows capabilities.
Greg Mauer: And I guess I would answer your question this way.
Greg Mauer: When we engage in our teams engage with partners on these types of.
Renewal extension, new business deals that youre talking about.
Greg Mauer: It is vastly different than it was three years or four years ago.
Greg Mauer: The types of conversations that we're having with our clients are much more multifaceted.
Greg Mauer: They're very rich conversations about a broad array of services that we can provide them one of which is of course network services for their debit cards and credit cards, but in a much more significant way, we're having conversations about processing about services about fraud and risk services.
Greg Mauer: Ways that as part of a multifaceted.
Greg Mauer: Agreement, we can expand from historical relationships in consumer payments to small business cards commercial cards.
Speaker Change: Fleet specific priorities I'm sorry.
Speaker Change: Specific priorities around fleet for example, or around agricultural verticals or different types of BTB verticals. It's just it's a very different sales motion, it's a very different type of.
Speaker Change: Negotiation, but importantly, as you alluded to it involves a lot of different revenue levers than we historically would have had.
Speaker Change: No.
Speaker Change: Various from client decline in market to market and what's important to them, but our teams are increasingly having success building on deep relationships historically in consumer payments and taking the opportunity of these renewals to really expand our partnerships, especially into new flows opportunities into vast opportunity.
Speaker Change: <unk> deepened our relate deepening our relationship with those partners and creating new revenue growth opportunities.
Speaker Change: Question. Please.
Speaker Change: Jeff Cantwell with Seaport Research partners. Please go ahead.
Speaker Change: Great. Thank you.
Speaker Change: Does the news this week on deep seek influence how you're thinking about your business and strategy.
Speaker Change: But in terms of when Youre thinking about stepping up your usage of AI to help with managing internal cost or maybe in terms of whether youre thinking about using AI towards support geographic landmark new revenue opportunities because it does appear from an outsider's perspective AI potentially.
Speaker Change: Potentially it could help improve operating efficiency and might even perhaps support some of your revenue.
Speaker Change: Areas like authorization or fraud prevention. So wanted to ask you for your view of what <unk> and the rise of AI generally means for visa as far as strategy and where do you see opportunity going forward. Thanks.
Speaker Change: Yes, we agree with you.
Speaker Change: Everything that's happening in the world, whether it's deep seek are the many many things that have happened before and it will happen after it all.
Speaker Change: All are examples of opportunities for us.
Speaker Change: Broadly across visa.
Speaker Change: We were very early adopters of artificial intelligence and we continue to drive hard at the adoption of generative AI as we have for the last couple of years. So we've been working to embed AI and AI tooling into our company's operations I guess broadly.
Speaker Change: We've seen material gains in productivity, particularly in our engineering teams.
Speaker Change: We've deployed AI tooling and client services sales finance marketing really everywhere across the company and we were a very early adopter of applied AI in the analytics and modeling space.
Speaker Change: Very early buy like decades, we've been we've been using AI in that space.
Speaker Change: So our data science and risk management teams have at this point decades of applied experience with AI and they are aggressively adopting the current generations of AI technology to enhance both our internal and our market facing predictive and detective modeling capabilities our product team.
Speaker Change: <unk> are also aggressively adopting gi to to build and ship new products, Yes, I think I talked last quarter about data tokens. That's a great example.
Speaker Change: And just as the Internet itself fundamentally change the way that we all shop and buy and the way Commerce works itself.
Speaker Change: We deeply believe that AI is going to be a driving force that is going to change the way digital commerce works and we have an amazing team of people that are working really hard to ensure that visa plays a central and sustainable roll in the next version of digital Commerce and I think we'll have more to say about that in future.
Speaker Change: Quarters.
Speaker Change: Last question please.
Speaker Change: Thank you Tien Tsin Huang from Jpmorgan you May go ahead.
Speaker Change: Hey, Thanks, I'll close it out with a question a clarification. If you don't mind just on the question with Asia Pac It looks like that's the only laggard again as the region otherwise brokers really good.
Speaker Change: The change in outlook for Asia Pac in.
Speaker Change: The usual macro versus structural question. There just just curious if theres any change in and taking the original my clarification was just on the restructuring was that contemplated in your prior guide and we will.
Speaker Change: I presume that the savings that you get from that will be reinvested pretty quickly sorry, if I missed that thank you.
Speaker Change: Great.
Speaker Change: Okay, Let me quickly get to it.
Speaker Change: Maybe the latter one first.
Speaker Change: To clear it.
Speaker Change: Restructuring at.
Speaker Change: It reflects we took a we recorded a charge this quarter is reflected in the guide for the full year, it's really focusing our expenses, we don't expect another charge this year.
Speaker Change: Sorry remind me your first question again.
Speaker Change: Asia Pac Asia Pacific, Yes, sorry, so AAP growth I think you characterized it right.
Speaker Change: It is moderately up from Q4 about a point a little bit more than a point, but it still reflects a somewhat muted environment. So it's growing at 1% in total.
Speaker Change: Moving in the right direction, but still still quite muted.
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 email our investor relations team. Thanks, again and have a great day.
Speaker Change: Thank you all for participating in Visa's fiscal first quarter 2025 earnings Conference call that concludes today's conference. You may now disconnect at this time and please enjoy the rest of your day.