Visa Benefiting from “Stable Consumer Spending”

By Brian Nelson, CFA

On April 23, Visa (V) reported fantastic second-quarter results for its fiscal 2024. Both net revenue and GAAP net income increased 10%, while GAAP earnings per share advanced 12%. On a non-GAAP basis, net income advanced 17%, while earnings per share leapt 20%. Payments volume increased 8% in its fiscal second quarter, while total cross-border volume increased 16% on a constant-dollar basis and processed transactions advanced 11%. We liked the quarter and commentary from management: 

Visa delivered strong results in the second quarter, with net revenue up 10%, GAAP EPS up 12%, and non-GAAP EPS up 20%. Overall payments volume grew 8% and cross-border volume grew 16%, driven by stable consumer spending. As we head into the second half of the year and beyond, we remain focused on the trillions of dollars of opportunity in consumer payments and new flows and on continuing to deepen our partnerships with clients around the world by adding value across our network of networks.

Image Source: Visa

Visa ended the quarter with $17.7 billion in cash and investment securities, which compares to $20.6 billion in long-term debt, so while Visa doesn’t have a net cash position, it’s balance sheet can be considered largely net-neutral to our valuation of the equity. For the six months ended March 31, cash flow from operations increased to $8.15 billion, while free cash flow totaled $7.6 billion, representing a considerable portion of total revenue and fantastic free cash flow conversion.

Visa’s outlook for its fiscal third quarter of 2024 and for the full-year fiscal 2024 was solid. For the fiscal third quarter, net revenue growth is expected in the low double-digit range, while diluted earnings per share growth is targeted at the “high end of low double-digit” range. For the full-year fiscal 2024, Visa expects net revenue growth in the “low double-digit” range, and diluted earnings per share growth in the “low-teens.” We liked Visa’s quarterly report and outlook, and we’re sticking with shares as a top idea in the Best Ideas Newsletter portfolio.