Visa’s Free Cash Flow Margins Are Incredible

Image Source: Visa

By Brian Nelson, CFA

On January 30, Visa (V) reported strong fiscal first quarter results with revenue and non-GAAP earnings per share coming in ahead of the consensus forecasts. Net revenue increased 10% (up 11% on a constant-dollar basis), while non-GAAP net income increased 11% and non-GAAP earnings per share jumped 14% on a year-over-year basis. During the fiscal first quarter, payments volume increased 9%, total cross-border volume increased 16%, while processed transactions advanced 11%.

Management spoke positively in the press release:

Visa’s strong first-quarter results reflected healthy spending during the holiday season and improving trends in payments volume, cross-border volume, and processed transactions growth. We delivered 10% net revenue growth, 8% GAAP EPS growth and 14% non-GAAP EPS growth. As we continue through 2025, we remain focused on serving our clients and innovating across our three growth levers – consumer payments, new flows and value-added services.

Visa’s cash and investment securities were $16.1 billion at the end of the calendar year versus short-and long-term debt of $20.6 billion. For the three months ended December 31, operating cash flow was $5.4 billion, up from $3.6 billion in the year ago period. Capital spending came in at $345 million in the quarter, with the firm hauling in free cash flow of $5.05 billion, revealing a free cash flow margin of 53%. Looking to full year 2025, management is targeting low double-digit growth in net revenue and low-teens earnings per share growth. We continue to like Visa as a top weighting in the Best Ideas Newsletter portfolio. The high end of our fair value estimate range stands at $365 per share.

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