Visa Inc. reported its Q2 earnings with mixed results, reflecting a combination of slightly below-expectation revenues and in-line earnings per share (EPS). The company posted an adjusted EPS of $2.51, surpassing the previous year's $2.16 and meeting analyst expectations of $2.43. However, the net revenue of $8.90 billion, representing a 9.9% year-over-year increase, fell just short of the $8.96 billion consensus estimate.
Shares of V tumbled below the 10-, 20- and 200-day convergence support levels ($266) and are down approximately 3% in early trade. The stock is trading at its lowest level since November of 2023 which marks the start of the broad market rally.
Payment volumes showed a stable but modest growth of 7% year-over-year, slightly below the estimated 8.36%. The cross-border volumes, which are crucial for Visa's revenue, met expectations with a 14% increase, highlighting a robust international transaction activity. The total Visa processed transactions grew by 9.8% year-over-year to 59.3 billion, just shy of the 59.45 billion expected by analysts.
In terms of regional performance, the Asia-Pacific (APAC) region and the lower spending consumer segment saw a sequential moderation, reflecting broader economic pressures in those areas. U.S. payments volume also indicated a slight sequential deceleration in July, influenced by factors such as weather, Prime Day timing, and technical outages. This contributed to a 1% deceleration in total and debit volumes and a 2% deceleration in credit volumes, alongside a modest 1% slowdown in cross-border volume (excluding intra-Europe).
Visa's operating expenses were tightly managed, coming in at $2.96 billion, a 4.4% decrease year-over-year and in line with the expected $2.95 billion. Client incentives, which reduce net revenue, totaled $3.53 billion, slightly higher than the estimated $3.51 billion but reflecting an 11% year-over-year decrease. This indicates Visa's ongoing efforts to balance growth with maintaining competitive offerings to its clients.
Despite the slight revenue miss, Visa's overall financial health remains robust, as evidenced by the significant share repurchases and dividends totaling $5.8 billion. The company's commitment to returning value to shareholders is a positive signal amidst the mixed earnings report.
Looking forward, Visa maintained its FY24 guidance for net revenue and adjusted EPS, despite noting a modestly lower foreign exchange tailwind. The company expects growth in the payments volume to remain stable, although sequential declines are anticipated due to external factors affecting consumer behavior and transaction volumes.
In summary, while Visa's Q2 earnings report showed some areas of strength, particularly in international and cross-border transactions, the slight revenue miss and modest growth in payment volumes highlight the challenges in the current economic environment. The company's strategic focus on managing expenses and maintaining shareholder returns positions it well for navigating these challenges moving forward.