6 Key Things We Learned from Visa’s Strong Q1 FY2024 Earnings

January 29, 2024

Visa Inc. (NYSE: V), a global leader in digital payments, has recently made headlines with its remarkable Q1 FY2024 performance, showcasing resilience even amidst a slowdown in U.S. payment volumes.

This article delves into the key highlights from Visa’s latest financial results, offering insights into the strategies and trends shaping its continued success.

Here are 6 key highlights from Visa’s strong Q1 FY2024 financial performance.

1. Q1 FY2024 earnings beat expectations

Visa reported an impressive Q1 FY2024 adjusted earnings per share (EPS) of $2.41, surpassing the Street’s expectations by approximately 3%. This performance was underpinned by a net revenue increase of 9% on a constant dollar basis, slightly ahead of market forecasts. A notable driver of this revenue uptick was enhanced data processing fees and a reduction in rebates and incentives as a percentage of gross revenue. Visa’s adept management of operating margins, which stood at 69.7%, further contributed to this positive EPS variance.

2. Weathering challenges in the US

Despite robust overall results, Visa did experience a deceleration in US payment volumes in January, largely attributed to inclement weather conditions. The volume growth rate dipped by about 100 basis points to approximately 4%. However, this minor setback was counterbalanced by the company’s strong performance in other areas.

3. Bright spot seen in cross-border volumes 

One of Visa’s standout achievements in Q1 FY2024 was its cross-border volume growth, which rose 20% year-over-year (yoy). This growth was partially buoyed by favorable foreign exchange tailwinds, with a constant dollar volume increase of 16%. Additionally, international payment volumes saw an 11% increase, significantly outpacing the growth in the U.S.

4. Strong FY2024 outlook

Looking ahead to FY2024, Visa has reaffirmed its revenue and EPS outlook, indicating confidence in its growth trajectory. The company’s guidance for the Q2 FY202 is slightly conservative in terms of revenue but anticipates a 5% higher EPS, driven by a lower tax rate and increased net operating income. This forward-looking perspective implies a notable acceleration in revenue growth in the second half of the fiscal year, fueled by higher average ticket sizes, new business wins, and easing comparative metrics.

5. Attractive valuation

Visa continues to trade at a discount relative to its historical price-to-earnings (P/E) premium compared to the S&P 500. Currently, this discount stands at around 20%, versus the five-year average of approximately 50%. Considering Visa’s consistent double-digit revenue growth and low to mid-teens EPS growth, the company presents an attractive risk-reward profile for investors.

6. Leading the global payment technology

Visa is not just a card issuer but a comprehensive payments technology company. Established in 1970 by Dee Hock and headquartered in San Francisco, Visa has revolutionized the way money moves across the world. The company facilitates global commerce by transferring value and information among a vast network that includes consumers, merchants, financial institutions, businesses, strategic partners, and government entities. Its advanced transaction processing network, VisaNet, is at the core of this, enabling authorization, clearing, and settlement of payment transactions. This network also allows Visa to offer an extensive range of products, platforms, and value-added services to its financial institution and merchant clients.

Final Thoughts

Visa’s performance in Q1 FY2024 is a testament to its strategic adaptability and robust business model. Despite minor challenges in the U.S. market, the company’s continued focus on diversifying revenue streams, optimizing operational efficiency, and leveraging cross-border volume growth positions it well for sustained success. As Visa navigates through the complexities of the global financial landscape, it remains a compelling story of resilience and growth in the digital payments sector.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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