Dive Brief:
- Visa’s income rose in recent months as consumer and corporate customers increased spending, partly in connection with the card network’s sponsorship of FIFA’s World Cup, the company said in an earnings report Tuesday. Specifically, year-over-year U.S. payment volume growth for the quarter that ended in June was 10%, the strongest it’s been since 2019 with the exception of a surge as the COVID-19 contagion eased.
- In discussing the fiscal third-quarter results with analysts, the company’s CEO, Ryan McInerney, pointed to three drivers of increased revenue: more payments flow from customer spending; product enhancements made possible by artificial intelligence; and the sale of ancillary services, like a subscription manager tool.
- Still, the company disclosed that momentum has slowed this month, compared to results last year. “Management's tone was constructive but measured, leaning into [value added services] momentum and cross border durability,” Bank of America analysts said in a Wednesday note to the bank’s clients. “On July, they framed the deceleration vs. June as tougher comps and retail timing rather than underlying weakness.”
Dive Insight:
The business update came as Visa on Tuesday reported fiscal third-quarter net income rose 7% over the year-ago period to $5.6 billion, as revenue rose 14% to $11.6 billion, according to an earnings press release from the San Francisco-based company.
“Quarterly payments volume grew 10% year over year in constant dollars to cross $4 trillion, the first time in Visa's history, and process transactions grew 10% year over year to $72 billion, reflecting strong and resilient consumer spending,” McInerney said on the call.
The higher revenue was driven partly by increased international card spending and cross-border payments related to Visa’s sponsorship of the World Cup tournament that ran from June 11 to July 19 in cities across North America. Aside from advertising related to the event, Visa had customer offerings tied to it.
International payments volume climbed 11% for the quarter, and cross-border card payments rose 15% over last year, according to a company earnings presentation.
On the expense side, the company reported that operating costs climbed 19% to $4.76 billion in a jump that resulted mainly from marketing and personnel costs, Visa Chief Financial Officer Chris Suh said during the call. Personnel expense rose 40% for the quarter over the year-earlier period.
“This was above our expectations, primarily due to larger than expected [foreign exchange] impact from balance sheet remeasurement and higher than expected personnel expense as a result of deferred compensation,” Suh said.
Now, Visa is acting to cut its employee costs by whittling its product and technology teams. The company confirmed that it cut 7% of its workforce, eliminating about 2,600 jobs, a move that was reported by the media outlet Bloomberg Tuesday. A Visa spokesperson declined to comment further on the job cuts.
The reduction was partly due to increased use of artificial intelligence in “engineering, client service, and model orchestration,” McInerney said. With fewer workers and the use of AI agents, the company is producing more coding faster for new product features, he said.
“As a result of the unlocks we can realize with this new tooling, we are reforming our product development teams that used to be 10 or more into smaller and more nimble agentic squads of two to four, and the results are meaningful for those teams that are using the agentic toolchain,” McInerney said.
