The operator welcomes participants to Visa's Fiscal First Quarter 2024 Earnings Conference Call and introduces the host, Ms. Jennifer Como. Ms. Como reminds participants that the call is being recorded and can be accessed on the Investor Relations section of Visa's website. She also mentions that the presentation includes forward-looking statements and provides information on where to find more details. CEO Ryan McInerney then speaks, highlighting a solid start to 2024 with 8% year-over-year payments volume growth and 5% growth in the US and 11% growth internationally.

In the second paragraph, the article discusses the performance of Visa in the first quarter, highlighting a 16% increase in cross-border volume and a 9% increase in processed transactions. The company's focus on serving its customers and forming new partnerships is emphasized, with a particular focus on cross-border transactions. The growth of credentials, acceptance locations, and engagement in consumer payments is also highlighted, along with two specific examples of expanded acceptance in Brazil and Asia-Pacific.

In the third paragraph, the article discusses Visa's expansion efforts in various countries, including Bangladesh, the U.S., and Europe. They have enabled tap to pay for their clients and have seen positive results in terms of increased transactions and spending. They have also renewed agreements and created new partnerships with major banks in Turkey, Poland, and Greece, as well as expanded their credit issuance partnership in Japan. These efforts demonstrate Visa's strong pipeline and attractive position in the global market.

Visa has renewed and expanded partnerships with several key clients, including Shinhan Card in Korea, BBVA in Mexico, and Bank of America in the U.S. They have also renewed contracts with fintech companies such as Chime and Rappi, and have formed a new global partnership with HSBC for their fintech initiative, Zing. These partnerships demonstrate Visa's commitment to providing a wide range of services and capabilities to their clients.

Visa has updated their sizing of the new flows opportunity and sees a potential $200 trillion annually in B2B, B2C, P2P, and G2C transactions. They are working with clients to digitize these flows using their commercial and money movement solutions, with a focus on Visa Direct. This quarter, Visa Direct transactions grew 20% and P2P cross-border transactions grew 65%. Visa has also expanded partnerships for new use cases and continued to drive cross-border volumes. They have launched a new ability for content creators on Meta's apps to cash out their earnings to a debit card and signed a long-term global partnership with Western Union. They have also expanded their relationship with Remitly to enable cross-border payments to over 100 countries.

In Canada, we have partnered with CIBC and Simplii to offer clients the ability to send money to digital wallets in key remittance destinations. Our total payments volume has grown 8% and we are focused on expanding into new verticals. This includes expanding our agreement with Singapore-based B2B platform Nium and signing new agreements with Worldline and Doxa to provide virtual card and financing options for contractors. We have also renewed and expanded our commercial relationship with United Overseas Bank. Our network of networks strategy is also driving our value-added services, such as processing capabilities for RTP networks Pismo and Prosa.

Visa has made significant progress in expanding its network of networks, with recent developments including becoming a certified service provider for FedNow and acquiring Pismo, a top cloud-native issuer processor. These initiatives will help Visa's clients with their priorities of modernizing their tech stacks and expanding their issuance to new regions. Additionally, Visa's acquisition of Prosa in Mexico will allow for improved payment processing in a market where cash and checks are still prevalent.

Visa is committed to improving safety, security, and reliability in payments and providing better experiences through value-added services. They plan to invest in both face-to-face and online transactions and are looking to develop new partnerships to drive further growth. Their recent partnership with ServiceNow showcases the demand for their services and provides a strong distribution channel. Visa's strong relationships, commitment to innovation, and brand amplification through partnerships, such as with FIFA and Red Bull, position them for success in the global market.

The partnership between the company and Formula One is expected to drive business for clients, along with other partnerships and events such as the Olympic and Paralympic games. The company's Annual Meeting was successful and plans to file an S-4 with the SEC for an exchange offer program. The Executive Chairman, Alf Kelly, has retired and is thanked for his leadership. The first quarter showed stable growth in payments volume and processed transactions, with strong growth in cross-border volume. Global payments volume and processed transactions both increased in constant dollars, while cross-border volume growth, excluding intra-Europe, saw a 16% increase.

The fiscal first-quarter net revenues for the company were higher than expected, with a 9% increase in both nominal and constant dollars. The growth was driven by lower incentives and less impact from foreign exchange. U.S. payment volumes also saw a 5% increase, with credit and debit growing at 6% and 5% respectively. The total U.S. payments volume growth rate saw a decrease of 80 basis-points from the previous quarter, primarily due to a less favorable mix of weekends and weekdays. Consumer spending remained stable across all segments, with holiday spending in the mid-single digits. International markets also saw strong payment volume growth, with cross-border volume up 16% year-over-year.

In the first quarter, cross-border card-not-present volume growth was slightly higher than expected, with travel-related spending increasing by 19%. The cross-border travel volume index also improved, particularly in Asia and the US. However, travel in and out of Mainland China remains below 2019 levels. In terms of financial results, service revenues grew by 11%, data processing revenues grew by 14%, and international transaction revenues grew by 8%. Other revenues increased by 18%, but were impacted by lapping strong growth from last year. Client incentives grew by 20%, but were lower than expected due to client performance and deal timing.

In the first quarter of the year, Visa saw growth in their three main areas: consumer payments, new flows, and value-added services. Consumer payments were stable, while new flows revenue grew in single digits due to one-time items and business mix impact. Value-added services revenue increased by 20%, driven by issuing and acceptance solutions. Operating expenses decreased due to a decrease in the litigation provision, but non-GAAP expenses increased due to personnel expenses. The GAAP tax rate was 19.1% and non-GAAP was 19%, helped by larger-than-expected tax benefits. In January, U.S. payment volume was up 4%, with debit and credit both showing growth, but slightly lower than December due to severe weather conditions. Process transactions grew 8% year-over-year.

In the 13th paragraph of the article, the company discusses their constant dollar cross-border volume growth, which excludes transactions within Europe. They also provide updates on their expectations for the full year, including the impact of Pismo and foreign exchange rates. The adjusted net revenues growth and EPS growth remain unchanged, while adjusted operating expense growth has been updated to low double digits. For the second quarter, the company expects minimal impact from Pismo and foreign exchange rates on net revenues growth, while adjusted net revenues growth is expected to be in the upper mid to high-single-digits and adjusted operating expense growth in the low-double-digits.

The paragraph discusses the expected nonoperating income in Q2 and the projected tax rate, as well as the company's solid start in the first quarter and their focus on executing their growth strategy for the rest of the year. The paragraph also addresses a clarification on new flows and a question about U.S. volume in relation to PCE growth.

The company is working with fintechs and banks to expand card acceptance and tap into new markets such as the service industry. They remain excited about the potential for growth in the U.S. market, but there were some factors that impacted growth in the first quarter. The commercial business is still performing well, with new flows driving growth. The company is focused on getting value-added services on all networks as part of their priorities.

Visa's partnership growth, particularly with companies like ServiceNow, is expected to create a bigger shared responsibility and potentially impact the company's financial performance. The company is excited about the progress of their value-added services strategy, which has seen success in various areas such as issuing, acceptance, risk and identity, advisory, and open banking. The company is also seeing demand from platforms with large customer bases who are interested in selling Visa's services to their users. The partnership with ServiceNow, for example, will initially focus on dispute services, but there are plans to expand to other products and services. Visa is currently in discussions with other platforms to bring their money movement and value-added services to their users.

Jennifer Como asks a question to Craig Maurer from FT Partners about Reg II and the onetime items that impacted Visa in the U.S. Ryan McInerney answers about the business aspect of Reg II and how they are having positive discussions with clients and partners. He also mentions that they are seeing good results 6 months into the implementation of Reg II. Chris Suh adds that there was a modest impact on payment volume growth in the U.S. due to a few factors.

The company experienced a mix of spend days and smaller impacts, including a softer October and the modest effect of Reg II. However, there have been no significant changes in volume since October and the impact has remained modest. One-time items, such as cross-border normalization and adjustments to incentives and rebates, have also affected revenue growth in the new flows business. The company expects this growth to continue outpacing consumer revenue for the full year. In regards to slower volumes, the company attributes it to severe weather in the first week of January and expects spending to reaccelerate as the weather improves.

The speaker explains that the recent extreme cold weather in the U.S. has affected the company's growth in different regions. They give examples of cities where the temperature drop has caused a decline in growth. However, they assure that this is a temporary issue and expect growth to return to normal in the following months. The speaker also mentions that the EPS growth outlook for the second quarter is high-teens, but this does not reflect in the full year EPS growth due to certain tax and operational expenses in the second half of the year.

The speaker discusses the success of the company's value-added services, which generated $7 billion in revenue last year and saw a 20% increase in constant dollars in the most recent quarter. They attribute this success to strong execution and client demand, and highlight specific segments, such as issuing solutions and DPS, as drivers of growth. The speaker also mentions a recent renewal with a major client, Bank of America.

The paragraph discusses the success of CyberSource in the acceptance solutions business and the growth of their disputes, risk and identity solutions, and advisory services. The speaker also mentions the success of their managed services platforms and how it helps drive revenue growth and strengthen their relationship with clients. They clarify that while growth may be at a low point in the first quarter, they expect it to accelerate going forward, with a projected mid to high single digit growth in the second quarter.

Andrew Jeffrey asks about the 17% growth in merchant acceptance and its potential impact on overall volume expansion. Ryan responds that it highlights the opportunity for continued volume growth, even in markets with slowing secular growth rates. He also mentions that this level of acceptance growth is sustainable and should continue to be a key driver of volume expansion.

Ryan McInerney, speaking to the sales teams, is pushing for more acceptance opportunities in the global market, including small businesses and the creator economy. He mentions the potential for billions of individuals to become acceptors through products like Tap to Phone. The company has seen 17-19% growth in acceptance locations and is working with players like bKash and Caixa to expand in emerging and developed markets. The next question asks about the recent slowdown in cross-border travel volume growth, which has dropped from 25% to 16-17%. The company had previously predicted low-20% growth for fiscal '24, which would be a 4-5 percentage point improvement from 2019.

The speaker is discussing the company's cross-border business and its strong performance in the first quarter of the year. They clarify that the guidance for low 20s growth was related to the travel portion, which came in at 19%. They also break down the performance by region, with LAC, CEMEA, Europe, and US outbound showing strong results, and US inbound improving in line with expectations. AP saw slower growth, particularly in Australia and Japan, and the recent conflict in the Middle East had some impact on cross-border numbers. Overall, the speaker is optimistic about the company's cross-border business for the rest of the year.

In this paragraph, Ashwin Shirvaikar asks about expectations for the second half of fiscal year 2024, given the Q1 results and the implied acceleration in growth for Q2. Chris Suh responds by breaking down the question into two parts: drivers and revenue. He explains that the drivers for growth in the second half of the year will be improved average ticket sizes and execution of growth initiatives in global markets. He also reaffirms the company's full year revenue guidance and expresses confidence in their Q1 results and outlook for the rest of the year. The next question is then taken by Timothy Chiodo from UBS.

Ryan McInerney explains that Visa found Pismo after hearing from CEOs of banks all over the world about their priorities and needs. Pismo is a cloud-based processor and core bank provider that already serves a mix of large banks, medium-sized banks, and fintechs. Visa's ambition is for Pismo to become the preferred provider for banks globally, including midsized banks in the U.S. who may be interested in using Pismo's core banking platform.

The speaker discusses the potential of Pismo, a global platform, to be used by large banks for debit, credit, prepaid, and commercial transactions. They express confidence in their ability to distribute the product to banks around the world due to their strong relationships. The speaker also reaffirms the outlook for low double-digit process volume and transaction growth for the year and maintains their incentive guidance for fiscal year 2024.

The company has updated their guidance for the full year and Q2 and will continue to focus on execution. They thank everyone for joining the conference and invite anyone with additional questions to contact their Investor Relations team. The operator then thanks everyone for participating and the call ends.

This summary was generated with AI and may contain some inaccuracies.