Q1 2026 Earnings Call Transcript

Welcome to Visa Inc.'s fiscal First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would like to now introduce your host, Ms. Jennifer Como, Senior Vice President and Global Head of Investor Relations. Ms. Como, you may begin. Thank you. Good afternoon, everyone.

And welcome to Visa Inc.'s fiscal first quarter 2026 earnings call. Joining us today are Ryan McInerney, Visa Inc.'s Chief Executive Officer, and Christopher Suh, Visa Inc.'s Chief Financial Officer. This call is being webcast on the Investor Relations section of our site at investor.visa.com. A replay will be archived on our site for thirty days.

A slide deck containing financial and statistical highlights has been posted on our IR website. Let me also remind you that this presentation includes forward-looking statements. These statements are not guarantees of future performance, and our actual results, outcomes, or timing could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website.

Except as required by law, we do not undertake any responsibility to update these forward-looking statements. Our comments today regarding our financial results will reflect revenue on a GAAP basis, and all of the results on a non-GAAP nominal basis unless otherwise noted. The related GAAP measures and reconciliation are available in today's earnings release and related materials available on our IR website. And with that, let me turn the call over to Ryan.

Thanks, Jennifer.

In our fiscal first quarter, we delivered strong financial results with net revenue up 15% year over year to $10.9 billion and EPS up 15%. Payments volume grew 8% year over year in dollars to nearly $4 trillion, and processed transactions grew 9% year over year totaling 69 billion, demonstrating resilient consumer spending. We continued to build and deliver innovations and scalable technologies across the Visa as a service stack, acting as a payment hyperscaler to enable anyone in the ecosystem to build, launch, and scale money movement and payments businesses across the globe. Let me share some more detail on the recent progress we have made in the services and solutions layers of our Visa as a service stack.

More specifically, in the evolution of Visa credentials, AgenTik Commerce, stablecoins, as well as in B2B and P2P money movement, issuer processing, and risk and security. The core of our consumer payments business is the Visa credential. It is much more than a physical card; it can be digital, in a wallet, online, mobile. It's the connection point to the Visa network on top of which we're able to layer all types of services, solutions, and access now totaling more than 5 billion Visa credentials.

We have continued to enhance Visa credentials in a few important ways this past quarter. Tap to pay, Visa Flex credential, and tokens. Our Tap to Pay penetration has now crossed the 80% mark of all face-to-face transactions with the US at nearly 70%. Transit acceptance remains a key enabler with our recent launches in San Francisco and more than 10 other systems globally this quarter.

In our first quarter, we have continued to enable tap to pay use cases for the different form of the credential. For example, in Europe, we recently announced new digital wallet enablement of iOS wallets such as Klarna in 14 countries, and Vips MobilePay in The Nordics. We also will soon launch a pilot in Italy with the domestic scheme Bancomat. In addition, we enabled Apple Pay for Visa cards issued in China for cross-border face-to-face, in-app, and online transactions.

This spans eight issuers representing nearly 60 million Visa credentials, supporting the many Chinese consumers traveling or living abroad, with more issuers coming soon. Our tap to phone capability, which has helped to grow our acceptance locations to more than 175 million globally, has added more than 20 new markets and more than doubled transactions in the last year. A second important area of progress enhancing Visa credentials is enabling multiple funding sources from one single credential with our Visa Flex credential. This past quarter, Block announced the pilot launch of a new Cash App Visa debit card, which enables Afterpay as a feature for their customers to pay over time anywhere Visa is accepted, and leverages Visa's DPS issuer processing solution for the debit component.

Globally, we have about 20 million Visa Flex credentials, just a small fraction of our total credentials but growing fast. They are offering funding sources such as debit, credit, multicurrency accounts, rewards, installments, and more. And we expect to expand to more than 20 additional issuers this year. The third and maybe most revolutionary credential technology is the Visa token.

Our token technology delivers a digitally native payment credential designed for the unique characteristics and needs of digital commerce. We have more than 17.5 billion tokens globally, over three times the number of physical cards, which means that the solution has been embraced broadly across the ecosystem. We continue to make progress on the tokenization of e-transactions to our ultimate goal of fully replacing card-centric PAN technology, further improving Visa's competitive positioning against cash, check, and legacy forms of digital payment. We utilize a variety of tools such as incentives, sales-oriented case studies, performance compliance programs, and enhancements, to encourage tokenization and enhanced data sharing to make the e-commerce environment as safe as it can be.

Issuer enrollment efforts are underway across Europe, CEMEA, and LAC, as we expand the click-to-pay directory to enable credentials to be always digital. Globally, we have also been working with acquirers and payment facilitators to ultimately eliminate the guest checkout that occurs today, which we have reduced from 44% of all Visa e-transactions in 2019 to about 16% in fiscal 2025. And among our top 25 sellers, it's less than 4%. This means that at our top 25 sellers, 96% of transactions now require only a simple click or biometric authentication and do not require a burdensome and error-prone form filling.

We continue to build new capabilities on top of our token service platform, positioning our credentials and tokens as the fundamental building blocks for the future of payments. One of those that is enabled with Visa tokens is an important area of innovation, AgenTik Commerce. Our Visa Intelligent Commerce solution utilizes tokens and their configurability as the core underlying foundation for AgenTik payments. We're working to enable AgenTik Commerce with more than 100 partners across the commerce ecosystem globally.

Over 30 partners are actively building in our sandbox, with multiple agents and agent enablers running live production transactions and more partners expected in the future. Just this quarter, we expanded into B2B AgenTik payments with Ramp, streamlining corporate bill payments, enabling their business customers to capture cash back on card payments, and optimizing working capital. We also reached an agreement with AWS to make Visa Intelligent Commerce available on AWS Marketplace to support developers building AgenTik Commerce solutions connecting secure automated payment workflows at scale through blueprints for workflows such as travel bookings or retail purchases.

In our CEMEA region, ALDAR, a leading real estate developer, investor, and manager, is integrating Visa Intelligent Commerce to make recurring payments such as property service charges on their Live Alder app. Our Visa trusted agent protocol continues to help define the connectivity and data elements required to bring trust to the agentic environment. In Q1, we announced partnerships with leading Internet security players, first Cloudflare, and then Akamai, who collectively serve millions of businesses globally, including nine of the world's top 10 retailers. In addition, we are building interoperability between key elements of Visa Intelligent Commerce and Google's new universal commerce protocol as part of our global effort to help ensure that Visa transactions are securely supported as different protocols evolve.

Our AgenTik solutions are live in the US and CEMEA, and we are initiating pilot programs in Asia Pacific and Europe. LAC is soon to follow, where we have already begun token enrollment for AgenTik commerce with issuers. We believe that we are well positioned to be the infrastructure provider and key enabler in AgenTik Commerce, so that every agent interaction is trusted and secure. Like AgenTik Commerce, stablecoins have tremendous growth and disruption potential but are still in the very early stages of adoption for payments use cases.

As new stablecoins and blockchains continue to emerge and show the promise of true utility, Visa's goal remains clear: build the secure and seamless interoperable layer between stablecoins and traditional fiat payment at scale across the world. This past quarter, we expanded our capabilities across several fronts. First, we added Stablecoin card issuance in nine additional countries in Q1 to surpass 50 countries worldwide, and payments volume continues to grow at a fast rate as we enable more consumers and businesses to spend stablecoins with Visa. This quarter, we also expanded our stablecoin settlement capabilities with USDC into the US, improving speed and liquidity for banks and fintechs, and providing interoperability to modernize treasury operations for our clients.

And total stablecoin settlement has reached an annualized run rate of $4.6 billion globally, as demand has grown among both stablecoin native and more traditional clients. We're finding that more and more participants in the payments ecosystem—financial institutions, merchants, acquirers, and consumer-facing technology companies—are looking to develop and refine their stablecoin strategy. As such, we recently launched our stablecoins advisory practice globally, where we are working closely with our clients providing access to training, strategy, and market entry planning and technology enablement.

In addition to being a design partner with the Tempo Layer One blockchain initiative, we recently announced our participation in the Testnet of ARC, a Layer One blockchain from Circle. With both, we see Visa's role in supporting both transaction processing and delivering value-added services. Finally, we are piloting Visa Direct stablecoin payouts, allowing platforms and businesses in the US to send payouts directly to users or workers or employees' stablecoin wallets. This innovation expands the reach of Visa Direct by providing creators, freelancers, and marketplaces with a stable store of value and faster access to funds, even in markets facing currency volatility or limited banking infrastructure.

The stablecoin opportunity remains additive to what Visa is doing today, and we will continue to invest where we see the greatest demand. On ramps and off ramps, settlement, money movement, consulting, and other value-added services. We believe that Visa is well positioned as a global trusted technology provider to deliver a full stack of bank and enterprise-grade infrastructure that our clients need to build the future of their business on-chain. Stablecoin is just one way that we are enabling money movement.

We also have continued to make enhancements to our Visa Direct and commercial solutions capabilities. In Visa Direct, we have continued to deepen relationships with existing partners like acquirer Nuvei, who has expanded their agreement to include Visa Direct to account in addition to card more than 30 countries. After initially enabling Visa Direct in 25 markets in 2023, PayPal's Zoom recently expanded its Visa Direct cross-border reach to more than 60 markets. In our B2B or commercial solutions, we continue to create compelling purpose-built offerings with a number of our services.

In Europe, we've expanded our partnership with Revolut to launch Titan in the UK, an ultra-premium card designed for high-growth companies that attracted thousands of business customer sign-ups on day one. Also in Europe, Eden Red Paytech has chosen Visa as its strategic partner to expand across multiple B2B use cases with our solutions, including open-loop workplace benefits, open-loop fleet and mobility, B2B travel, insurance payouts, and procure-to-pay. Another area of innovation and expansion in the services and solutions layers of the Visa as a service stack has been issuer processing. Visa has been in the issuer processing business for over thirty years.

We have continued to invest in this space by enhancing DPS, but also through the acquisition of PISMO. Many issuers around the world are seeking to upgrade their technology stacks to ensure they can deliver for customers in a digital age. Visa's issuer processing capabilities enable clients to have one connection to Visa from which they can access our other solutions and services such as network products, value-added services, tokenization, risk products, and more. One of the two agreements I would highlight this quarter is Pismo's first commercial offering since the acquisition with Banco Bisse in Chile.

In collaboration with expense management platform Mendel, we will offer a business credit corporate issuer processing program for Bisse and their large and middle market B2B clients. The second agreement is Pismo's first fleet card offering with FinanceNow in New Zealand. Visa will also provide fleet card issuance, tokenization, and risk services as well. We will continue to look for ways to invest in to both modernize and enhance payment systems globally and accelerate the adoption of our value-added services.

The final area I want to highlight is our risk and security solutions. As you know, we closed on our acquisition of FeatureSpace just over a year ago, and we have continued to invest in this platform to provide a holistic AI-driven solution for our clients, before, during, and after a transaction. Nets, part of Nexi Group in Europe, has chosen FeatureSpace to expand fraud prevention for 150 banks across Nordic and Central Europe regions, leveraging cloud hosting and advanced fraud models. Another AI-powered solution, Visa Account Attack Intelligence, was announced in 2024 in the US to help clients prevent enumeration attacks, which are when bad actors systematically initiate e-commerce transactions to obtain valid payment credentials.

The results of this solution in the US have been impressive, with over 60 billion transactions scored and nearly 600 million suspicious transactions identified in the last twelve months. We are now investing in its market expansion with launches in the rest of our regions where we are also seeing strong results. In LAC, for example, in just six months, have almost 90% of clients already activated and have prevented more than $10 billion of fraud. We have brought our network-agnostic risk solution, Visa Advanced Authorization, to more countries as well, including recently securing the business from Morocco's national switch, Switch Elmarib, to score all domestic transactions.

We have also expanded our A2A risk solution, Visa Protect for A2A, to two more countries this past quarter, with a half a dozen more planned by the end of the year. Of course, these represent just a small set of examples, and throughout the quarter, we have developed many more solutions that will help us drive long-term growth. Collectively, all of our efforts produced 15% year-over-year net revenue growth, with our growth pillars continuing to deliver very strong results. Commercial and money movement solutions constant dollar revenue grew 20%, with 10% constant dollar commercial payments volume growth and 23% Visa Direct transaction growth.

Value-added services constant dollar revenue grew 28% and represented around 50% of our overall revenue growth in the first quarter. These results and our feedback from our clients give us confidence that our strategy is working and we are investing in the right capabilities to position Visa and our clients and partners for the future. Visa is delivering breakthrough innovations that redefine what's possible in payments as we enable our partners to achieve global scale quickly and securely. Now to Chris, where he will discuss our financial performance.

Thanks, Ryan, and good afternoon, everyone. We had a very strong start to our 2026 fiscal year, driven by strong driver growth, a strong holiday season, and continued execution of our strategy across consumer payments, commercial and money movement solutions, and value-added services. Business drivers remain strong. In constant dollars, global payments volume was up 8% year over year, and relatively consistent with Q4. Cross-border volume, excluding intra-Europe, was up 11%, and total processed transactions grew 9%.

Fiscal first quarter net revenue was up 15% year over year, with the outperformance largely driven by stronger than expected value-added services revenue, lower than expected incentives, and stronger than expected commercial and money movement solutions revenue.

These three factors more than offset lower than expected currency volatility. First quarter revenue was up 13% in constant dollars. EPS was up 15% year over year, better than expected, primarily due to stronger than expected net revenue growth. EPS was up 14% in constant dollars.

Let's go into the details. US payment volume was up 7%, with e-commerce growing faster than face-to-face spend, reflecting resilience in consumer spending. Credit was up 7% and debit was up 6%. The slight step down in USPV throughout the quarter was driven by debit, primarily as a result of a Visa Direct client moving the remainder of its volume to its own solution, and a number of other small factors including the loss of some interlinked volumes, to the Capital One debit migration and severe weather that affected certain spend categories.

Growth across consumer spend bands remained relatively consistent with Q4, with the highest spend band continuing to grow the fastest. We did not see a deterioration in the lower spend band, and across our volume, both discretionary and nondiscretionary spend remain strong. Honing in on the holiday season specifically, which we define as the period from November 1 to December 31, I would note a few items. In the US, consumer holiday spending growth was in line with last year, reflecting continued strength in retail, an improvement in fuel, and some moderation in other spend categories.

Focusing on retail, holiday spending growth was slightly better than last year, driven by strong growth in e-commerce, which continues to take on a greater share of consumer retail spend. In several key countries around the globe, we saw similar trends, with consumer retail holiday spending growth up from last year led primarily by e-commerce growth. First quarter total international payments volume was up 9% year over year in constant dollars, generally consistent with the growth we've seen over the past several quarters. Now to cross-border volume, which I'll speak to in constant dollars and excluding intra-Europe transactions.

Q1 total cross-border volume was up 11% year over year, consistent with Q4. Cross-border e-commerce volume was up 12%, slightly below Q4 primarily from lower growth in cryptocurrency purchases. Travel-related cross-border volume was up 10%, consistent with Q4. We saw continued strength in commercial volumes and we started to see improvement in US inbound from Canada. With that as a backdrop, I'll move to discuss our financial results, starting with the revenue components. Service revenue grew 13% year over year versus the 9% growth in Q4 constant dollar payments volume, primarily due to pricing and card benefits.

Data processing revenue grew 17% versus the 9% growth in processed transactions, primarily due to pricing, strong value-added services performance, and higher cross-border transaction mix. International transaction revenue was up 6%, below the 11% increase in constant dollar cross-border volume growth excluding intra-Europe. Even with the favorable FX, we saw a much lower than expected volatility, with additional negative pressure from mix and hedging. Other revenue grew 33%, primarily driven by growth in advisory and other value-added services, and pricing.

Client incentives grew 12%, lower than our expectations due to one-time true downs related to client performance and deal timing. Now to our three growth engines. Consumer payments revenue was driven by strong payments volume, cross-border volume, and processed transaction growth. Commercial and money movement solutions revenue grew 20% year over year, in constant dollars.

CMS revenue was better than expected, driven primarily by our commercial solutions business. Commercial payments volume grew 10% in constant dollars, consistent with Q4 and faster than Visa's overall payments volume growth, primarily due to strong client performance driven by both new wins and continued cross-border strength. Visa Direct transactions grew 23% to 3.7 billion transactions, with strength in both domestic and cross-border. Value-added services revenue grew 28% year over year, in constant dollars to $3.2 billion, driven by strength across all portfolios.

Value-added services revenue growth was better than expected, primarily due to greater demand for our advisory and other services, especially in marketing services. Operating expenses grew 16%, above our expectations, primarily due to an unfavorable FX impact from balance sheet remeasurement and higher than expected marketing from both timing of marketing spend and marketing services related expenses, some of which are associated with the stronger value-added services revenue I just mentioned. Non-operating expense was $4 million, better than our expectations, primarily due to investment income.

Our tax rate for the quarter was 18.4%, slightly higher than expected due to the timing of the resolution of a tax matter. EPS was $3.17, up 15% year over year, with an approximate one-point benefit from exchange rates and a minimal impact from acquisitions. In Q1, we bought back approximately $3.8 billion in stock and distributed approximately $1.3 billion in dividends to our shareholders. We also funded the litigation escrow account by $500 million, which has the same effect on EPS as a stock buyback.

At the December, we had $21.1 billion remaining in our buyback authorization. Now let's look at drivers through January 21, with volume growth in constant dollars. US payments volume was up 8%, with credit up 9%, and debit up 6% year over year. For constant dollar cross-border volume, excluding transactions within Europe, total volume grew 11% year over year, with e-commerce up 12% and travel up 10%.

Processed transactions grew 9% year over year. Moving to our guidance. Now that a quarter has passed since our initial FY26 commentary, I would note the following on our key assumptions. As we regularly say, we are not economic forecasters, so we're assuming the macroeconomic environment stays generally where it has been and consumer spending remains resilient.

So no change. On pricing, we also have no material changes, with the benefits of new pricing expected to be similar in magnitude as last year and the majority in the back half. What that means from a cadence perspective is Q2 would see a relative step down in the year-over-year growth pricing contribution from Q1. On incentives, we had true downs and deal timing that helped in Q1, that we do not expect will carry into Q2. As such, this implies a step up in the growth rate from Q1 to Q2, with Q3 continuing to have the highest year-over-year incentive growth rate and the full year remaining relatively unchanged.

On volatility, it has been much lower than we expected so far this year, and we are assuming that that volatility continued at current levels for the rest of the year, implying a larger drag for the rest of the year than in Q1 and with Q3 having the toughest comparable to last year's higher levels. We pull these assumptions together on an adjusted basis defined as non-GAAP results in constant dollars and excluding acquisition impacts. You can review these disclosures in our earnings presentations for more detail. For the full year, we have no material changes in our expectations for our adjusted and nominal net revenue growth.

We still expect our full year adjusted net revenue growth to be in the low double digits, reflecting anticipated weaker volatility environment the rest of the year, that's offset by the Q1 outperformance and higher utilization of our products and services. On the expense side, we have no material changes to our prior full year guidance, and still expect adjusted operating expense growth to be in the low double digits for the year. As a result of Q1, our expectations for non-operating expense are now between approximately $101 million and $125 million. On our tax rate, as a result of the claim of right tax benefits related to recent and anticipated legal settlements, we now expect our full year rate to be lower than we guided, between 18% and 18.5%.

I should reiterate that we still expect our long-term tax rate to be between 19% and 20%. This implies adjusted EPS growth in the low double digits, albeit a bit higher in the range than previously guided, primarily due to the change in tax rate. Moving to Q2 financial expectations. We expect Q2 adjusted net revenue growth in the low double digits.

The primary reasons for the step down from Q1 net revenue growth include the lower contribution from pricing, lower volatility, and higher incentive growth. We expect adjusted operating expense growth in the mid-teens, about a point above Q1 adjusted operating expense growth. This reflects the step up in marketing-related expenses primarily due to the Olympics and FIFA. And you may recall that Q2 last year had lower than expected operating expense growth due to timing.

Non-operating expense is expected to be about $30 million, and our tax rate in the second quarter is expected to be around 16.5%, primarily as a result of the claim of right benefits I mentioned previously, that we expect to realize in the second quarter. As a result, we expect adjusted second quarter EPS growth to be in the high end of low double digits. As always, if the environment changes, and there are events that impact our business, we will remain flexible and thoughtful on balancing short and long-term considerations. It's an exciting time in payments, and we're confident in our strategy and investments to fuel Visa Inc.'s future growth.

And now, Jennifer, I'll hand it back to you.

Thanks, Chris. And with that, we're ready to take questions.

Thank you. If you would like to ask a question, please press 1 and clearly record your name. You will be announced prior to asking your question. To ensure all questioners are heard, we ask that you please limit yourself to one. Once again, to ask a question, please press 1. To withdraw your question, press 2. Dan Perlin with RBC Capital Markets, your line is open.

Thanks. Good evening, everyone. I just wanted to dig in a little bit on the opportunities around value-added services, but specifically, around purpose-built offerings for events. So here, we're really talking about the Olympics and World Cup. Given the value-added services is a much bigger part of the business today than the last time that occurred.

Yeah. So you see if I hit the core question then. So we first of let me just start with these sponsorship assets that we have. They're obviously marquee sponsorship partnerships.

Talking about, for example, this year, FIFA. This year, Winter Olympics. You know, global, very, very global in nature. And what we have through our sponsorships is the ability to pass through those rights to our clients and partners all over the world.

And that's what we do. Our value-added services sales teams go to market. They sit with our clients many, many months in advance of these programs. And they design programs that are bespoke and custom-built for our clients to help them grow their business.

So for some clients, those might be advertising campaigns that we develop together with them in support of maybe a sweepstakes for their cardholders. Things like that. For other clients, they might want to create client events for their private banking clients at one of the FIFA Games in the US, Canada, or Mexico. So in that example, our team works with them to build bespoke events, obviously branded for the bank or financial institution and those types of things.

It's a very busy time of year for us. It's a very, very busy year for us. There is a ton of demand from our clients, and the great thing about this is not only are we helping our clients, not only are we generating revenue from these services, we're deepening our partnerships with our clients. And so, you know, we get more renewals because of them.

We get more business because of them. And so we feel really good about it.

Next question, please.

Our next caller is Darrin Peller with Wolfe Research. Your line is open.

Thanks, guys. Maybe we just touch on what you're seeing strength and that's actually it seems like it's offsetting the lower than expected FX volatility such that you're able to maintain your full year for revenue growth. I know VAS and CMS seems to be standing out pretty well. And just if I could just throw one more about capital return.

Have you guys thought through any changes given where the market is placing valuations now over capital allocation, buybacks maybe is picking up a notch? Thanks, guys.

Okay. Hi, Darrin. Well, yeah, let me jump in. Value-added services in particular, we saw in Q1 really great performance, strong execution, strong client demand.

Ryan talked about some of that around some of the events, but the strength was really quite broad-based. We saw strong growth year over year in all four of the portfolios that we talk about. Issuing solutions, acceptance, risk and security, and advisory. The team continues to do very well across that.

And so when we think about the performance and then, of course, CMS had a very high growth quarter as well, performing above what we expected. So when we think about the full year expectations, those are the moving parts that we talked about. We said, volatility, it you know, obviously, it's hard to determine where that's gonna go, but given the persistent low that we saw in Q1, if we extend that throughout the rest of the year, that does provide for more downside than the momentum that we have in the business that we anticipate will continue throughout the rest of the year, those two become largely offsetting.

To your second point around capital return, as you know, Darrin, our approach to capital return and share buyback has largely been programmatic. We've executed on that very consistently throughout our history. But at the same time, you know, we do take advantage when we see opportunities, when we think the market is underpricing our stock and we see an opportunity, we'll lean in as well, and we'll continue to look for opportunities to do that as well.

Next question, please.

Thank you. Will Nance with Goldman Sachs. Your line is open.

Thanks for taking the question today. I wanted to ask just the advisory question on the regulatory environment. CCPA has been and then there's quite a bit. Just if you could share your updated thoughts on how you're thinking about I guess, the risk to the business from that potentially going forward as well as how you're thinking about recent conversations on the Hill and know, the likelihood of that.

Becoming a reality. Thank you for taking the question.

Hey, Will. You cut a little out when you asked about specific thing. Was it CCTA you mentioned or something else?

Yeah. It was it was CCCA kind of effects of implementation as well as, you know, recent conversations on the hill and likelihood of passing.

Yeah. So as you'd expect, we're very engaged. On the hill. We're very engaged with members.

As you know well, there's many things floating around. And, you know, we view it as our job to educate elected representatives on the impacts that the various policies that are being floated around could have. In the case of CCCA specifically, we've talked extensively, in this call and other places about our view and it's you know, it hasn't changed. It's very harmful.

And it's just simply not needed. So, you know, when I have a chance to talk to elected officials and the rest of my leadership team does, like, they're listening. They're understanding. Know, these people don't live in our industry every day.

So, you know, they they they do need the time to understand it. You know, when we talk to them about why it's not necessary, we explain the competitive environment in this business. It is intense. We have new players entering all the time.

You know, we talk on this call about crypto stablecoins, BNPL. Obviously, all the competition in the credit card and debit card markets. You know, wallet players, A2A. We take them through an explain, you know, this competitive environment.

And we also explain why the market is working so well. And there's no need for government intervention. And the second thing we explained was just how harmful it would be. I mean, this legislation would have far-reaching negative consequences.

At a time when, you know, the economy certainly doesn't need that. Consumers and small businesses would see reduced access to credit, you know, rewards would be eliminated entirely. There'd be fewer credit card options. And, by the way, weaker security protection.

Less innovation, all these things, and we explain why. I think this is just gonna be this is gonna be part of what we all do regularly because there's elections. You have new elected officials. They're very busy with lots of other things, and so we just have to continue to remind them of the impacts whether it's CCCA or anything else for that matter.

Next question, please.

Adam Frisch with Evercore ISI. Your line is open, sir.

Thanks, guys. Nice results. Could you double click into the much better than expected growth in commercial and what you saw there? It was just a great quarter?

Or did something unlock in a market with immense potential but I think previously, was supposed to be a little bit more slow and steady. And then would appreciate if you could provide just a quick perspective on spending trends around the world, maybe some color on what you're seeing in the major regions and to the extent you can, some insights on affluent versus mass. Thanks, guys.

Hey, Chris. Let me start a little bit on commercial from a business perspective, then you can follow-up on the numbers, and then you can hit the other questions that's fed in trends. I think what you're seeing in commercial is the results of the strategy we've been talking to you about now for, really for a few years. And you know, I I think just, credit to our teams, like, we've been shipping great product.

Our sales teams have been engaging with players all around the world. We've been winning. You know, we we talk when we think about the commercial space, we've been talking with you all about three different types of opportunities, and we're having great success across all three of them. You know, we talked about converting more small business and medium business spending.

And, you know, what's an example I'd point to there? I you know, point to, the Chase Sapphire reserve for business product. You know, that was a portfolio win that we announced a great product in the market that's doing exactly that. And the second opportunity we talked about is scaling large and middle market.

Card and virtual payables use cases. And, again, that's an area where we've been shipping some great product and having some great client wins. I'd point to our trip.com global virtual travel card issuing business I think it's a great example there. And then the third opportunity, the third leg of this strategy, and we've been talking to you all about is delivering product innovation and network flexibility to help our partners reach underpenetrated spend.

And, you know, I I I think it was maybe the last call or call before that I mentioned, you know, our win at at BMO up in Canada where we launched our network agnostic enhanced spend management capabilities with them. And, you know, that's gonna allow them to to really capture some of that underpenetrated spend. So I think it's the strategy. It's the results.

Been shipping great product. Having great client wins, you know, like the the ones that I mentioned. And then you wanna pick up on some of the numbers? Sure.

I think Ryan covered CMS and VCS. So let me just hit on some of the question you had around some of the regional volume numbers. So when we look at our international volume in total, which was 9% this quarter, that was largely in line with what we saw last quarter. And if you think which was 10%, if you think about the difference in that in we did see some idiosyncratic things that sort of helped the in Q4, the international volume growth to be 10%.

And so when you normalize for some of those things, we we see a lot of stability. As you click into each of these regions, some of these things do show up in in some of the regional stories. So if I if I, you know, do sort of a tour around world and and give a little bit of a high level commentary, in Europe, payments volume was relatively consistent. With Q4. We continue to to execute well, and and we're seeing the benefit of some of the wins that we've had there.

In SAMEA also, you know, that was down maybe a couple points from Q4, and that's being impacted by some of those idiosyncratic things that I talked about. But still very strong growth. Very strong growth. Let me be very clear about that.

One of our fastest growing regions, but it was really related to the timing of promotional campaigns that we saw in Q4. And maybe the last one I'd call out is AP as well. AP is growing, low single digits. A little bit slower than Q4. But that was one that we also called out before in terms of timing of tax payments that we saw. In Asia.

And so when we normalize for some of these timing differences, we're seeing a relative stability across international payments volume.

Next question, please.

Sanjay Sakhrani with KBW. Your line is open, sir.

Thank you. I know you talked about VAS a decent amount already, but just curious if that 28% growth this quarter can sort of sustain itself for the remainder of the year? Or do you think there's some specific factors in the quarter that drove the strength and that may not reoccur? And then just Chris, you mentioned that there were some expenses that were higher as a result of the stronger VAS revenue growth.

I'm just curious, is that a variable component? Or can that be leverageable in the future? Thanks.

Sure. Hi, Sanjay. Let me try to address it. Yeah.

You know, just building on what I said earlier about the strong start to the year in VAS. Obviously, we don't guide to growth pillars, but you know, a lot of the things that we've talked about, you know, Q1 being 28%, that is above where we expected it to go in, but it's also you know, in line with the momentum that we've seen. We were we've seen growth in the 25-24, mid-twenties for for some period of time. It's really a reflection of you know, similar to what Ryan was saying about CMS.

It's a reflection of the fact that we're executing against our strategy. We're investing behind it. We, you know, we have a clear strategy and a clear address market that we're going after. The teams are certainly, doing a really, really great job of about that.

You know, some of the things also just tie into some of the other conversation we've been having, the first question is around events. And this year is a unique year that we do have two events. Both FIFA World Cup and the Olympics. We've talked about how that's gonna benefit marketing services in particular, which lands in sort of the other revenue line.

That is a business where, you know, clients are super excited to engage with us and activate and have access to these sponsorships, and and we're excited about that. But that does also contribute to some of the revenue, some of the expense reasoning that that we talked about. And so let me talk about that real quick. So with both those two big events, you know, it from an expense standpoint, we see a little bit more quarterly variability this year than a normal, let's say, a typical year.

When we went into the year, we said the expense associated with these two events will be in primarily peaking in Q2 and Q3. And so, therefore, as we look at sort of Q1 and Q2, we do think half one expense is a little bit higher than half two as a result of that. It really is associated with incremental revenue that we're capturing. Related to these two events. And so, you know, we're happy to do that and, obviously, clients are thrilled as well.

Next question.

Andrew Jeffrey with William Blair. Your line is open.

Thank you. Good afternoon. Appreciate you taking the question. I wanted to ask a question on the Flex credential, which is really intriguing.

And and recognizing it's very small as a percent of your total credentials today, could you maybe sort of frame out a growth trajectory for us? Is there a point in time when you think about Flex really bending the growth curve for Visa? And and just I'm just trying to dimensionalize what it can mean over the next, say, three, five, seven years for your revenue growth.

You know, it's still early in the development of Flex. I talked about, you know, some of the wins we had this quarter and others. I also talked think, in my prepared remarks, about some of the expansion opportunities we have in the pipeline. Clients are very excited about it.

You know, we if you just step back for a sec, you know, we think about the Flex credential like the Swiss army knife of payments. You know, it like, it's got multiple funding options that are all packed into one card. And that resonates with different players across the ecosystem. You know, you look at a SMCC in Japan who you know, they're they're more of a traditional bank, and they launched this product to to bundle know, credit, debit, rewards, etcetera, all into, you know, one product.

You know, I've mentioned on this call in the past, BNPL players like Affirm and Klarna, and now as you heard in my prepared remarks, Block, who are able to take BNPL offerings that they used to have to go build out merchant by merchant by merchant around the world, which is obviously very difficult, time-consuming, and costly. Now they can offer their users a Visa Flex credential and they can go use the the BNPL offering anywhere where Visa is accepted, which is you know, all over the world. And and, you know, kinda goes on and on. So in terms of, like, the growth impact it's gonna have, we're still early in sales cycle.

Like you said, these numbers at this point, you know, are small in the context of our 5 billion credentials. But you know, when you look at other things that we've done, like tokenization, when you look at Visa Direct, you look at some of the other innovations that we brought to market, it you know, we follow a similar strategy and path. Build great product, get it out there in the ecosystem, and then and then go at it year after year after year to ultimately help serve our clients and grow the business.

Next question.

Thank you. Tien-Tsin Huang with JPMorgan. Your line is open, sir.

Tien-Tsin Huang: Thanks so much. Hi, Ryan, Chris, and Jennifer. I want to ask on the issue of processing side, if that's okay. Just I heard there's some good wins in DPS like Block, and you you talked about the Pismo expansion. So it's got just got me to thinking, how much have you invested in both of these assets from a tech perspective especially it it feels like there's some momentum on the on the processing side and maybe can you discuss if the TAM has changed around issuer processing? Love to hear just an update. On that. Thanks.

Hey, Tien-Tsin. No change in the TAM. It's enormous. I mean, you think about you think about the the opportunity, every bank on the planet except a few, needs to go through the process of modernizing their tech stack.

Whether that be you know, debit issue or processing, which is where DPS is focused in the US in a more narrow place. But more broadly, their their whole entire issue of processing stacks and their core banking stacks. And yeah, we've been, we've definitely been investing, product and engineering resources into both. I think we've been shipping some great products in both.

Which is, you know, what's driving the wins both with, you know, more traditional financial institutions, and with fintechs like you referenced. And PISMO especially. You know, our thesis, when we bought Pismo was that our clients were facing big decisions on how they could modernize their tech stacks and ultimately move into the cloud. And that's know, that's what that's what's proving out.

Is we're we're having great sales interactions with financial institutions all around the world. And when we're able to take them through the PISMO capabilities and show them that it's cloud native, you know, provides issuer processing, core banking. It does it for all products. You know, debit, credit, commercial.

You know, current accounts, DDAs, etcetera, we're getting a lot of uptick. Now, you know, these are long sales cycles. You know, the you know, a a bank kind of changing out its its, you know, its core banking infrastructure moving from on-prem into the cloud. Like, these are big decisions.

They take time. And we knew that going into to buying Pismo. And, you know, we'll continue continue at the sales cycle, continue to ship great product on it, and we're very excited about the space.

Next question, please.

Thank you. Ramsey El-Assal with Cantor Fitzgerald. Your line is open.

Ramsey El-Assal: Hi, thank you for taking my question this evening. I wanted to ask about your commentary on stablecoins of $4.6 billion of settlement. It's a small number, but it's ramping seemingly quite quickly. Do you expect more growth in stablecoin flows to be related to settling payments? Or do you see the bigger opportunity for Visa on sort of the disbursements money movement side of things? And just one quick point of clarification for Chris. You said there was some pressure on cross-border revenues from low FX hedging and mix. What did you mean by mix? Thanks.

Yeah. So let me let me just try to to frame this. I I think the short answer is the latter. But let me let me unpack that.

You know, in terms of stablecoins, the areas where we see product market fit are generally the areas around the world with significant TAMs and areas where we're actually underpenetrated today. Know, what is that? So one is you know, it's countries around the world where there's high currency volatility or hard to access US dollars. And we've had great success issuing Visa credentials I think I said in my prepared remarks, I I I talked about this now in more than 50 markets, around the world to provide on and off ramps, for stablecoins.

And, you know, that's that's an area where there's great product fit. Product market fit. The second area where we see, good product market fit is around cross-border, whether that's remittances, at the consumer level or whether that's B2B payments, or even B2C payments for disbursements. Another area of opportunity another area where we're generally under underpenetrated, another gigantic TAM.

And then coming back to the beginning of your question, we're seeing a lot of interest. As you noted, the numbers are still small in the big scheme of things. But the growth rates are very high. Settlement on our network with stable coins.

When we have partners that settle on our network with stablecoins, they're able to get access to seven-day-a-week settlement. For example, because, you know, with stable coins, we can settle on Saturdays, and we can settle on Sundays even when, correspondent banking, is not generally available. And that creates more liquidity for partners and clients. They're able to get access to settlement flows faster.

In the case of some instances where they might otherwise have to hold collateral, during a weekend, they don't have to do that. So yeah, I mean, we're we're very excited about the opportunities. I guess just to be very clear about it, to the beginning of your question, we don't see a lot of product market fit in developed digital payment markets like The United States or like, you know, The UK or Europe. For stablecoin payments.

You know, as I said before, in The US, if a consumer wants to pay for something using a digital dollar, they have ample ways to do that today. They can pay from, you know, their their checking account or their savings account. It's it's become quite easy to do. So we don't see a lot of product market fit for stablecoin payments and consumer payments in digitally developed markets.

Hey, Ramsey. I'm gonna tackle the second part. I'm glad you asked the question about the commentary, the prepared commentary on international transaction revenue. And that's the first place I'd start.

I'd differentiate. Because of the way you ask questions, you cross pressure on cross-border yields. International transaction revenue does not equal one to one cross-border revenue. Cross-border revenue lands in all of our service lines.

It lands in it contributes to the 15% growth we saw across the business. It contributes to the 17% growth in data processing. And it also obviously contributes to the international transaction line. And and I will say when we look at the cross-border business in total, obviously, the volumes have remained strong and stable.

This business remains high yielding and very profitable. And so it it remains a very healthy business. Now to your specific question, around, you know, the commentary around the difference between international transaction revenue, I I called out three things. I won't go through them all.

But the first one and the biggest one was volatility. And we talked about, you know, sort of the low currency volatility. The second one was mix, which is the one that that you've talked that you brought up. As we've talked about mix in prior quarters, and, really, this is talking about the composition of yields across our business.

Different clients, different products, different regions have different yields. As growth rates across these different items vary, then it, you know, it can have a mix impact. This quarter, the one I doubt is Visa Direct, which continues to grow fast. And also very profitable, but typically has a lower yield than carded transactions.

So to the extent Visa Direct cross-border transactions are growing faster than carded, then that's gonna mix the yield down. And so that's an example of of mix.

Next question.

Got it. Thank you. Dan Dolev with Mizuho. Your line is open.

Hey, guys. Great quarter. Thanks for letting me ask a question. I just have a follow-up on the PISMO update.

It sounds like it's off to a really good start and you're making a lot of progress. Can Ryan, can you maybe update us on how PISMO is trending you know, in terms of wins with large versus small banks? And and how much bigger do you think could be in two to three years? Because it sounds like it's a great business here, and you're making a lot of getting a lot of traction.

Thank you.

Yes. Thanks, Dan. Yes. As I mentioned, we remain very excited about it.

You know, the large versus small bank question, it's really both. You know? The the the smaller players tend to be the fintechs. You know?

And I you know, the other part of our thesis, when we bought PISMO beyond what I said earlier was fintechs are limited in their capabilities that they have to drive international expansion in many markets around the world. Often, fintech will, you know, grow up in one country and then wanna expand, and what they quickly run into is a challenge. They can't find a a technology partner that can help them scale to the next five, 10, 15 countries. So on the smaller fintech side of things, that's where PISMO has been a great fit.

Right? Because it's cloud native, we're able to move with fintechs and help them expand broadly around the world. By the way, that helps the fintech. That's great news for PISMO because it it drives revenue.

But it's really good news for Visa. Because we're able to help more fintech scale more broadly into markets that are underserved with Visa credentials. So it's a real win-win-win in that sense. On the more traditional financial institutions and and the bigger banks as as you referred to them as, it's more about kind of engaging with clients on this journey that they're embarking on, moving from on-prem legacy technology stacks to the cloud.

And that's for, you know, that's for visual processing. That's for core banking. And know, what we're finding is that when these big sophisticated large clients really dig through the PISMO capabilities, they're extraordinarily impressed. And they find what we found, which is when we found PISMO, that it really is the best cloud native issuer processing and core banking stack on the planet.

Alright. We'll take one more question, please.

Thank you. And our last caller is Harshita Rawat from Bernstein. Your line is open. Hi, good afternoon. I want to ask about tokens.

As you said, they've grown to over 17 billion, three times the number of cards you have. We know the authorization rates and fraud deduction benefits, which are meaningful. It's also using the agentic capabilities. My question is, how does this proliferation of tokens and the benefits it brings changes the conversation you have with your issuer customers and merchants and merchant acquirers?

Does it further change the nature of those conversations from network fees to the value of ringing? And I know there could also be more opportunity for pricing for value here. Thank you.

Thank you. As I mentioned in my prepared remarks, we're the progress, that we've made with 100% tokenized transactions. I wanna before I answer your question directly, I wanna go back to something I alluded to, earlier. You know, to get to the point where we are right now, with 17.5 billion tokens and 50% plus of transactions.

It has been a multiyear journey. You know, our teams in in countries around the world have had to go you know, client by client, both the issuers and the the acquirers and merchants as you asked about. Get them to embed the tokenization into their tech stacks, help them understand the value of it, and and do that work for many, many years, which has led us to where we are. The nature of the the dialogue both with issuers in a with merchants and acquirers, has been great.

You know, if, you know, if you're a if you're a retailer, big or small, like, your number one goal is more sales. And when we're able to show the sales uplift that tokenization provides, it's a real moment. You know, the the other thing that is very much on the minds that you alluded to of, merchants and acquirers all around the world is fraud reduction. And when we're able to show them the impact that tokenization can have on their fraud rates, they're very very impressed.

So what we're doing right now is we're just continuing that journey. We're engaging with merchants and acquirers and issuers on case studies and showing them the impact like I described in my prepared remarks. We're really focused on merchants who have large stored credentials, cards to file. And we're showing them the benefits of converting those cards on file to Visa tokens.

We're focused on checkout. You know, I mentioned in my prepared remarks the enormous progress we've made reducing guest checkout, but it's still 16% of Visa e-commerce around the world. That means 16% of the transactions, our customers aren't as delighted as they could be if those were as simple as a a tap or a biometric authentication using a Visa token. So we're working with those merchants to try to put in place the the the Visa token solutions to to improve those user experiences.

We're also focused on new markets. You know, bringing tokens to new markets, both with issuers and acquirers in places like Europe and CEMEA and Latin America. So we're we're excited about the progress, but we still have a lot of work ahead of us, and we're very focused on it.

And with that, we'd like to thank you for joining us today. If you have additional questions, please feel free to call or email our investor relations team. Thanks again, and have a great day.

Thank you all for participating in Visa Inc.'s fiscal first quarter 2026 earnings conference call. That concludes today's conference. You may disconnect at this time. And please enjoy the rest of your day.