Visa Inc. (V) Q3 2025 Earnings Report, Transcript and Summary

Welcome to the Visa Fiscal Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your host, Ms. Jennifer Como, Senior Vice President and Global Head of Investor Relations. Ms. Como, you may begin your conference.

Thank you. Good afternoon, everyone, and welcome to Visa's Fiscal Third Quarter 2025 Earnings Call. Joining us today are Ryan McInerney, Visa's Chief Executive Officer; and Chris Suh, Visa's Chief Financial Officer. This call is being webcast on the Investor Relations section of our website at investor.visa.com. A replay will be archived on our site for 30 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 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. Our comments today regarding our financial results will reflect revenue on a GAAP basis and all other 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. This quarter, our financial performance once again demonstrated the power of Visa's diverse business model, global scale, commitment to innovation and relentless focus on our clients. We delivered net revenue of $10.2 billion, up 14% year-over-year, and EPS up 23% year-over-year. Our key business drivers were strong. In constant dollars, overall payments volume grew 8% year-over-year, U.S. payment volume grew 7% and international payments volume grew 10%. Cross-border volume, excluding intra-Europe, rose 11% in constant dollars, and processed transactions grew 10% year-over-year. We are obsessed about serving our clients and wake up every morning thinking about what we can do to help them be successful today and in the future. We recently completed our annual global client engagement survey where Visa again received a Net Promoter Score of 76, a tangible sign of how our clients feel about Visa and our capabilities, services and products. And as I'm sure you all saw, we hosted our Product Drop on April 30. We shared how we are continuing to evolve the Visa-as-a-service stack to advance our product developments and lead in a number of areas, including AI and stablecoins, across consumer payments, commercial and money movement solutions and value-added services. Now let's look at some of the specific innovations and progress across our growth pillars this quarter. In consumer payments, we continued to grow through a focus on solutions to address both carded and non-carded volumes across the globe. Total credentials were up 7% year-over-year, marking the ninth consecutive quarter of at least 7% growth. We are nearing 15 billion tokens and now more than 50% of our e-commerce transactions are tokenized globally, getting closer to our ultimate goal of reaching 100% penetration. As we continue to transform Visa cards for a more digital future, our Flex Credential is an important solution. We have seen interest across various use cases such as buy now pay later, small business, multicurrency and more. This quarter, we announced that Klarna will be launching a Klarna Card powered by our Flex Credential in both the U.S. and Europe. We also expanded Flex Credential geographically with inaugural clients in Vietnam, the Philippines, and Bangladesh, and we have a pipeline of more than 200 client opportunities. Another way that we are advancing a more digital future is with Visa Intelligent Commerce, which enables consumers to shop and buy with AI agents. It combines a suite of integrated APIs, including AI-ready cards with tokenization and authentication, together with a commercial partner program for AI platforms, enabling developers to deploy Visa's AI commerce capabilities securely and at scale. We are excited to announce that we have more than 30 partners testing in our live sandbox, and we will soon enter the live transaction pilot phase, with general availability to follow later this year as we see agentic commerce becoming a reality. In the face-to-face environment, we continue to drive cash digitization and habituation through our Tap to Everything use cases. Tap to Pay penetration is now at 78% of face-to-face transactions globally. As a result of our efforts to increase issuance and acceptance, especially transit which drives habituation, we now have 75 U.S. cities at 60% penetration or higher, up from 30 cities just last year. And New York City and San Francisco have now surpassed 85% and 80%, respectively. Tap to Phone added a record 3 million transacting devices this quarter, and Tap to Add Card continues to expand with more than 275 issuers participating globally, almost doubling from last quarter. For affluent consumers, we are excited to launch Visa Infinite Privilege in Brazil, a new super premium offering with personalized exclusive experiences enabled by dedicated lifestyle managers for each affluent user. Itau, Unicred, and XP International are our inaugural issuer partners. In Canada, our Visa Infinite affluent offerings for fintech Wealthsimple has been their most requested product with tens of thousands of cards issued in just 2 months and hundreds of thousands on the wait list. Throughout all these innovations, we have continued to deepen our relationships with our clients across the globe. We renewed our partnership with Absa, a leading pan-African bank in consumer and commercial issuance consulting and CyberSource across 9 countries. And in India, we renewed our consumer credit agreements with HDFC and Axis Bank this quarter, 2 of the country's top 5 credit card issuers. Our consumer payment strategy is also focused on non-carded solutions like Visa A2A in the U.K. With this offering, we bring together Visa's brand, consumer protections, technology and risk management capabilities to enable simpler, safer and more secure account-to-account payments. We released APIs on the Visa Developer Platform a few months ago, and we now have several partners onboard and even more in our pipeline with a formal launch soon. Also in the A2A space, we're making a very deliberate effort to focus on open banking in the markets that have the greatest potential such as Europe and Latin America. As an example, in Brazil, we have developed Visa Conecta, a payment initiator that connects with Pix to facilitate open banking payments through Tink technology, both in the face-to-face environment but more specifically in e-commerce where conversion is a challenge due to the current customer experience. Now moving to commercial and money movement solutions, or CMS, where we continue to pursue new use cases and verticals, domestic and cross-border flows and develop unique products. This quarter, commercial payments volume was up 7% in constant dollars, Visa Direct transactions grew 25% and CMS revenue rose 13% year-over-year in constant dollars. In Visa Commercial Solutions, one of our key strategies is addressing the day-to-day challenges of small and large businesses through our vertical-specific solutions. In the health care and benefits vertical, we are very active, including providing solutions for employee benefits to more than half of the top HSA providers in the U.S. A recent example of our activity in the benefit space is with Sunny, a health care fintech that will issue Visa prepaid disbursement cards to their millions of U.S. consumers to spend integrated health benefits and rewards. In the travel vertical, Checkout.com will begin using Visa virtual cards for online travel agencies, or OTAs, in the U.K. and Europe. In addition, Pliant, already an important issuing partner across numerous verticals in Europe, will be expanding into the U.S., bringing their virtual card-as-a-service offerings with spend management capabilities to OTAs, travel management companies and others in the travel vertical. And in the fleet and fuel vertical, we continue to make progress with our Fleet 2.0 solution, providing key Visa enhancements such as EMV chips, digital wallet provisioning and contactless payments. In Europe, Octopus Energy is one of the region's largest energy suppliers, and they selected Visa as their partner as they start issuing cards to fleet managers seeking a single payment solution to manage mobility expenses. In Visa Direct, we have made some important progress in facilitating cross-border flows to further our positioning as the largest money movement platform by transactions, volumes and end points. One of the biggest banks in the U.A.E. with over 60 branches serving over 1 million customers, ADIB, will use Visa Direct to power Remit, their newly launched remittances program, by offering access to cards, accounts and wallets across all corridors. In Bangladesh, we have signed our first 4 partners to enable Visa Direct: Meghna Bank, Trust Bank, Midland Bank, and BRAC Bank, specifically for outbound cross-border payments. And in the U.S. and Canada, Paysend, who we have discussed before is an important Visa Direct remittance client with 10 million customers, is now expanding to add more cross-border use cases such as gig economy worker payouts, payroll disbursements and accounts payable flows as a reseller to third parties. Before I go to value-added services, I think it is important to touch on a topic that has had a lot of interest lately, stablecoins. We are supportive of the GENIUS Act, and we believe that it marks a key milestone on the path to regulatory clarity for stablecoins. We have been active in this space for almost a decade and believe that stablecoins can solve important payments problems for certain use cases. We believe that Visa's role is to do what we always do: provide trust, standards, connectivity, billions of end points, scale and interoperability to the payments ecosystem. Beyond capital markets use cases, we see product market fit for stablecoins in 2 important areas: one, in emerging markets where the local fiat currency is volatile and/or where consumers do not have easy or affordable access to U.S. dollars; and two, in cross-border money movement, both B2B payments and consumer remittances. Our in-market solutions, partnerships, market activity and product road map reflect our commitment to this space. For example, we have deployed stablecoin-linked cards in many markets around the world with partners such as Bridge, Rain and banks. In the emerging market use case I mentioned earlier, consumers and businesses are using stablecoins to save money in U.S. dollars. But they also want easy and safe ways to spend that money, and there's no better way to do that than using a Visa card. Stablecoin-linked Visa cards are an extension of what we have been doing in the crypto space for years. Since 2020, we have enabled crypto users to spend more than $25 billion in Bitcoin, Ethereum and an array of other cryptocurrencies, and now stablecoins. We are also enabling cross-border money movement capabilities for P2P and B2B in certain emerging markets. And we are piloting and partnering with stablecoin payments companies who specialize in these markets as we build out our stablecoin treasury stack for settlement and money movement flows. A recent example is with Yellow Card in Sub-Saharan Africa. Together, we are working to streamline treasury operations, improve liquidity management, and enable quick and more cost-efficient cross-border transactions. Additionally, we are also helping banks issue their own stablecoins and realize the benefits of programmable money through our Visa Tokenized Asset Platform. And we offer multichain and multi-coin stablecoin settlement on the Visa network. We recently expanded our capabilities by adding a euro-backed stablecoin, EURC, and through a partnership with Paxos, 2 additional regulated stablecoins, USDG and PYUSD. We are also adding support for 2 additional blockchains, Stellar and Avalanche, enabling us to support 4 stablecoins running on 4 unique blockchains, representing 2 currencies that we can then accept and convert to over 25 traditional fiat currency across the world for our clients within our settlement infrastructure. There is so much more to come in this space, and we are excited about enabling commercial and money movement flows globally across networks, currencies and form factors. Now to value-added services, which had one of our strongest revenue growth quarters, up 26% year-over-year in constant dollars. Let me walk through some of the highlights in our 4 portfolios. In Issuing Solutions, Pismo continues to expand, benefiting from Visa's deep client relationships and trusted partner status. We have now entered Europe with ABN Amro's neobank, BUUT, in the Netherlands and have also partnered with Lunar, who serves over 1 million consumers and business users for the first Pismo-powered Visa card across Denmark, Sweden and Norway. This quarter, we signed with EML Payments in Australia to deploy Pismo for their global issuance strategy, enabling them to consolidate their multiple processing platforms to 1 across Australia, North America, the U.K., and Europe. In Acceptance Solutions, we continue to grow through both direct relationships with merchants as well as with acquirers. I'll give 2 examples of each. First, direct with merchants. We renewed our agreement with ShopeePay, a leading digital payments platform serving tens of millions of users, and expanded geographically from Singapore, Malaysia, and Vietnam to include the Philippines, Indonesia and Thailand, and also expanded with additional products such as tokenization. Careem Pay, part of Super App Careem that serves over 50 million customers across Middle East and North Africa, will utilize several value-added services, including CyberSource and account verification. On the acquiring side, in Saudi Arabia, Arab National Bank has selected Visa as their new partner for our CyberSource and risk solutions to offer to their merchant clients. We also signed with BAC, the largest acquirer in Central America, to provide CyberSource and tokenization to their merchant clients. In Risk and Security Solutions, our feature-based capabilities continue to resonate with our clients. This quarter, TSYS, an existing and important partner of Featurespace, will begin transitioning their tens of billions of transactions to our next-gen SaaS platform so they can benefit from continued innovation in our advanced AI scoring models in a scale away. Moving on to Advisory and Other Services, where our payments, consulting and marketing experience, data and analytics capabilities and sponsorships help us to deepen our relationships with our clients. For example, AEON Financial Service, one of our largest clients in Japan, renewed their credit relationship and will add consulting, managed services and marketing services to help them grow. I'll call out 2 other examples of our consulting and marketing services at work. In Brazil, our consulting and technical teams are working with Caixa to help develop a super app for their over 40 million customers, enhancing digital engagement and loyalty. In the U.S., fintech Shine utilized our marketing services capabilities to support their brand campaign during the NBA playoffs this past quarter. With each of these 4 portfolios growing at strong levels, value-added services remains a powerful engine of revenue growth for our business. In conclusion, our third quarter results were strong. In Q3 and through July 21, even with the continued uncertainty, consumer spending remains resilient. Within the U.S., while spending growth differed among consumer spend bands, all spend bands in Q3 remained resilient and consistent with past quarters. Within spend categories in the U.S., we saw relative stability to Q2 when adjusted for leap year impacts. Both U.S. discretionary and nondiscretionary spend growth remains strong, and we see no meaningful impact from tariffs. For cross-border, total volume growth, excluding intra-Europe, remained strong and above pre-COVID levels, even with continued impacts from currency weakness and travel to specific countries. While we're not immune to macroeconomic impacts, our business has proven to be diverse, resilient and well positioned to capture the significant opportunities ahead. We all know that as commerce evolves, so do buyer and seller preferences. We have proven our ability to anticipate these changes and deploy solutions that enable our expanding network of partners to meet and exceed the needs of their users. Visa has become a hyperscaler that enables anyone around the world to access the breadth, scale and resiliency of our network across more than 200 countries and territories, 150 currencies and nearly 5 billion credentials. Anybody that wants to be in the money movement business or the payments business can build on top of the Visa stack. And as we connect billions of buyers and sellers through seamless secure digital payments, we're very excited about how that will help us enable innovative commerce as we drive Visa's growth forward well into the future. Now I'll hand it over to Chris.

Thanks, Ryan, and good afternoon, everyone. Visa reached a record $10.2 billion in quarterly net revenue in our third quarter, up 14% year-over-year, better than expected driven by lower incentives, a lower FX headwind and higher value-added services revenue. Net revenue was also up 14% year-over-year in constant dollars. Underlying business drivers remain strong. In constant dollars, global payments volume was up 8% year-over-year; and cross-border volume, excluding intra-Europe, was up 11% year-over-year. Total processed transactions grew 10% year-over-year. EPS was up 23% year-over-year in nominal and constant dollars, better than expected, primarily due to the strength in net revenue growth. Let's go into the details. Total international payments volume was up 10% year-over-year in constant dollars in Q3, relatively consistent with Q2 when adjusted for leap year. U.S. payments volume was up 7%, with e-commerce growing faster than face-to-face spend. Credit was up 6% and debit was up 7%. When we look at U.S. payments volume year-over-year growth on a monthly basis, April was stronger than March, primarily due to Easter timing and some portfolio loss lapping that continued throughout the quarter; May was relatively in line with April; and June was softer, primarily due to the impact of both days mix and bill pay timing. Putting it all together, total Q3 U.S. payments volume growth was generally consistent with Q2, adjusted for leap year. Now to cross-border volume, which I'll speak to in constant dollars and excluding intra-Europe transactions. You may recall that we expected Q3 total cross-border volume growth to moderate from Q2 and be slightly below Q4 of FY '24, primarily due to the impacts of weaker currencies in certain countries and the Canada to U.S. travel corridor. In Q3, those impacts generally played out as we expected, with total cross-border volume year-over-year growth at 11%, e-commerce up 13% and travel up 9%, even with some monthly variability. April benefited from Easter and Ramadan timing, and May moderated from April without this timing benefit. In June, we saw the growth step down from May, primarily due to further weakening of the U.S. dollar and a few smaller factors that largely reversed in July. As Ryan said, Visa's Q3 total cross-border volume growth was strong and remained above the pre-COVID trend. With that as a backdrop, I'll move to discuss our financial results, starting with the revenue components. Service revenue grew 9% year-over-year versus the 8% growth in Q2 constant dollar payments volume, helped by pricing and card benefits that more than offset the exchange rate drag. Data processing revenue grew 15% versus 10% in processed transaction growth primarily due to pricing. International transaction revenue was up 14%, above the 11% increase in constant dollar cross-border volume, excluding intra-Europe, helped by elevated currency volatility and exchange rates, partially offset by hedging and mix. Other revenue grew 32%, primarily driven by advisory and other value-added services and pricing. Client incentives grew 13%, lower than expected, primarily due to 2 factors: first, deal timing as we saw some expected deals shift out of Q3; second, we expanded several client relationships, which led to updated incentive terms and onetime reductions in the associated accruals. Now to our 3 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 13% year-over-year in constant dollars. Commercial payments volume grew 7% year-over-year in constant dollars, accelerating slightly from Q2 adjusted for leap year, primarily due to the lapping of certain portfolio losses. Visa Direct transactions grew 25% year-over-year to 3.3 billion transactions with strength in both domestic and cross-border P2P. Value-added services revenue was $2.8 billion, with growth accelerating to 26% year-over-year in constant dollars. This was driven by strength across all portfolios and pricing. Operating expenses grew 13%, higher than expected, primarily due to a lower-than-expected FX benefit and higher-than-expected personnel expenses. Nonoperating income was $191 million, helped by investment income from higher cash balances. Our tax rate for the quarter was 17.3%, in line with expectations. EPS was $2.98, up 23% over last year, with minimal impacts from both exchange rates and acquisitions. During the quarter, we issued EUR 3.5 billion of fixed rate senior notes, with maturities ranging between 3 and 19 years and interest rates from 2.25% to 3.875%. In addition, we bought back approximately $4.8 billion in stock and distributed $1.2 billion in dividends to our stockholders. At the end of June, we had $29.8 billion remaining in our buyback authorization. Now let's move to what we've seen so far in Q4. Through July 21, U.S. payment volume was up 9% with debit up 10% and credit up 9% year-over-year. Even when adjusting for lapping the weather and technology outages impacts from last July, we saw strong growth, primarily due to the timing of July 4, the days mix impact I mentioned for June now helping July, and the timing of promotional shopping events. Processed transactions grew 11% year-over-year. For constant dollar cross-border volume, excluding transactions within Europe, total volume grew more than 10% year-over-year with e-commerce up 13% and travel up 9%. July cross-border volume growth accelerated more than 1 point from June as we saw improvement in both e-commerce and travel, primarily due to strong retail spend in e-commerce, the dollar strengthening versus certain currencies and the reversal of a few smaller factors that impacted June. Now on to our expectations. Remember that adjusted basis is defined as non-GAAP results in constant dollars and excluding acquisition impacts. You can review these disclosures in our earnings presentation for more detail. For Q4, when we take the latest trends for business drivers and volatility as well as our current view of deal timing, our adjusted net revenue expectations are unchanged, in the high single digits to low double digits. On a nominal basis, this puts Q4 net revenue growth generally in line with first half of FY '25 nominal net revenue growth, which was about 10%. Moving to adjusted operating expenses, which we expect to grow in the high single digits to low double digits. Nonoperating income in the fourth quarter is expected to be minimal, and our tax rate in the fourth quarter is expected to be between 18.5% and 19%. As a result, we expect adjusted fourth quarter EPS growth to be in the high single digits. For acquisition impacts, we expect a minimal benefit to net revenue growth and approximately 1.5 point contribution to operating expense growth and an approximately 0.5 point headwind to EPS growth in the fourth quarter. Pulling it all together for the full year, we have no changes to our full year adjusted guidance except for nonoperating income, which we expect to be about $250 million as a result of the third quarter. However, it is important to note that when you incorporate our performance year-to-date with our Q4 guidance, even though the full year guidance ranges are unchanged, we now expect our net revenue growth and EPS growth to be stronger than previously anticipated. It's also a good reminder of the strength of Visa's diverse business model where in the face of changing conditions throughout the year, we still expect to deliver strong growth and leading profitability. As we look ahead and plan for 2026, while we're contemplating a variety of economic scenarios, the strength and diversity of our business model that I just mentioned, the resilience of the consumer and our clear and effective strategy together give us the confidence as we make investment decisions to build the future of payments and drive long-term growth. And now, Jennifer, it's time for some Q&A.

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

[Operator Instructions] Our first question comes from Harshita Rawat with Bernstein.

Chris, I want to follow up on the fourth quarter guide, if you can provide more color. Can you maybe help us kind of bridge the kind of deceleration from the third quarter? I know you talked about kind of FX volatility, to some extent, incentives. But anything else to call out also, I think, with regards to cross-border.

Harshita, yes, so let's talk about Q4. We're expecting a fundamentally strong Q4 with strong drivers and continued resilient consumer spending. Now the guide reflects reported growth in Q4, that is being impacted by the lapping of some items that we spoke about last Q4. Specifically, there were onetime impacts that reduced incentives, the lowest growth quarter of last year. If you recall, Q4 last year grew 6% incentives. And also, we had a very strong VAS quarter related to the Summer Olympics again last Q4. If you normalize for those lapping items, those onetime lapping items for last year, Q4 growth -- digits. So that's sort of the absolute description of Q4. Now versus Q3, which was your specific question, Q3 was a very strong quarter driven by strong drivers, higher currency volatility, strong VAS and lower incentives, as we talked about. And if I compare the 2 quarters, really the big differences are going to be currency volatility, which was high in Q3, especially early in the quarter, has settled down, and that's our assumption through the rest of Q4; and the second one is incentives where, again, Q3 benefited from onetime incentives that we talked about -- that I talked about in my prepared comments, and Q4 is anniversarying the benefits that we saw incentives from a year ago. So normalize for those 2 things, Q3 is a strong quarter, Q4 is a strong quarter. And when you add it up, we're going to finish a very strong FY '25 higher than we thought entering the quarter.

Our next caller is Tien-Tsin Huang with JPM.

Tien-Tsin, are you there?

I am. Can you hear me, Jennifer? I'm sorry.

Yes. Now we can.

Just want to -- maybe I'll ask on investment priorities, if that's okay. I'm just curious if that's changing at all given -- I know, Ryan, you talked a lot about AI and stablecoin to us here intra-quarter. So I'm just curious if your priorities have changed because it does look like OpEx is running a little bit higher and fourth quarter reported implies not much operating leverage. So I'm just curious if you're changing some of your investments there given some of the news, GENIUS Act, et cetera.

Tien-Tsin, let me talk about your question around priorities. And then I'm actually going to have Chris just talk briefly about OpEx because I think there's a very clear explanation that will be helpful to you. In terms of priorities, no change from what I've been talking about publicly. We have a deep and rich product pipeline. We feel great about the products that we put out into market, both the ones that we've deployed and the ones that we announced at our product drop in April. And we're always nipping and tucking in certain markets and adjusting kind of where we're going to go launch in this country versus that country. But no, overall, priorities remain the same. We feel great about the momentum that we have in market and continue to drive that forward. But Chris, I think he was teed off a little bit by the OpEx part of this question. Do you want to just address OpEx?

Yes, let me address that, too. I'll talk about Q3 and Q4. So Q3 OpEx did come in a little higher than we anticipated. There was a couple of things. One was the FX benefit was less than expected. And then the second one, which I mentioned on the call, was higher personnel costs. And just to click into that, specifically, the overage came from higher costs related to the mark-to-market of the deferred compensation liability. But just for clarity, that's EPS neutral is because we record the equivalent gain on that mark-to-market in NOI, and that contributed part to the NOI overperformance. As far as Q4 goes, as Ryan talked about, we're investing in many things across our broad business to drive growth, and we're anticipating to grow OpEx in the high single digits to low double digits. We're doing all that investment and growing OpEx in line with revenue for Q4.

Our next caller is Trevor Williams with Jefferies.

I wanted to go back to the spread between international transaction fees and the nominal cross-border volume. I think this quarter, that spread was less than 1 point, even though, Chris, you called out currency volatility being up pretty significantly year-over-year. And I think hedging and mix were the main offsets that were also mentioned. If you could just expand on both of those. And then especially on mix, you guys have been clear about U.S. inbound travel having slowed. I'm just curious how much of an impact that's having overall on the yield dynamic there.

Sure, Trevor. Let's go into all the different components, as you called out. Well, the 2 numbers that I'll reference is the 11% growth in total cross-border versus the 14% international. And as you point out, the spread shrinks on a nominal basis. So the 3 factors were higher currency volatility. We've talked about that at length. And then the other 2 items, hedging which is in line with our strategy to mitigate cash flow impacts of FX movements. And in this quarter, we had a hedging loss that offset a portion of the favorable impact of the weaker U.S. dollar. And then the third one being mix. You mentioned Canada to U.S., that is a variable in here. So across our business, the composition of our yields can and does vary, different clients, different regions. And that's the example I'll use. The U.S. inbound is one of our higher-yielding corridors, and that's being impacted by the Canada to U.S. volume. So the mix can certainly be an offset to the higher volatility. Those are the puts and takes for the quarter within that line specifically. But all in all, we're pleased again that revenue, whether it's in international or in data processing or service, we're outgrowing volumes in all 3 categories.

Timothy Chiodo with UBS.

I want to see if we can dig in a little bit to Visa Direct. So on our estimates, it's becoming a more important part of the volume growth algorithm and particularly for debit. I want to see if we could hit 2 topics. One is some of the newer or faster growth use cases, one in particular that you mentioned earlier in the prepared remarks around banks signing up to use Visa Direct as their cross-border platform. And then the second item I was hoping we could touch on is some of the pricing dynamics. At the Investor Day, there was a slide that showed the roughly $0.09 to $0.10 yield on Visa Direct. I was hoping you could talk a little bit about the pricing strategy there and to the extent that, that may or may not be evolving to maybe add some ad valorem fees and whether or not that might have contributed at all to any of the strength in data processing.

It's Ryan. I'll try to hit the high points of what you're asking there. Thanks for the question on Visa Direct. I love talking about Visa Direct. Coming back to the top of your comments, and we shared this at Investor Day as well, we now crossed the 10 billion transaction mark, at least on a rolling 12 months, which we're very excited about. So I think Visa Direct has really scaled in a meaningful way. As I mentioned in my prepared remarks, it is the largest at-scale money movement platform in the world, however you want to measure it, whether it's end points or transactions or volumes or partners or what have you. And the investments that we've made in that platform over time are what are helping our sales teams and client teams around the world sell into a lot of these new and exciting use cases. You mentioned the banks enabling and embedding Visa Direct as their cross-border money movement platform. That's something we've been very focused on. And we're having good success. And I believe there's a big opportunity here. I think there's a big opportunity for banks around the world to play a more direct role in money movement. When we're sitting and talking to our bank partners around the world, they often recognize that a lot of their users are leaving their bank app and maybe going to another fintech or another money movement platform to send remittances, for example. And they view that as a lost opportunity. And so they're using Visa Direct to power a remittance platform and a money movement platform and embed that in their app so that they can deepen their relationship with their users. Their users are getting more value from their financial institution and ultimately driving more value as well. In terms of the pricing and the yield dynamics, it really differs. We price to value, as we always talk about on this call. The competitive dynamics are different in every vertical, in every use case, in every country around the world. We're going up against different competitors in CEMEA than we are in Latin America than we might be in Europe. And the pricing has different components to it as well. Just because we talked about the yield in cents per transaction, don't necessarily assume that reflects all the different pricing, whether it's the remittance topic that you asked about specifically or just Visa Direct in general. We talked about it in that way because that's generally the right way that we think to think about the revenue dynamics is kind of what are we earning in cents per transaction. And as we said during Investor Day, it's similar yields to what we're seeing in the debit business globally. So feeling good about on all those fronts and the momentum that we have in the Visa Direct business.

Gus Gala with Monness, Crespi, Hardt.

Street is currently looking for an acceleration in volume transaction in fiscal '26. If we think of the macro kind of persisting from June, July levels kind of there and bank activity level kind of staying where it is, is that kind of a realistic expectation? And then on the comments on the lower -- there was a large peer, Fiserv commented on lower bank activity levels. You mentioned deal timing being moved back in prep remarks. Any part of the stack or transaction where that's maybe happening within VAS or parts of VAS where that's more acute, and granted you guys still accelerated in the quarter, but just any color around that would be very helpful.

Why don't I take the second part of the question on VAS, and then you can address the first part of the question, which I think was a question -- you were going a little in and out, so sorry to -- I think it was a question around 2026. We really feel great about the momentum in the value-added services business. As you heard in both my and Chris' prepared remarks, firing on all cylinders across all of the different businesses. Maybe just as a reminder in terms of how we're thinking about the overall VAS strategy because I think you're seeing the results of that strategy now, we've been focused on our VAS business for a long time about enhancing Visa transactions, making Visa payments safer, simpler, easier, more reliable. And that has been historically how we've generated most of the VAS revenue that we've generated. Where we're really seeing a lot of success is in the 2 additional strategic levers that we talked about. The second is putting our VAS to work, enabling all different types of payments, other card payments, account-to-account payments, digital wallet payments, partnering with RTP networks around the world and digital wallet players. I mentioned in my prepared remarks the partnership that we have in Brazil to power Pix payments. So we're really starting to see a lot of momentum in this second leg of the strategy by putting our VAS to work to enable all different types of payments. And then the third area, which is really going beyond payments and helping our clients with a whole range of things from marketing to managed services, to strategy, to analytics, to data. And there, too, in my prepared remarks, you heard a lot of great examples from all around the world of the success we're having in that area. So good progress, good momentum, and you're starting to see kind of the strategy that we talked about a couple of years ago really start to come through in the performance and the numbers. And then, Chris, I think there was a question about 2026.

Yes. Let me comment on '26. Obviously, we're focused on closing Q4 and finishing FY '25 strong, but we are also in the planning phases for FY '26. And broadly, we see tremendous opportunity across our 3 growth engines, consumer payments, CMS and VAS. And as we think about 2026, we're evaluating several drivers and parameters, including various macroeconomic scenarios, expected client renewals and pricing in both the card-present and card-not-present environment, as well as the investments we want to make to build the future of payments. Now we'll have a lot more to say about '26 in our next earnings call.

Will Nance with Goldman Sachs.

You got all the way to me here without getting the stablecoin question. So I'll ask one on the remittance space, which you guys called out as a potential use case. Could you talk a little bit about how you see the role of stablecoins in that space? Is it on the pricing side, the settlement side? And do you expect the value of the role that stablecoins play to accrue to the service providers in that space? Or do you expect it to accrue to the consumers in the form of lower pricing?

Thanks, Will. A lot in there. And as you know, it's early days, but we see a lot of opportunity, specifically in remittances. And as I said in my prepared remarks, more broadly in cross-border, whether it's P2P or B2B. So let me hit a couple of points. First is Visa Direct. Visa Direct, as you know, is our remittance platform, and it is a network of networks that enables money movement all around the world in lots of different currencies. We're able to push money and I think it's 14 billion different end points now, whether it's cards, wallets or bank accounts. And for some of those use cases and some of those corridors, the money movement and transactions are near instant. But sometimes, for example, sending money from a Visa card to a bank account in an emerging market, we're reliant on local banking infrastructure. So in these types of use cases, stablecoins could enable us to have faster cross-border transactions. By the way, that's true for consumers or for businesses. And we've been testing that out and having some good results. We've been testing a series of corridors and putting stablecoins to work directly versus the fiat currency money movement options that we're able to deliver to our clients and their users today. And at this point, we've got a pretty good sense on which corridors we can provide faster money movement, cheaper money movement, which ultimately is value, I think, that will accrue both to end users and to our clients. So we're working through all of those things. I do think, as I said in my prepared remarks, that there is real product market fit for stablecoins in remittances for certain corridors. And as the largest money movement platform around the world, we're going to be an early adopter of a lot of those things on behalf of our clients and their end users.

Dan Dolev with Mizuho.

And just tying the 2 things together, really strong VAS growth and stable coins. Have you been -- has the growth been helped by your services and consulting that you're providing on stablecoins? And are you monetizing that? If I could squeeze in one housekeeping question on sort of the right way to think about incentives mid-20s in the fourth quarter and heading into the '26, if you can answer it.

Okay. I'll let Chris answer the question on incentives. Thanks for your question on advisory. Our advisory business has been doing strong growth all around the world for a while now. And as you alluded to, and as, I think, you would expect, the most complicated, most impactful topics that are happening around the world in money movement are the ones where we're engaging with our clients. So yes, on stablecoins and crypto more broadly. We launched our crypto advisory practice several years ago, I can't remember now. But our clients, both issuers and people on the seller side of the ecosystem, have really come to rely on our team of experts around the world to help them inform their strategies. And also, that leads to opportunities for us to put our products and services to work. So for example, the Visa Tokenized Asset Platform is a platform that we've built to help financial institutions issue and mint and burn stablecoins. And when we're working with them on their stablecoin strategies, that's a natural opportunity for us to kind of embed a platform like that. We're also having a lot of success working with our clients on agentic, both AI broadly in terms of how they're running their companies, but specifically, as you'd imagine, the implications and the products and services that they're going to need to bring to market to win kind of in the agentic space. And those are just a couple of examples. I just want to take the opportunity to say thank you to our teams all around the world that have been working with our clients on all those tough topics and really helping them and serving our clients in a meaningful way. Chris, I think Dan had a question about incentives.

Q4 incentives was the question. So I want to provide a little bit of context. A lot of what I'm going to say is things that were in my prepared comments, but also reminding you of some of the things that we said in previous quarters. As we've communicated all this year and earlier in my comments, we expect Q4 -- we expected incentives to step up sequentially into Q3 and into Q4. And as a result, we have always consistently expected Q4 to be the highest growth quarter of FY '25 from an incentive point of view, in part because of the lapping that I talked about in the Q4 number when we talked about the lapping of the onetime items. But also what I spoke about last quarter, which was the impact of performance adjustment and some deal timing that occurred prior to Q3. And so when you add that all up, Q4 was going to be the high point for incentives. But that all said, again, I'll just reiterate our guidance today, our view of adjusted net revenue for Q4 is unchanged from the view that we had a quarter ago, even after contemplating all the reestimation of the current volatility outlook drivers and our latest view of deal closures into Q4, it's going to be a fundamental strong Q4 to cap off a strong FY '25.

Darrin Peller with Wolfe Research.

Can we just touch on, number one, the pricing dynamic that we're seeing in data processing? And the spread between growth on revenue and volume was obviously strong. Just maybe explain a little more of what's going on behind it, where you're seeing the value on raising price there and just the timing on it, is it sustainable? And then just to revisit incentives also on timing also because I think this year, fiscal '25, was supposed to be a higher year of renewals. I think you had talked about 20% of the book or something along those lines versus a norm more like 15%. So is that still the case? And would we expect that to be more normalized next year?

Yes. I'll take both of these, Darrin. So pricing, again, I'm going to go back to some of the things that we said earlier in this year. When we entered this year, we said the pricing benefit in FY '25 is going to be similar to FY '24, but the timing would be more back half weighted. And if you recall, in Q1 and Q2, when we were having these conversations about revenue versus yield, pricing was less benefit than we might typically see in half 1, consistent with that timing of pricing. And so now pricing back half loaded, we're having a more concentrated impact in Q3 and Q4. And that's really sort of what's happening. And so it's great that we see revenue outperforming volumes on data processing and a number of other spots. In terms of your second part of your question around the amount of volume of deals and deal timing, you are correct, '25 is a bigger year for renewals than '24. You quoted the 20% number. We still believe 20% of our PV is impacted this year above the 15% last year. It's just more deal activity. And as you know, the deals are long in duration, increasingly more expansive, which inherently brings a level of complexity. These are important deals. And so sometimes they take a long time to get right, and we're going to take the time to get them right. The good news is we feel really good about the success we're having renewing and expanding our client partnerships. But as you can see, the timing can vary a bit from quarter-to-quarter.

Fahed Kunwar with Rothschild & Co. Redburn.

I had one more on incentives, if you don't mind. If I go back a little further, incentive growth as a percentage of revenue has been going up about 1 percentage point a year for the best part of 10 years. It does feel like in the last kind of 1.5 years, it stabilized or at least in the last year at that 28% level. I know you talk about renewal cycles now, but is this an inflection point? Do we think that incentive growth now broadly runs in line with revenues and that kind of trend line up has kind of inflected to be flat? Or is there something else that we're missing or some other change as to why we might see an inflection back upwards to that old growth rate?

Sure. I'll take this one as well. No. I mean it's just honestly not the way that we think about our business. This is consistent with the way we've been talking about net revenue growth, and that's our focus. We're growing volumes. We're growing net revenues along with our partners and incentives are simply a tool for us to achieve mutual goals. And it does get impacted, of course, by the volume of expirations and renewals, and it can vary from year-to-year. But I certainly am not going to comment on sort of the relationship between those 2. We're driving net revenue growth and driving volumes, and that's the most important thing.

Nate Svensson with Deutsche Bank.

I want to talk a little more about cross-border trends, especially travel. I know you gave some color in the prepared remarks, but it looks like we've had a couple of soft months here in June, maybe a little bit of recovery in July month-to-date. Hoping you can give an update on what you're seeing specifically in international travel in your book of business, maybe what bookings look like, what impact recent FX moves are doing to consumer demand, et cetera? And then anything to call out on specific corridors? I know we talked about inbound U.S. from Canada, but anything like Europe to U.S. or any other changing dynamics you've seen maybe over the past 3 months or July month-to-date?

Sure. Okay. Let's talk cross-border. And this one, we'll sort of try to break into a fair level of detail, so bear with me. Just starting from the top, just so we have sort of a complete picture, cross-border growth in Q3, as we reported, 11%. That's ex intra-Europe in constant dollar, largely in line with the directional expectations that we had set at the beginning of the quarter. We did see variation from month-to-month for the factors that we talked about: holiday, timing of Easter, Ramadan, weakness in currency, U.S. to Canada. All those things that we had anticipated to happen in Q3, much of it did play out. We did see the U.S. dollar weaken further, which may have impacted the June month as well. And then obviously, in July, you referenced this as well. We've seen it accelerate more than 1 point from June. And we've seen that improvement in both travel and e-commerce related, we believe, due to the dollar strengthening again in July versus certain currencies. But also we see strong retail spend in e-commerce and the reversal of some of the few of the smaller factors that we referenced in June. So obviously, the growth rates month-to-month, it's a little bit fluid, and we're likely to see it continue to be fluid as long as we continue to see currency exchange movements at the speed and pace that we're seeing it. But we also don't believe circumstances like the current Canada to U.S. corridor are permanent structural changes either. And so we could see some strengthening there or we could see further sort of impact from sentiment around the world. And specific to corridors, which is the second part of your -- I'll give a few examples. We've talked extensively about Canada to U.S. That's remaining relatively consistent. U.S. outbound, historically, that's been very sensitive to the strength or weakness of the U.S. dollar. And with the recent weakening U.S. outbound, we believe, has been impacted in a correlated way. AP currency has remained weak as well and has continued to remain weak and across a number of markets in AP, and that's impacting travel there as well. And then, of course, the timing of various holidays, Easter, which had a larger impact in Europe; and Ramadan, of course, had a larger impact in CEMEA, those are some of the things that we're seeing from a corridor standpoint. But again, if we zoom out of the month-to-month and we look at cross-border in total, the overall level, the data, the trends, and we understand sort of the currency impacts that can show up, cross-border volume, we think, in total has remained strong and above pre-COVID levels.

Sanjay Sakhrani with KBW.

I had a bigger picture stablecoin question. Totally understand that Visa can add stablecoins to its suite of payment methods, link it to its products and services and acceptance network. But I guess if we pull up on the long runway to tap into the large revenue TAM in payments, Ryan, do you think stablecoins dilute that? Or do you think it keeps it the same? Does it add to it? When does it become a material contributor in your view? And by the way, those Chime ads during the NBA playoffs are pretty good.

Sanjay, it is best. You go back to the product market fit that I described, if you agree with that, which clearly I do, I think it's a lot of opportunity for us. And why do I say that? The first, on the emerging markets use cases, the bulk of those markets around the world are very cash-rich markets. The bulk of those markets around the world are markets where we haven't been as successful digitizing cash as we have in more mature markets. And so to the extent that stablecoins get adopted in a broad-based way by both consumers and businesses and assuming that we are able to continue to have success with our playbook of making Visa cards the preferred way for people who have stablecoins in those markets to pay for things, I think that could accelerate our progress digitizing consumer payments and business, small business and commercial payments in those markets. The second area of product market fit that I mentioned was cross-border. And as you know well, the cross-border TAM in terms of whether it's remittances or B2B money movement, those are enormous TAMs that we're still relatively low in terms of our penetration of those as well. And so I think to the extent that we can do the types of things I was mentioning in the question that Will asked earlier for remittances on our Visa Direct platform, that's going to be an opportunity for us to continue to expand and accelerate our growth in remittances. So I'm genuinely optimistic about what stablecoins could do to accelerate our progress digitizing flows, whether it's consumer payments or opportunities in CMS, and we'll continue to update you as we learn more.

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

Thank you all for participating in Visa's Fiscal Third Quarter 2025 Earnings Conference Call. That concludes today's conference. You may disconnect at this time, and please enjoy the rest of your day.