Visa Beats Q1 Earnings on Volume Muscle, Shrugs Off Processing Miss

Visa Inc. V reported first-quarter fiscal 2026 earnings per share (EPS) of $3.17, which beat the Zacks Consensus Estimate of $3.14. The bottom line increased 15% year over year.

Net revenues of $10.9 billion improved 15% year over year. The top line beat the consensus mark by 1.9%.

The strong quarterly results benefited from higher payments and cross-border volumes. Resilient consumer spending remains a tailwind. However, the upside was partly offset by increased operating expenses and lower-than-expected processed transactions.

Visa Inc. Price, Consensus and EPS Surprise

Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. Quote

Q1 Business Drivers of Visa

Visa's payments volume increased 8% year over year on a constant-dollar basis in the fiscal first quarter, driven by expanding operations across the United States, Europe, CEMEA and LAC regions. Processed transactions (implying transactions processed by Visa) grew 9% year over year to 69.4 billion. The metric marginally missed the consensus estimate of 69.8 billion.

On a constant-dollar basis, the cross-border volume of Visa (that boosts international transaction revenues) rose 12% year over year. Excluding transactions within Europe, its cross-border volume jumped 11% year over year.

Visa’s Q1 Segment Performance

Service revenues (depending on the payment volume in the previous quarter) increased 13% year over year to $4.8 billion in the December quarter, attributable to expanding payment volumes. The metric beat our model estimate of $4.6 billion. Data processing revenues of $5.5 billion grew 17% year over year and met our model estimate.

International transaction revenues rose 6% year over year to $3.7 billion in the fiscal first quarter, driven by higher cross-border volumes. The metric missed our estimate of $3.8 billion. Other revenues were $1.2 billion, which climbed 33% year over year and surpassed our estimate of $1.1 billion.

Client incentives (a contra-revenue item) increased 12% year over year to $4.3 billion and met our model estimate.

Adjusted operating expenses of $3.4 billion escalated 16% year over year due to higher marketing costs, general and administrative costs, professional fees and litigation provision. Our estimate for the metric was $3.3 billion. Interest expenses increased 6.6% year over year to $194 million.

Visa’s Balance Sheet (As of Dec. 31, 2025)

Visa exited the fiscal first quarter with cash and cash equivalents of $14.8 billion, which fell from the fiscal 2025-end level of $17.2 billion. Total assets of $96.8 billion increased from the fiscal 2025-end level of $99.6 billion.

Visa’s long-term debt amounted to $19.6 billion, in line with fiscal 2025-end. Current maturities of debt were at $1.6 billion.

Total equity declined to $38.8 billion from the fiscal 2025-end figure of $37.9 billion.

Visa’s Cash Flows

The company generated net cash from operations of $6.8 billion in the fiscal first quarter, which increased 25.6% year over year. Free cash flows were recorded at $6.4 billion, up 26.7% year over year.

Visa’s Capital Deployment Update

Visa rewarded $5.1 billion to its shareholders via share buybacks ($3.8 billion) and dividends ($1.3 billion) in the December quarter. The company had leftover authorized funds of $21.1 billion under its repurchase program as of Dec. 31, 2025.

The quarterly cash dividend, amounting to 67 cents per share, will be paid out on March 2, 2026, to its shareholders of record as of Feb. 10.

Visa’s Q2 FY26 Outlook

On an adjusted nominal-dollar basis, net revenues are anticipated to witness the high-end of low-double-digit growth. Adjusted operating expenses are estimated to grow in the high-end of mid-teens digits. It expects EPS to witness growth in the high-end of low-double-digit.

Visa’s FY26 View

On an adjusted nominal-dollar basis, net revenues are expected to witness low double-digit growth in fiscal 2026. Adjusted operating expenses are also expected to witness low double-digit growth. Management anticipates EPS will witness growth in the high-end of low-double-digits.

Visa currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

How Are Visa’s Peers Placed This Quarter?

Major rival Mastercard Incorporated MA reported fourth-quarter 2025 adjusted earnings of $4.76 per share, which outpaced the Zacks Consensus Estimate by 13.3%. Net revenues advanced 18% year over year to $8.8 billion. Growing cross-border volumes, an increase in switched transactions and solid growth in value-added services aided Mastercard’s performance.

American Express Company AXP is scheduled to report fourth-quarter 2025 results on Jan. 30. The Zacks Consensus Estimate for adjusted earnings is pegged at $3.55 per share, indicating 16.8% year-over-year growth. The same for revenues is pegged at $18.8 billion, signaling a 9.6% increase. American Express beat earnings estimates in each of the past four quarters with an average surprise of 4%.

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