Visa Inc.

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 the results of many factors. Additional information concerning those factors is available at 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. For non-GAAP financial information disclosed in this call, 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.

Hi, everyone. Good afternoon and thank you for joining us. We are off to a solid start in 2024. Consumer spending remained resilient with first quarter year-over-year payments volume growth at 8%. U.S. payments volume grew 5% year-over-year. International payments volume grew 11%. Cross-border volume, excluding intra-Europe, rose 16% year-over-year in constant dollars, with cross-border travel at 142% of 2019 levels, up from 139% in the fourth quarter. Process transactions rose 9%. Our net revenues increased 9%, with GAAP EPS up 20%, and non-GAAP EPS up 11%. As I reflect on the execution of our strategy this quarter across consumer payments, new flows, and value-added services, I wanted to highlight a few key themes. One, we remain obsessed about serving our customers, including traditional bank partners, neobanks, fintechs, wallets, sellers, acquirers and everyone else. Our focus on clients has enabled us to deepen our relationships with partners across all three pillars of our strategy. Two, we continue to seek new partnerships, new use cases and new verticals to drive our business forward with a particular emphasis on cross-border. Three, We have gone to market with innovative solutions across our network of networks, seeking to add value for all transactions, no matter the network. And four, we are always looking for new and innovative ways to amplify our brand in service of our partners. With those themes in mind, let me provide some more details on the quarter. Let's start with consumer payments. we saw continued growth in credentials, acceptance, and engagement. Credentials grew 6%, and we now have more than 8.7 billion network tokens up 55%. Acceptance locations grew 17%. And let me highlight two recent examples of where we have expanded acceptance. The first was in Brazil with Caixa. for cash conversion at their over 10,000 lottery branches. They are now accepting Visa credit and debit cards to pay for utilities, tax collection, lotteries, and voucher payments, which are called boletos. Another example was in Asia Pacific, where we signed an agreement with Bcash, the largest mobile financial services player in Bangladesh. Already a client with Visa Direct, They now have enabled Visa's 15 million-plus cardholders in the country to use their in-app QR code to pay at more than 550,000 Bcash merchants. These examples demonstrate our local approach to expanding our global acceptance footprint. grew five percentage points from last year to 77% of face-to-face transactions globally, excluding the US. In the US, we reached 45% penetration. One highlight from the first quarter is that Lowe's has enabled tap to pay acceptance. We believe that tapping provides the best buyer and seller experience in the face-to-face environment and we have seen that play out in the results. In a recent Visa study in the U.S., we saw on average two more transactions a month and spend lift of $70 a month for those who tap with a Visa debit card versus those who don't tap. Now on to some noteworthy updates from the quarter, which demonstrate our ability to deepen and expand partnerships as well as create new ones. In Europe, we renewed our agreement with Ishbank, the largest private bank in Turkey with 33 million cards for its consumer and commercial credit and debit portfolios. As part of that renewal, they will be issuing the first Olympic and Paralympic Games credit card in Europe outside of France, leveraging our sponsorship. In Poland, we signed a new issuing agreement with Pikal Bank Polsky, the largest issuer and acquirer in Poland and Central Eastern Europe for consumer and commercial debit. In Greece, we expanded our partnership with Piraeus Bank, the largest bank in the country, to become their exclusive payment network across their consumer and commercial credit and debit portfolios. These are all fantastic examples of the attractive position and strong pipeline in continental Europe I spoke about last quarter. In Japan, we expanded our credit issuance partnership with EPAS, one of the fastest growing issuers in the country, affiliated with department store Marui. They will use Visa Managed Services which is a part of our advisory solutions where we embed Visa employees within a client organization to help execute against key initiatives. In Korea, we renewed and expanded our partnership with Shinhan Card, the largest issuer in the country, for consumer and commercial credit and debit. Shinhan has also committed to utilizing a suite of Visa's value-added services including consulting and marketing, to advance their business. In Mexico, we renewed our agreement with BBBA across consumer and commercial credit and debit, along with value-added services, including risk, advisory, and data tools. And last, in the U.S., we extended our agreement with Bank of America for multiple value-added services, including Visa's Loyalty Platform Service, Cardinal Commerce 3D Secure Service, Verify Order Insight Digital Service, and DPS Debit Processing. We also continue to be a partner of choice for fintechs around the world. First, in the U.S., we renewed with leading fintech Chime for their debit and credit builder secured card portfolios, as well as for Visa Direct. In Latin America, we renewed our debit and credit contracts with Rappi, one of the largest FinTech and merchant clients in the region with more than 30 million customers. They will also utilize numerous value-added services, including CyberSource and Decision Manager. And finally, we are excited about a new global partnership with HSBC, for their FinTech initiative, Zing. Starting with the UK, we are supporting the ambition to launch this multi-currency proposition in more than 30 markets. Visa's capabilities through Tink, Currency Cloud, and our consumer payment solutions offer a powerful customer proposition and rapid deployment for Zing and HSBC. Through these renewals and new partnerships, you can see how we are focused on building a deep relationship across all the capabilities Visa offers. Now moving to new flows. We have updated our sizing of the new flows opportunity using the latest market data available. Excluding Russia and China, we see $200 trillion of opportunity annually across B2B, B2C, P2P, and G2C, certainly an enormous number. We are working with our clients to deliver Visa's commercial and money movement solutions to help digitize these flows on our network of networks. Starting with Visa Direct, total transactions this quarter grew 20% to 2.2 billion, and on the P2P cross-border front, transactions grew more than 65% year-over-year. In terms of client highlights for this quarter, we have been developing partnerships for new use cases and verticals, and we are continuing to drive cross-border volumes. First, in new use cases, in addition to our existing P2P partnership in the U.S., we have expanded our Visa direct relationship with Meta, launching the ability for content creators on Meta's family of apps to cash out their earnings to a debit card. This launch, now live in the US, UK, France, and Italy, allows for creators to receive their payouts quickly and safely. Second, on cross-border volumes, we have continued to make progress in enabling global money movement across our 8.5 billion endpoints in nearly 200 countries and territories. Western Union is a great example. We just signed a long-term global partnership agreement with Western Union covering issuance, Visa Direct, and other services across 40 countries and five regions. This long-term collaboration will bring product innovations and digital-first customer experiences to enhance cross-border money movement. We also expanded our relationship with Remitly to enable customers from 30 countries to send cross-border payments to eligible debit cards and bank accounts in over 100 countries globally. In Canada, we recently announced our agreement with CIBC and Simply to provide millions of clients the ability to send money to digital wallets in key remittance destinations including the Philippines, China, and Bangladesh. On to the commercial side. Total payments volume grew 8% in constant dollars, and throughout the quarter, we continued to focus on new verticals. Let me highlight a few specific areas. First, in the cross-border travel vertical, we recently expanded our agreement with Singapore-based B2B platform Neom. Their virtual card B2B travel program will expand from the US and Europe into Australia, Singapore, Hong Kong, and Japan. Also in B2B travel, we signed a new virtual card agreement with Worldline, a leading global payments provider for travel intermediaries to pay their suppliers more quickly. In the contractor vertical, we recently signed an agreement with United Overseas Bank and Doxa, a Singapore fintech for contractors. In partnership with Visa, the Doxa platform has further been enhanced to provide embedded financing capabilities. Subcontractors will be given the option to be paid for their services through UOB virtual cards. And also with UOB, We renewed and expanded our commercial relationship across commercial debit and credit, including the enablement of payment flows for the Singapore government. Let me move on to value-added services. Our network of network strategy is also playing a key role in value-added services. As a reminder, this has three components. One, moving money to all endpoints and to all form factors. Two, using all available networks and being a single connection point for our partners. And three, providing our value-added services on all transactions, no matter the network. We have continued to develop and expand our value-added services as part of this strategy. Let me cover three recent examples. Processing capabilities for RTP networks, PISMO, and PROSA. Last quarter, I noted that Visa is becoming a certified service provider for FedNow, enabling financial institutions to receive funds through the FedNow service. We have now enabled the ability to also send funds. The second example is Pismo, which we just closed last week. As I talk to clients around the world, particularly issuing clients, there are two priorities that are increasingly on the minds of CEOs. The first is for many of our issuing clients, they've either recently embarked on or are considering embarking on a transformation of their tech stack from their legacy infrastructure to cloud-native API-based tech stacks. The second is that many clients, whether they be traditional issuers or fintechs, are increasingly looking to rapidly expand their issuance to new regions and countries, especially to more developing markets around the world. Our clients are looking to Visa to help them with both of these priorities. And with Pismo, we will be able to deliver to our clients the best cloud native issuer processor and core banking platform in the world. Pismo offers global core banking, and multi-product issuer processing covering credit, debit, and commercial with connectivity to local payment networks such as PIX. Our goal is for PISMO to be the platform of choice for our issuing partners around the world, enabling them to accelerate their global expansion and transition to cloud-native platforms. And the third example of our network of networks is our announcement to acquire a majority interest in PROSA, a payments processor in Mexico. A couple things about the Mexican market. One, cash and check represent more than 50% of personal consumption expenditures. And two, today Visa has limited ability to process domestically. We believe we can bring enhanced technology infrastructure and lay the groundwork to develop new innovative ways for consumers, small businesses, and local issuers and acquirers in Mexico to pay and be paid. This includes improving safety, security, and reliability, and providing better experiences through our value-added services, such as tokenization, risk products, and more. We can also bring our innovation and commitment to continued investment for both face-to-face and online transactions. Together, these efforts will help further digitize payments in the country. The investment is subject to regulatory review, and we hope to close in the second half of calendar year 2024. And finally, I want to highlight the opportunities to drive further growth in value-added services via the development of new partnerships. These enable us to enhance our overall offering and distribution reach. Yesterday, we announced an agreement with digital workflow leader ServiceNow to build solutions and distribute Visa's products and solutions to joint customers. To start, ServiceNow will launch an end-to-end disputes management solution for issuers with plans to expand to additional segments and products over time. This partnership showcases the demand for our value-added services and provides a compelling distribution channel to reach more customers around the globe. So, across consumer payments, new flows, and value-added services, you can see the enormous opportunity as well as Visa's strong relationships, commitments to our clients, and innovation in new ways to pay and be paid. What helps to amplify all of these efforts is our brand. We recently renewed our longstanding partnership with FIFA, creating a powerful opportunity to drive business for both Visa and our clients, improve brand lift, and maximize global reach, not to mention providing an opportunity to showcase and implement Visa's innovative payment technology. We are also launching our first new global sports sponsorship in more than 15 years with the Red Bull Formula One teams. The partnership aligns our brand with two teams within Formula One, which is one of the fastest growing sports on the planet, providing another opportunity to drive business for our clients. As we look ahead this year, we're excited to be activating our brand with our clients across all of these partnerships, as well as the Olympic and Paralympic Games in Paris. Before I hand it over to Chris, I wanted to mention that we held our annual meeting on Tuesday. All of the proposals that the board recommended passed, including the exchange offer program proposal. As such, we will be moving promptly to file an S4 with the SEC relating to the initial exchange offered. I also wanted to give a special thanks to my colleague, partner, and friend, Al Kelly, as Tuesday he officially retired as executive chairman. Al, on behalf of the entire Visa family, thank you for your exceptional leadership. You led this business to incredible heights while also driving innovation, deepening our client relationships, and strengthening our culture in so many ways. Your impact on Visa will be visible for generations. In closing, in the first quarter, Visa once again demonstrated the effective execution of our strategy across the globe. While uncertainty seems to be the norm, Visa has the experience and discipline to manage through the challenging environments And I remain optimistic and confident about our future. Now over to Chris.

Thanks, Ryan. Good afternoon, everyone. As Ryan said, Q1 was a solid quarter with relative stable growth in overall payments volume and process transactions and strong growth in cross-border volume. Looking at our drivers, in constant dollars, global payments volume was up 8% year over year and process transactions grew 9% year over year. Cross-border volume growth, excluding intra-Europe, was up 16% year-over-year in constant dollars. Fiscal first quarter net revenues were up 9% in nominal and constant dollars, which was on the high end of our expectations, primarily due to lower-than-expected incentives and less FX drag. Gap EPS was up 20%, and non-gap EPS was up 11% in nominal and 10% in constant dollars. Now on to the details, starting with the U.S. U.S. payment volumes grew 5% year over year. Credit grew 6% and debit grew 5%. Card present spend grew 3% and card not present volume grew 7%. As we look at the monthly total U.S. payments volume growth rates throughout the quarter, we saw a low in October and a peak in November with December in between. Putting it all together, the step down of about 80 basis points in total U.S. payments volume growth from Q4 to Q1 was primarily due to a less favorable mix of weekends and weekdays compared to last year, and a combination of a few small items, including a softer October and modest impact from Reg II. Consumer spend across all segments from low to high spend has remained relatively stable. Our data does not indicate any meaningful behavior change across consumer segments. Moving to holiday spend, which is the period from November 1 to December 31, in the U.S., consumer holiday spend growth was in the mid single digits on a year-over-year basis. Consumer retail spending growth was similar to last year. However, retail spending growth on key shopping days from Thanksgiving to Cyber Monday was much stronger. E-commerce increased its share of retail spending versus last year. Moving to international markets, where total payments volume growth was up 11% in constant dollars, stable to Q4. Payments volume growth rates were strong for the quarter in most major regions, with Latin America, Samia, and Europe ex-UK each growing about 20% in constant dollars. Now on to cross-border, which I'll speak to in constant dollars and excluding intra-Europe transactions. Total cross-border volume was up 16% year-over-year. Cross-border card-not-present volume growth, excluding travel, grew slightly faster than expected in the low teens, adjusted for cryptocurrency purchases. Cross-border travel-related spend grew 19% year-over-year. The cross-border travel volume indexed at 2019 increased from 139% in Q4 to 142% in Q1. Travel volume into Asia indexed at 132% of 2019 levels for the quarter, up three points from Q4, while travel volume out of Asia was up four points to 118%. This was lower than last quarter's expansion, primarily due to relative weakness in Australia and Japan. Travel in and out of mainland China continued to improve, but both remained below 2019 levels. U.S. travel inbound continued to improve several points from Q4 versus 2019 levels. And we continued to see healthy travel volumes in and out of LAC, Europe, and Samia, and out of the U.S., ranging from 145 percent to 170% of 2019 levels. Now let's review our first quarter financial results, starting with the revenue components. First, as any new pricing usually goes into effect in April and October, this quarter, each of our revenue components benefited as a result, and the growth rates were either further enhanced or offset by the additional factors as follows. Service revenues grew 11% year over year versus the 9% growth in Q4 constant dollar payments volume with some additional help from card benefits. Data processing revenues grew 14% versus 9% process transaction growth, helped by business mix and value-added services. International transaction revenues were up 8% versus the 16% increase in constant dollar cross-border volume, excluding inter-Europe, impacted by lapping strong currency volatility from last year. Other revenues grew 18% with strong consulting revenue growth but impacted by lapping 31% growth from 2023, primarily from FIFA-related value-added services revenue. Client incentives grew 20%, but ended up lower than expected due to client performance and deal timing. Across our three growth engines, consumer payments growth was driven by relative stability in payments volume growth and process transactions, as well as strong growth in cross-border volume. This quarter, in new flows, the underlying drivers remained relatively stable. Commercial volumes rose 8% year-over-year in constant dollars, and Visa direct transactions grew 20%. Total new flows revenue grew in the low single digits year-over-year in constant dollars due to several one-time items and business mix impact. As you know, for any given period, there can be puts and takes, but most importantly, Drivers were stable, and we continue to expect full-year 2024 new flows revenue to grow faster than consumer payments revenue. In Q1, value-added services revenue grew 20% in constant dollars to $2.1 billion, with strength in issuing and acceptance solutions. Gap operating expenses declined 6%. The decrease in expenses was driven by a decrease in the litigation provision, somewhat offset by an increase in personnel expenses. Non-GAAP operating expenses grew 7%, primarily due to an increase in personnel expenses. Excluding net gains from our equity investments of $4 million, non-GAAP non-operating income was $84 million. Our GAAP tax rate was 19.1%, and our non-GAAP was 19%, helped by larger-than-expected tax benefits. GAAP EPS was $2.39. Non-GAAP EPS was $2.41, up 11% over last year, inclusive of an approximately half-point benefit from exchange rates. In Q1, we bought back approximately $3.4 billion in stock and distributed over $1 billion in dividends to our stockholders. At the end of December, we had $26.4 billion remaining in our buyback authorization. Now let's move to what we've seen so far in January through the 21st. U.S. payment volume was up 4%, with debit up 3% and credit up 4% year-over-year, down from December, largely due to severe weather conditions in parts of the U.S. Process transactions grew 8% year-over-year. Constant dollar cross-border volume, excluding transactions within Europe, grew 16% year-over-year. Travel-related cross-border volume, excluding inter-Europe, grew 16% year-over-year. or 146% indexed to 2019, and cross-border card not present, ex-travel grew 16%. Now on to our expectations. Remember that adjusted basis is defined as non-GAAP results in constant dollar and excluding acquisition impacts. You can review these disclosures in our earnings presentation for more detail. For the full year, we have no material changes to our prior outlook for drivers, adjusted net revenues, or EPS growth. Remember that our drivers assume no recession or a further increase in Reg II impacts. PSMO is expected to have minimal benefit to full year net revenues growth and an approximately half point headwind to non-GAAP operating expense and EPS growth. FX is expected to have an approximately half point drag to net revenues growth and approximately one point benefit to non-GAAP operating expense growth and a minimal drag to non-GAAP EPS growth. GAAP and non-GAAP non-operating income is expected to be between $350 and $400 million, with nearly half in Q2 due to the resolution of some non-U.S. tax matters. Putting it all together, adjusted net revenues growth is unchanged at low double digits. Adjusted operating expense growth is updated to low double digits, and adjusted EPS growth is unchanged at low teens. For the second quarter, similar to the full year, PISMO is expected to have a minimal benefit to net revenues growth and an approximately half-point headwind to non-GAAP operating expense and EPS growth. FX is expected to have minimal drag to net revenues growth and an approximately half-point benefit to non-GAAP operating expense growth and minimal benefit to non-GAAP EPS growth. We expect adjusted net revenues growth in the upper mid to high single digits and adjusted operating expense growth in the low double digits north of 10 percent. Non-operating income is expected to be highest in Q2 due to the resolution of some tax matters, as I noted earlier. As such, the tax rate is expected to be between 16 and 16.5 percent in Q2 with the full year unchanged. This puts second quarter adjusted EPS growth in the high teens. In summary, we're off to a solid start in the first quarter. The fundamental drivers remain relatively stable, and with no material changes to our full-year guidance, we remain focused on the execution of our growth strategy for the rest of 2024. As always, if the environment changes and there's an event that impacts our business, we will, of course, adjust our spending plans. We remain thoughtful on balancing between short and long-term considerations. And now, Jennifer, let's go to Q&A.