Visa Inc - Class A (V) — Q4 2025 Earnings Call Transcript

Thank you. Good afternoon, everyone, and welcome to Visa's Fiscal Fourth Quarter and Full Year 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. We finished fiscal full year 2025 with strong financial performance, an ever-growing obsession for our clients and a sharp focus on innovation as we build the future of payments. Fiscal fourth quarter net revenue grew 12% year-over-year to $10.7 billion, and EPS was up 10%, resulting in full year net revenue and EPS year-over-year growth of 11% and 14%, respectively. Total full year payments volume was $14 trillion, up 8% year-over-year in constant dollars, and processed transactions totaled $258 billion, up 10% year-over-year. Our financial performance and growth demonstrate how Visa has become a hyperscaler, enabling anyone who wants to be in the money movement or payments business to build on top of the Visa as a Service stack. You may recall the layers of the stack, the foundation layer, the services layer, the solutions layer, and the access layer. Throughout 2025 and most recently in Q4, we have intensified our investment in innovation. Today, I want to highlight Visa's progress with our clients and the ecosystem at large across the Visa as a Service stack, starting with the foundation layer. At the foundation of the stack is our global connectivity, our network, and our network of networks that enable global commerce and money movement. In full year 2025, we expanded our network of networks in three important ways: first, more connection points, Visa's network of networks now has approximately 12 billion endpoints. That's about 4 billion cards, bank accounts, and digital wallets each; second, more settlement currencies, we are adding support for four stablecoins running on four unique blockchains representing two currencies that we can accept and convert to over 25 traditional fiat currencies; and third, we have begun deployment of the next generation of VisaNet, the core processing platform in our Visa as a Service stack. It offers a cloud-ready microservices distributed modular architecture that uses open languages and technologies, enabling easier scaling, configuration, and faster feature deployment. Over half of the new code base was built with the assistance of generative AI, improving development speed, security, and maintainability. We have specific modules in the market today with plans to roll out additional modules and markets. The next level of the Visa as a Service stack is our services layer, which encompasses the building blocks of our core capabilities, including credentials, tokens, authentication, risk management, fraud detection, and more, which we've turned into discrete modular components. We grew the number of Visa credentials by 270 million this year, and we continue to sign many deals this past quarter to drive further growth. I'll share a few regional highlights. We are pleased to have renewed our nearly 60-year relationship with Barclays in the U.K. and the U.S. across their millions of customers in consumer and commercial issuing and acquiring, and enabling increased focus on value-added services utilization. In the U.S., Visa continues to be the exclusive payment network for the Southwest Airlines co-brand program, and we will soon be expanding our relationship into a co-brand debit offering, providing customers a new way to earn Rapid Rewards points on everyday purchases. In Latin America, we won the new Scotiabank wealth management credit card issuance with our Visa Infinite product across seven countries. And in Mainland China, one of our largest clients, China Merchants Bank, has renewed their long-standing relationship with us as we continue to upgrade China's magstripe dual-branded cards to contactless EMV chip cards. Moving to tokens. We now have over 16 billion Visa tokens, up from 10 billion just in May of 2024. We continue to increase the amount of Visa tokens globally in pursuit of our ultimate goal of 100% of e-commerce transactions tokenized. We continue to enhance our risk management capabilities, including Visa scam disruption, which proactively detects scam activity at the network level that no single issuer, acquirer, or merchant could see alone and leverages AI-enhanced merchant monitoring external intelligence feeds and our global expertise. Just a year since launch, we have worked closely with our clients and law enforcement to dismantle more than 25,000 scam merchants representing more than $1 billion in fraud attempts. Our stablecoin platform is another key component of our services layer. Since 2020, we facilitated over $140 billion in crypto and stablecoin flows, including Visa users purchasing more than $100 billion of crypto and stablecoin assets using their Visa credentials and spending more than $35 billion in crypto and stablecoin assets using Visa credentials. Within this, we see particular momentum with stablecoins. We now have more than 130 stablecoin-linked card issuing programs in over 40 countries. And in Q4, stablecoin-linked Visa card spend quadrupled compared to a year ago. We expanded the number of stablecoins and blockchains available for settlement, and monthly volume has now passed a $2.5 billion annualized run rate. We are starting to enable banks to mint and burn their own stablecoins with the Visa Tokenized Asset Platform, and we are adding stablecoin capabilities to enhance cross-border money movement with Visa Direct. In September 2025, we announced a stablecoin pre-funding Visa Direct pilot targeting banks, remitters, and financial institutions seeking faster, more flexible ways to manage liquidity, and there is much more to come in this space. The next level of the Visa as a Service stack is our solutions layer, a comprehensive portfolio of solutions where we have taken the componentized capabilities from the services layer and invested in and enhanced them to create new features and capabilities we deliver to a broader array of customers and partners. If we look across our growth levers in this layer, I would note progress in a number of areas. In consumer payments, Visa Intelligent Commerce integrates Visa's token technology with authentication and predictive analytics, empowering partners to deploy secure, personalized digital commerce experiences. And I'm pleased to announce that we are now powering live agentic transactions and recently released a merchant agent toolkit to make it easy for developers to embed our solutions into workflows and agentic processes. Just two weeks ago, we announced the Visa Trusted Agent Protocol, a framework that enables safer agent-driven checkout by helping merchants verify agents and avoid malicious bots. Since it's built on existing messaging standards, minimal integration is required for merchants. Next, our Visa Flex Credential continues to gain momentum, enabling consumers to access many underlying funding sources with a single credential powered by Visa token technology. For example, the Klarna card launched in 15 European markets, building on its success in the U.S. where it had over 1 million sign-ups in less than three months, and they will expand to even more markets soon. Our Visa Accept Solution enables even the smallest of sellers to accept card payments with just a Visa debit card and an NFC capable smartphone. Our first live launch of Visa Accept was in Sri Lanka, which represents an opportunity to bring an estimated 7 million sellers onto the Visa network, most of whom are informal sellers who primarily transact in cash today. And this is just our first launch. We are targeting 25 countries across several regions where we expect to launch Visa Accept soon with even more expansion to follow. Our Visa Pay solution connects any participating wallet to any Visa accepting seller worldwide, locally or internationally, in-store or online. We are pleased to now be processing live Visa Pay transactions in four markets across AP and CEMEA, including our recently announced market launch in the Democratic Republic of Congo. In addition, we have a pipeline with more than 70 clients to expand across more markets in 2026 and beyond. Rounding out consumer payments is tap to everything. 79% of all face-to-face transactions are taps, up 8 percentage points this year with the U.S. at 66%. Our transit initiatives contributed to this expansion, and this year, we enabled more than 100 new transit systems to now total approximately 1,000 systems globally, delivering 19% year-over-year growth in transactions. In Europe, BBVA recently launched BBVA Pay, enabling tapping from an iOS device for all Visa cards within their banking app. They also have enabled customers to use AI to create their own personalized Visa cards starting in Spain. Tap to Phone, which provides an easy, low-cost method for micro sellers to begin accepting card payments or large sellers to add additional mobile terminals, has now passed 20 million transacting devices, more than doubling since last year with strong growth across all regions. And Tap to Add Card launched a little over a year ago has strong adoption as consumers and our partners see the value of a simplified, more secure customer experience where a simple card tap to a mobile device can add a Visa credential to a digital wallet. Since Q3, we have doubled the count of issuers participating globally to more than 600 across all regions, resulting in the service being live for more than 1.4 billion Visa credit and debit cards around the world. Shifting to CMS and starting with Visa Commercial Solutions. Our full year 2025 commercial payments volume grew 7% in constant dollars to $1.8 trillion. This was helped by targeting specific segments including business owners and online travel agencies. In the premium card segment, we supported Chase with the launch of Chase Sapphire Reserve for Business on Visa Infinite, an expansion of the Sapphire Reserve product line. The Sapphire Reserve for Business card is designed to meet the needs of business owners by elevating their travel experience and offering premium benefits and value toward business services to help fuel their growth. And also in the U.S., we are excited to have partnered with Truist to launch the Truist Business Premium Visa Infinite card, a premium credit card designed for small businesses with meaningful annual spend. They are the first super-regional to do so in this country. Our purpose-built travel solution offers virtual card credentials, automated reconciliation, and rich data. We recently won Trip.com's global virtual travel card issuing business, which will be issued through their fintech, TripLink. In our traditional carded business, our global network-agnostic enhanced spend management capabilities have helped us to expand our partnership with BMO. We recently won new commercial issuance, and BMO will offer our Spend Clarity for Enterprise tool to their corporates in the U.S. and Canada. Our unique FX capabilities enabled us to win a de novo issuing relationship with ICICI Bank for India's first corporate Foreign Exchange prepaid card, targeting both SMBs and large corporates to meet foreign exchange payment needs for business travel. In fact, in India, Visa SMB cards have doubled since 2020 and now total more than 10 million, helping us to grow total commercial cards to 340 million worldwide. Moving on to Visa Direct, which reached 12.6 billion transactions in full year 2025, up 27% year-over-year. Our push to account and wallet funding capabilities continue to help us to expand cross-border payouts. We signed with KCB in East Africa, where they will use Visa Direct to account for eight corridors across their more than 30 million individual and business customers. Touch 'n Go eWallet, the largest wallet in Malaysia with more than 24 million users, will leverage Visa Direct to enable tourists to fund their wallets across eight corridors. And Al Rajhi, a leading remitter with the largest branch network in the Kingdom of Saudi Arabia, expanded on its Visa Direct to card usage to now include Visa Direct to account. Our interoperability capabilities unlocked through our YellowPepper acquisition enabled us to renew with Yape and Plin, securing our position as the leader for interoperable transactions in Peru. Now moving to value-added services, where we have seen our innovations across issuing, acceptance, risk, and advisory continue to power our growth. We have achieved our goal to expand Pismo's offerings to clients in more than five countries across four regions in 2025. In the fourth quarter, we signed our first Pismo deal for a stablecoin-linked card with Gnosis Pay in Europe. In Acceptance Solutions, our Token Management Service, or TMS, provides a single network and payment service provider-agnostic integration to simplify token adoption, access, and management for merchants and acquiring clients. This quarter, we signed with Booking.com for TMS and account updater across more than 65 markets, deepening our presence in the online travel platform space. Many of our risk and security solutions are also network-agnostic. Let me highlight a few points of progress. Visa Advanced Authorization evaluates more than 400 unique attributes in a few milliseconds, and this quarter, Banco Diners in Ecuador deployed our network-agnostic solution to score both Visa and non-Visa transactions, the first bank in LAC to do so. Our award-winning product, Visa Protect for A2A, is delivering value with AI. Our pilot in Brazil scored nearly $500 billion of our bank partner's Pix volume over a six-month period and identified over $90 million of fraud, which could have been prevented with a detection rate of more than 80%. We believe Visa Protect for A2A can play an important role in Brazil by providing real-time fraud monitoring on Pix, helping to reduce fraud for our bank partners and ensure a safer payment experience for buyers and sellers. Our most recently acquired risk capabilities from Featurespace are being sought after by our clients with more than 100 closed client deals since January. And our advisory services continued to deliver revenue and deepen our client relationships across Visa. In consulting, we estimate that we helped clients realize over $6.5 billion of incremental revenue as a result of delivering almost 4,500 engagements during the year, including GenAI and stablecoin engagements. In marketing services, our flagship sponsorships include the FIFA World Cup 2026 in the U.S., Canada, and Mexico as well as the Olympic and Paralympic Winter Games in Milano Cortina. We are already seeing significant interest from our clients as they seek to offer unique cardholder experiences and build their brand in addition to helping drive issuance, acceptance, and engagement. One Olympic and Paralympic related marketing example was our first large-scale campaign created using generative AI tools for Intesa Sanpaolo, which showcased a ski race down the streets of Italy's seaside villages. We already have over 35 clients engaged with us for marketing services for the 2026 Olympic and Paralympic Games and more than 70 for the FIFA World Cup 2026 with more than 100 already in our pipeline. The fourth and final layer of the Visa as a Service stack on top of the foundation layer, the services layer, and the solutions layer is the access layer, the client entry point to access Visa solutions. We take an open partnership approach and seek to provide value by enabling access to our Visa as a Service stack through multiple integration methods, including custom integrations, programmatic access via APIs, and structured data exchange through our Model Context Protocol, or MCP server. We remain the payments platform of choice in full year 2025 with more than 700 billion API calls across our more than 3,700 endpoints. And we recently launched our MCP server, providing access for AI systems to interface with our Visa Intelligent Commerce APIs. Our open, flexible access layer enables anyone, whether a small business, a tech partner, or a global bank, to build on top of the Visa as a Service stack and operate at scale instantly. In conclusion, you can see our intense focus on innovation is delivering results for Visa and our clients. The Visa as a Service stack has positioned Visa to be a hyperscaler for the payments ecosystem. Our strong fiscal year 2025 performance is a result of our products resonating in the market and our commitment to our clients every day. I want to thank our more than 34,000 employees around the world who will continue to obsess about our clients and work tirelessly in 2026 and beyond to deliver value through the Visa as a Service stack to our clients and across our partner ecosystem. We live in remarkable times in payments as technologies are converging to reshape commerce. And at Visa, with our clients, partners, sellers, and consumers, we are keeping our focus on innovation and product development, positioning Visa to lead this transformation. Now to Chris, where he will discuss our financial performance and outlook for 2026.

Thanks, Ryan, and good afternoon, everyone. Building on the momentum we saw through the first three quarters, we had a very good Q4 to finish the year with continued strong and stable business drivers. In constant dollars, global payments volume was up 9% year-over-year, improving slightly from Q3. Cross-border volume excluding intra-Europe was up 11% and total processed transactions grew 10%, both relatively stable to Q3. Fiscal fourth quarter net revenue was up 12% year-over-year, better than expected, primarily due to value-added services revenue, commercial and money movement solutions revenue, and a benefit from FX. Fourth quarter net revenue was up 11% in constant dollars. EPS was up 10% year-over-year in both nominal and constant dollars, better than expected, primarily due to better-than-expected net revenue. Let's go into the details. Total international payments volume was up 10% year-over-year in constant dollars in Q4, generally consistent with Q3. Of note, we saw acceleration in Asia Pacific of approximately 2.5 points on a constant dollar basis, driven by timing effects and a modest improvement in Mainland China. U.S. payments volume was up 8%, slightly above Q3 with e-commerce growing faster than face-to-face spend. Credit and debit were both up 8%, reflecting resilience in consumer spending. When we look at quarterly spend category data in the U.S., we saw broad-based strength, including improvements in retail services and goods, travel, and fuel. Both discretionary and nondiscretionary spend were up from Q3. And growth across consumer spend bands remained relatively consistent with Q3, with the highest spend band continuing to grow the fastest. Now to cross-border volume, which I'll speak to in constant dollars and excluding intra-Europe transactions. Q4 total cross-border volume was up 11% year-over-year relatively stable to last quarter, with e-commerce up 13%, and travel improving sequentially to 10%. E-commerce remains strong as it has for the last eight quarters now and still represented about 40% of our total cross-border volume. Travel spend continued to grow above pre-COVID levels. The slight step-up from Q3 was led by a combination of factors, including increased commercial volumes, helped by our efforts in virtual card and some improvement in CEMEA outbound due to holiday timing. With that as a backdrop, I'll move to discuss our financial results. Starting with the revenue components. Service revenue grew 10% year-over-year versus the 8% growth in Q3 constant dollars payments volume, primarily due to card benefits and pricing. Data processing revenue grew 17% versus the 10% growth in processed transactions, primarily due to pricing and a higher cross-border transaction mix. International transaction revenue was up 10%, below the 11% increase in constant dollar cross-border volume growth, excluding intra-Europe, primarily due to mix, partially offset by exchange rates. Other revenue grew 21%, primarily driven by growth in advisory and other value-added services and pricing. Client incentives grew 17%, in line with our expectations as we lapped one-time adjustments from Q4 of fiscal '24. 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 14% year-over-year in constant dollars as we lap the one-time adjustment we saw in Q4 FY '24. CMS revenue was better than expected, driven primarily by our Commercial Solutions business. Commercial payments volume grew 10% in constant dollars, 3 points above Q3 growth and faster than Visa's overall payments volume growth primarily due to new portfolio wins and the lapping of certain portfolio losses with strong client performance, especially in cross-border. Visa Direct transactions grew 23% to 3.4 billion transactions with strength in both domestic and cross-border. Value-added services revenue grew 25% in constant dollars to $3 billion, driven by issuing solutions, advisory and other services, and pricing. Value-added services revenue growth was better than expected, primarily due to issuing solutions, both in network products and card benefits. Operating expenses grew 13%, above our expectations due to a larger-than-expected FX impact and higher-than-expected personnel expenses as a result of deferred compensation mark-to-market, which, as a reminder, is EPS neutral. Excluding those two factors, adjusted operating expense growth would have been as expected. Nonoperating income was $29 million, higher than expected due to investment income from the deferred compensation mark-to-market benefit that offsets the expense I just mentioned and higher returns on our investments. Our tax rate for the quarter was 18.8%, in line with expectations. EPS was $2.98, up 10% year-over-year with minimal impacts from exchange rates and acquisitions. In Q4, we bought back approximately $4.9 billion in stock and distributed $1.1 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 end of September, we had $24.9 billion remaining in our buyback authorization. With a strong finish to the fiscal year, our full year net revenue grew 11% to $40 billion, and EPS grew 14% to $11.47. Full year 2025 CMS revenue growth was 15%, and value-added services revenue growth was 23% on a constant dollar basis. In a year marked by a significant step-up in uncertainty around the globe, we delivered strong results above our expectations. As we think about 2026, our guidance philosophy holds. We give you our best perspective based on current information. So let's get into the guidance details and a quick note, when I reference 2025 and 2026, I am referring to our fiscal years. First, let's cover our underlying assumptions for net revenue growth. As we regularly say, we are not economic forecasters, so we're assuming the macroeconomic environment stays generally where it is today and consumer spending remains resilient. On key business drivers, we are assuming no material change from the Q4 2025 growth levels in 2026. On pricing, for 2026, we expect the benefits of new pricing to be similar in magnitude and timing as in 2025, with the majority going into effect in the back half. When you combine that with the 2025 pricing timing, this implies a relatively uniform contribution each quarter with Q1 seeing the largest contribution. On incentives, we expect around 20% of our payments volume to be impacted by renewals this year, which implies incentive growth generally similar to 2025, with Q3 having the toughest comparable to 2025. On volatility, we expect volatility throughout the year to be generally consistent with where we exited Q4, which implies a drag for the first three quarters, with Q3 having the toughest comparable to 2025. 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 presentation for more detail. In 2026, we expect full year adjusted net revenue growth to be in the low double digits. On a nominal basis, we expect an approximately 0.5 point benefit from FX, which implies nominal net revenue growth that is generally consistent with fiscal 2025, which was 11%. We have an exciting year with the Olympic and Paralympic Games in Q2 and the FIFA World Cup in Q3 and Q4. I'll speak to expense in a moment, but as far as net revenue impacts, we expect the benefit from value-added services to be spread throughout the year as our clients will utilize our solutions in the buildup to and during the events. In terms of quarterly variability of net revenue, two items I would call out. First, we expect Q1 to have the highest year-over-year net revenue growth rate, primarily due to the timing impact of our FY '25 pricing actions. Second, we expect Q3 to have the lowest year-over-year net revenue growth rate, primarily due to the lapping impacts of strong volatility and lower-than-expected incentives in Q3 of 2025. Now moving to expenses. We expect to continue our significant investments in our Visa as a Service stack across consumer payments, commercial and money movement solutions, and value-added services in FY '26. Let me share a few examples. Within consumer payments, we will enhance our cross-border and affluent offerings, scale recently launched products, and expand our stablecoin capabilities, in addition to utilizing our marketing dollars for both the Olympics and FIFA to amplify the Visa brand. Within CMS, we'll focus our investments in specific commercial vertical opportunities and build out new Visa Direct product capabilities focused on cross-border money movement. And within VAS, we'll invest in our product development as well as our sales engineering teams to deepen customer engagement and shorten deal cycles. In addition, we're also investing in our AI efforts. In fact, every leader at the company has AI targets to drive efficiencies that we intend to invest back in the business to further our differentiation, competitive advantage, and drive long-term growth. We currently expect to grow adjusted operating expense in the low double digits, consistent with our net revenue growth. As we think about the cadence of spend, we expect Q2 and Q3 to have the largest year-over-year growth rates as a result of marketing expense related to the Olympics and FIFA. Now moving to non-operating income. The non-operating income we've had for the past three years has been a function of cash balances, interest rates, and one-time items. In 2026, based on current interest rate forward curves, we now expect non-operating expense of $125 million to $175 million. Now to our non-GAAP tax rate. You may recall that we've historically estimated our long-term tax rate to be between 19% and 20%, and this remains unchanged. In both fiscal 2024 and 2025, our actual tax rate was below 18%, helped primarily by our geographic mix of earnings and certain one-time benefits, such as the resolution of tax matters and positions taken on certain taxes. In 2026, we still expect to be below our long-term tax rate. When we incorporate our current tax planning strategies, we expect the tax rate to be between 18.5% and 19%, up from 2024 and 2025, primarily due to the absence of one-time benefits. On capital return, the Board has declared an increase to our quarterly dividend by 14%, and we intend to return excess free cash flow to shareholders through buybacks. All of this results in our adjusted EPS growth to be in the low double digits. Moving to Q1. Through October 21, with volume growth in constant dollars, U.S. payments volume was up 7%, with credit and debit both up 7%. Processed transactions grew 9% year-over-year. For constant dollar cross-border volume, excluding transactions within Europe, total volume grew 12% year-over-year, with e-commerce up 14% and travel up 11%. Now on to our financial expectations. We expect Q1 adjusted net revenue growth in the high end of low double digits. We expect adjusted operating expense growth in the low double digits. Non-operating expense is expected to be about $15 million. And our tax rate in the first quarter is expected to be around 18%. As a result, we expect adjusted first quarter EPS growth to be in the low teens. When we look on a nominal basis for net revenue growth in Q1, we expect an approximately 0.5 point benefit from FX. And for our expense growth, we expect an approximately 0.5 point drag from FX and a 1 point impact from acquisitions, which, taken together, result in nominal net revenue and expense growth that are more matched at 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. Visa's underlying business continues to be healthy and the growth opportunities are significant, together giving us conviction as we make investment decisions to build the future payments to drive compelling net revenue and earnings per share growth. And now, Jennifer, I'll hand it back to you.

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

Like the outlook. It's very strong. I guess when I think through some of the assumptions that are embedded in it, I know, Chris, you talked about assuming the macro is stable. But we've heard some of your competitors talk about choppiness in the economy, different spending habits, especially for consumers as they've been trading down on discretionary items. I mean, have you guys seen anything like that? And sort of how does that factor into your outlook?

Yes, we have great momentum as we finish FY '25, and we expect that to continue into '26 for another strong year. To address your questions about spending and the macroeconomic environment, one of the key strengths of Visa is our business diversification. We have extensive exposure to both credit and debit. Our volumes come from everyday purchases, special occasions, essential items like fuel and groceries, as well as discretionary spending on travel, holidays, and various goods and services, encompassing consumer and commercial sectors. Throughout the year, we have maintained consistent growth across our spending categories, with higher spending by cardholders contributing to that growth, reflecting trends seen in the U.S. economy. This data supports our belief that consumer resilience has persisted, which has informed our outlook as we transition from FY '25 to FY '26.

Great. Really appreciate all the work that you guys are doing on new initiatives, et cetera. One that's quite topical, obviously, is all things agentic commerce. And I know you've had some recent announcements on that topic. Can you paint a picture for us like the role that you expect Visa to play in agentic commerce transactions and ramp and kind of milestones we should expect to see in its development?

We see considerable opportunity in agentic commerce. But just to put it in context, when we had the first wave of digital commerce with eCommerce, we set the standards. We led the product development, and Visa was a significant beneficiary. Then you saw a second wave of commerce, which was mobile commerce. And again, Visa was the leader in terms of standards, in terms of product innovation, in terms of the capabilities enabling that to happen. And we've been a big beneficiary. You've seen that both in people buying things on their phones but also using their phones to buy things, especially with Tap to Pay. And now in this third wave of agentic commerce, we've been leading in terms of our role of setting the standards. I think one great example of that is Visa Intelligent Commerce, where we put out a set of capabilities for AI-ready cards, leveraging tokenization, AI-powered personalization, leveraging our data token service. We put out a set of standards with payment instructions that are going to allow customers like you and me to easily set spending limits and conditions to provide clear guidance for agent transactions and also our payment signals, which are going to share those data payloads in real time with Visa, enabling us to help set transaction controls, manage disputes and chargebacks and those types of things. So I think that's a great example of the leadership role that we're taking in agentic commerce. And then just two weeks ago, we announced the Visa Trusted Agent Protocol. The Visa Trusted Agent Protocol is meant to really ensure that merchants know when an agent is coming to buy something on my behalf. It is actually a real agent that I have authorized to make purchases on my behalf. And I think what differentiates the Visa Trusted Agent Protocol is two things. One is it's open. It's an open set of standards, and we think that an open framework is critical to drive mass adoption in the way that's needed for agentic commerce. And the second is it's easy to integrate. We built it on existing web infrastructure so that it's going to be easy for merchants to integrate into existing messaging standards and get up and running quickly. So those would be two examples. We're very excited about it. We think it's a significant opportunity for Visa and for everyone involved in the ecosystem.

I actually wanted to ask a follow-up on agentic. Seems to be topic of the day. I'm just curious to get your perspective on when do you think we start seeing material volumes across the industry from agentic commerce. Obviously, there's still some important security considerations to be addressed. And would also love your perspective on to what extent you see agentic as more of a substitute for traditional e-commerce versus being additive to the TAM of the overall payments industry.

Jason, let me address the second part of your question first and then the first part. On the second part of your question, I think the base case is it continues to accelerate the adoption of e-commerce and mobile commerce as we all know it. I think there's an upside case on that where you could actually see users buying from a much larger and more diverse set of merchants than they do today in traditional e-commerce given the power of these agents and their ability to go out and search the world's inventory based on whatever it is that you prefer for your agent. That might be value. That might be price. That might be inventory. That might be speed of delivery and so on and so forth. I think that could ultimately result in consumers buying more things from more merchants, which ultimately means more transactions on Visa. I also think there's a significant upside in the delivery and the relevance of our portfolio of value-added services for the entire ecosystem, especially as you said, they have to work through a number of things that involve potential fraud and disputes and chargebacks and things like that. Right. Back to the first part of your question. Listen, it's still early days. And I think what you're likely to see in the evolution of agentic commerce is not different or dissimilar to what we saw in e-commerce. I think early on, you're seeing consumers use these agents and these platforms for discovery. They're shopping. They're looking for what might be available for any given gift I'm trying to buy or any clothing item that I might try to buy. But then I might jump to the actual merchant site to make the purchase. Then the next step of what you're starting to see is the integration of the buy capabilities into that shopping journey. We're just starting to see that in the marketplace today. We've been working on that for many, many months with the ecosystem. And then I think the ultimate kind of user experience and the promise of agentic commerce will be truly empowering agents to go out to search for things on our behalf and ultimately make purchases and buy things without human intervention. That, we haven't really seen in the marketplace today, but we're working very hard with the platform players to ensure that the capabilities are in place to enable that.

Great job. The data processing yield was up a lot, and I know that was explained somewhat. But I'm wondering, is some of that due to VAS, the biggest part of VAS outside of others probably in data processing? And I guess the question is, is there a sustainability to big yield growth in DP given VAS just keeps building? I guess that's the question.

Yes, as you mentioned, data processing revenue grew by 17% compared to the 10% growth in underlying transactions. The main factors I highlighted in my remarks were related to pricing and mix, which were the two largest influences. We introduced new pricing in the second half of FY '25, which is positively impacting our performance in Q3 and Q4, and will continue to do so into Q1 as well. When we talk about mix, we refer to how different products and services, as well as various clients in different regions, can yield different results. Over the course of any quarter, we observe varying growth performances across these elements, leading to different yield outcomes. In this quarter, for data processing, we experienced stronger growth in higher-yielding cross-border regions, which contributed to the increased disparity between transaction growth and revenue in data processing.

I want to follow up on AI and then ask a broader question about the new VisaNet rollout. To clarify on AI, do you view your suite of services as a significant component of what other payments ecosystem partners are offering? How do you plan to engage with various value-added services in terms of fraud management compared to others? Additionally, Ryan, you mentioned the VisaNet rollout; could you explain what this means for product development and the speed at which you can innovate, as well as how it positions the network for future developments like agentic commerce or stablecoins?

Darrin, short answer, long answer. Short answer is yes and yes, but let me dive into both of those. On kind of agentic commerce, I think you've seen from us, really over the course of the year is Visa doing what we do, which is when there's new technology, new platforms emerging, take a leadership role in establishing kind of the way that payments can work most efficiently and most effectively for buyers and sellers, and we're doing that in the agentic commerce space today. And I think to the first part of your first question, yes, you should assume that we're doing the work to build the infrastructure, the operating regulations and rules, and the processes to enable a lot of the things that you're seeing kind of in the marketplace today. As I said on the earlier question, I think it was Jason, it's still very early days. You're going to see a lot of announcements. You're going to see a lot of things coming out. What ultimately is going to help kind of agentic commerce achieve its promise is collaboration, collaboration among all of these various ecosystem partners that make e-commerce and mobile commerce and all of these things work today, and you should expect us to take a leadership role that we're taking. On the next generation of VisaNet, so this has been something we've been focused on as we continue to invest in our stack. We've deployed the next generation of VisaNet, which is our core processing platform at the base of our stack. And the answer to your second question is yes as well. It allows us to ship product more quickly. It allows us to adapt to ecosystem changes more quickly. It allows us to adapt to regional and country-specific requirements more quickly. Here, too, it's early days. We've just begun the deployment of it, but it's a very exciting milestone for us, and ultimately, we think it will be great for the ecosystem and our partners.

I noticed in Latin America, there was a slight deceleration in volume versus last quarter. Anything you can call out there?

Sure. Yes. In Latin America, we did see a bit of a slowdown. It still grew strong, but it was slower than we saw in Q3. And the biggest single contributor I would point to is the moderating inflation that we've seen in Argentina. But overall, across Latin America, it remains a high-growth region, and we're very pleased with the performance.

Maybe just one more on agentic commerce. I was wondering if you could talk about some of the differences and similarities between Visa's Trusted Agent Protocol and Stripe's Agentic Commerce Protocol. I mean, anything you could talk about in terms of what layer is the value chain you're tackling and how your offering is differentiated versus theirs? And then maybe just talk about the broader tokenization opportunity and your leadership there with over 16 billion tokens and just how the agentic commerce ecosystem will leverage that.

Thanks, Ken. Regarding the second part of your question about tokenization, I believe it is a crucial component that will help agentic commerce fulfill its potential. If you look back at the Visa Intelligent Commerce products and standards, tokenization as a platform is what drives most of that functionality and will enable secure, trusted transactions with agents acting on our behalf. Tokenization is essential for this. As you mentioned, with around 16 billion Visa tokens already in the ecosystem, the technology and standards are widely recognized and adopted globally, benefiting both sellers and issuers. This is why it will support the scaling of our standards. Concerning the Trusted Agent Protocol, collaboration is key to making this work. We are seeing various players in the ecosystem, including Visa, other networks, acquirers, payment service providers, and platforms, begin to introduce their capabilities and standards. The Visa Trusted Agent Protocol can serve as a foundational layer for everyone to build upon and utilize. We are excited about the scaling of the Trusted Agent Protocol for two main reasons: it is an open standard, and it is designed to be lightweight and easy for merchants to integrate.

Just kind of a two quick parter. Just thinking about holiday sales growth rate this year versus last, there's some expectation that maybe holiday sales will be a little bit weaker in terms of growth rate. Just how is Visa thinking about that? And then secondly, just cross-border growth versus e-comm versus travel, any differentiation kind of what we've seen on trend lines as we go through this fiscal year?

I'll address both of your questions. Regarding the upcoming holiday quarter, I have shared our guidance for Q1, which indicates a strong performance, building on the momentum from Q4, supported by solid underlying drivers and benefits from last year's pricing. Overall, this leads to a resilient consumer base, a stable macro environment, and consistent spending trends. We expect a robust quarter as we enter the holiday season, which corresponds with our fiscal Q1. For your second question about cross-border growth, we have shared our overall numbers, which have remained stable and strong, with 11% growth in both Q3 and Q4. When we break it down by category, e-commerce has consistently performed well with 13% growth in both quarters, while travel saw slight improvement from Q3 as previously mentioned. It's important to note that total cross-border growth is currently exceeding pre-COVID trends, largely due to an increase in the e-commerce share of overall volume. Previously, e-commerce accounted for about one-third of our business; it's now around 40% and is growing faster than travel. If this trend continues, we anticipate an increasing emphasis on the e-commerce segment. Overall, the cross-border trends remain strong and stable, and we will monitor their performance as we progress through the year.

I want to ask about stablecoins. As the dust is settling a bit with the passage of the GENIUS Act, it increasingly appears that what was initially thought of as a risk to Visa could, in fact, be an opportunity in cross-border money movement, merchant acceptance in certain markets and services. Ryan, you talked about the momentum in stablecoin-linked cards. This quarter, Visa Direct kind of announced a new stablecoin prefunding option, a number of things you're doing here. I guess my question is what are the most tangible areas of opportunities as it relates to stablecoins in the coming years, maybe in cards, VAS, etc?

Harshita, we've seen it as an opportunity for a while now. And the short answer to your question is we see opportunities in issuance, in modernizing our settlement network. I think I talked about some of the opportunities we've captured with our Pismo platform. As you said, we're leveraging stablecoins and cross-border money movement. We announced the Visa Direct prefunding work. We're minting and burning on behalf of our clients with the Visa Tokenized Asset Platform. We've been working with our clients in our consulting business with stablecoins. I mean the list goes on and on. But just stepping back, as I've said, the areas where there's product market fit for stablecoins in the world are the areas where there are significant TAMs and largely where we're underpenetrated. And that's emerging markets and that's cross-border money movement. And we have a deep product pipeline focused on putting products to market against both of those areas of opportunity and cross-border money movement broadly, whether that's remittances or B2B or gig economy payouts or the like. So we definitely see it as an opportunity. We have targeted a significant portion of our product roadmap to capture that opportunity and hope to talk to you more about some products that we're bringing to market in the future.

We're going to take a few more questions, so we are going to go a little over. Just want to try to get in a few more.

Appreciate the Visa stack discussion. That was a good one. Maybe I could ask about the Asia Pac improvement. Chris, I know you mentioned timing in China improvement, but if we could peel back the layers there and maybe talk a little bit more about what's going on and whether that improvement is sustainable, that would be great.

Yes, thanks, Andrew. As I mentioned in my prepared comments, we were pleased to see the improved results, which increased by 2.5 points. I noted improvements in Mainland China and some smaller, specific factors related to timing that will normalize over time. Overall, we're optimistic about the momentum in China and across the Asia Pacific region, and we believe this will continue to be a significant growth opportunity for us. So, when we take a broader view, I think Asia Pacific is heading in a positive direction.

Great. I want to talk a little bit about the evolution of the growth algorithm. Just looking at it numerically, it looks like the biggest change really is, a few years ago, not too long ago, value-added services was about 20% of revenue, growing in the high teens. And now it's approaching 30% of revenue and growing in the mid-20s, so the growth contribution has stepped up at least 200 basis points, if not, closer to 300 basis points. And part of that has been we've seen the RPO tick up over the years. And even this year, the RPO has been up roughly, give or take, 30%. And I was hoping you could talk a little bit about that RPO. What's been driving that roughly 30% growth? I appreciate part of that is valuing timed incentives, but maybe dig into that and other drivers of the RPO.

Yes. I'll address the first part of the question, and then Chris can handle the second part. Tim, you articulated the situation very well. If we refer back to Investor Day and examine the growth framework and strategies we presented, both for VAS and CMS, and then consider our current progress, we are successfully implementing those strategies in the market and achieving the results we expected from that framework. You provided a good summary regarding the VAS aspects. Would you like to discuss the...

Sure, Tim, I think you know this. The RPO includes various elements, one of which is value in kind, an important lever for us. It provides incentives for clients to create value for themselves, enhancing our client engagement and benefiting Visa, sometimes through value-added services but also in other areas of the business. While it doesn't account for the majority of value-added services, it remains a significant factor, and I anticipate clients will continue to leverage it effectively.

All right. Let's wrap things up. I would like to inquire about investments and operating expenses. Considering growth and operating expenses aligning with revenue, I'm interested in any insights you might have on that. Is Visa being strategic with its spending, or is there a fundamental issue as you expand various aspects of your service offerings, some of which may be newer? I'm trying to get a clearer picture of incremental margins and how they may be evolving.

Sure. As mentioned before, we don't aim for a specific margin target in a traditional sense, but we prioritize several aspects of our business. We concentrate on increasing volumes with our clients, boosting revenue in consumer payments, value-added services, and commercial payment solutions, while also ensuring our operations are as efficient as possible. Balancing our investments for short, medium, and long-term returns is part of this approach. When executed correctly, as we have done, it results in strong financial performance with industry-leading margins. Regarding our investments for 2026, I refer back to our Investor Day presentation in February, where we outlined the significant opportunities we are pursuing and the strategies we will implement to capitalize on them. In our fast-evolving industry, it's crucial for us to invest in emerging opportunities like agentic and stablecoins. By doing so, we are committed to achieving the growth framework presented at Investor Day, which will enable us to generate substantial profit growth and deliver strong returns to our shareholders.

And Tien-Tsin, the only thing I would add on what Chris said is I don't ever recall being so excited about the opportunities ahead of this company. And I don't ever recall being so pleased with how well our teams have lined up our product pipeline, our go-to-market sales motions, our client teams, the things that we talked about today, whether it's agentic, stablecoins, Visa Pay, Visa Accept, tap to everything, the great momentum in the VAS business, the great momentum in Visa Direct, the great momentum and results we're seeing in Visa Commercial. It's just an extraordinarily exciting time for the company, and I'm just super proud of the investments that everybody is making across the place. So appreciate that question. I appreciate everybody's questions. Jennifer, back to you to close.

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