Visa Inc. (NYSE: V) reported financial results for its fiscal first quarter of 2026 on Thursday, characterized by double-digit growth in net revenue and earnings. The world’s largest payment processor benefited from sustained consumer spending during the year-end holiday period and a continued acceleration in international transaction activity. While the company exceeded analyst projections for top-line performance, a significant litigation provision and rising operational costs influenced the broader financial picture.
Financial Overview and Earnings Performance
For the quarter ended December 31, 2025, Visa recorded net revenue of $10.90 billion, a 15% increase from the $9.51 billion reported in the prior-year period. On a constant-dollar basis, net revenue growth was 13%. The result surpassed the consensus estimate of $10.68 billion by approximately 2%.
Non-GAAP net income for the quarter reached $6.12 billion, or $3.17 per share, representing a 15% increase year-over-year. This outperformed the average analyst estimate of $3.14 per share. On a GAAP basis, net income was $5.85 billion, or $3.03 per share, reflecting the impact of a $707 million litigation provision related to ongoing interchange fee disputes in the United States. Following the announcement, Visa’s stock rose 1.47% in aftermarket trading, reaching $331.49.
Core Volume and Transaction Metrics
Visa’s operational strength was underpinned by a 12% increase in total cross-border volume. When excluding intra-Europe transactions—which are typically lower-margin—cross-border volume rose 11% on a constant-dollar basis. Total payments volume increased 8% year-over-year to nearly $4 trillion, supported by a resilient 7% growth in U.S. payments volume.
Processed transactions reached 69.4 billion for the quarter, representing a 9% year-over-year increase. The company’s revenue streams showed broad-based gains across primary segments:
Data Processing Revenue: Increased 17% to $5.54 billion, the highest growth among primary segments, driven by pricing actions and a favorable mix of cross-border transactions.
Service Revenue: Rose 13% to $4.76 billion, recognized based on the prior quarter’s payments volume.
International Transaction Revenue: Grew 6% to $3.65 billion, primarily benefiting from the sustained momentum in cross-border commerce.
Other Revenue: Surged 33% to $1.21 billion, reflecting high demand for value-added services, including consultancy and security products.
Client incentives, which Visa pays to financial institutions and merchant partners to drive volume, rose 12% to $4.27 billion. While these incentives grew in absolute terms, they remained relatively stable as a percentage of gross revenue.
Operating Expenses and Capital Allocation
Total GAAP operating expenses for the quarter reached $4.16 billion, a 27% increase over the previous year. This spike was primarily attributed to the $707 million litigation charge and a 16% increase in non-GAAP operating expenses. Personnel costs rose due to expanded headcount, and marketing expenses jumped 34% as the company prepared for major 2026 global branding initiatives.
Visa maintained its aggressive capital return strategy, distributing $5.10 billion to shareholders during the quarter. This included $3.80 billion in share repurchases, totaling 11 million shares of Class A common stock, and $1.30 billion in dividends. As of December 31, the company had approximately $21.10 billion remaining in its share repurchase authorization.
Strategic Outlook and Macroeconomic Context
Management reiterated its fiscal full-year 2026 guidance, projecting net revenue and adjusted EPS growth in the “low double digits.” For the upcoming second fiscal quarter, Visa expects net revenue growth to persist in the low double-digit range. However, operating expenses are projected to rise at a “mid-teens” rate due to the timing of marketing cycles and technological infrastructure investments.
The company’s performance is set against a backdrop of stabilizing global inflation and a steady 2.7% projected global GDP growth rate. Visa’s leadership highlighted the “New Flows” initiative—including Visa Direct—as a critical pillar for future diversification. Visa Direct transactions grew 28% in the quarter, reaching 3 billion transactions.
Industry and Regulatory Landscape
The results come at a time of structural transition for the global payments industry. While consumer spending remains healthy, the industry faces evolving regulatory scrutiny, including proposed caps on credit card interest rates. Despite these headwinds, the transition from cash to digital payments remains a long-term tailwind.
Reasons to Pass on V
- Litigation overhang: A $707 million legal provision related to interchange fee disputes weighed on GAAP earnings and highlights ongoing regulatory risk.
- Rising cost structure: GAAP operating expenses rose 27% year-over-year, with non-GAAP expenses also up 16%.
- Expense growth outpacing revenue: Management expects operating expenses to grow at a mid-teens rate in FY2026, faster than projected low double-digit revenue growth.
- Increasing client incentives: Incentive payments rose 12% year-over-year, limiting operating leverage despite strong volume growth.
- Margin pressure risk: Higher marketing spend and continued investment in technology infrastructure may constrain margin expansion.
- Regulatory uncertainty: Continued scrutiny of interchange fees and potential caps on credit card interest rates pose structural risks.
- Valuation sensitivity after rally: Shares moved higher following earnings, potentially limiting near-term upside given already strong expectations.
- Macro dependence: Results remain tied to consumer spending and cross-border travel trends, which could moderate in a softer global growth environment.