Earnings

Visa Says A Quarter Of Payments Volume Renews In Fiscal 2027, Capping EPS Growth At Low Teens

The CFO defended a guide where heavier client renewals and reinvestment hold earnings growth to the low double digits to low teens.

Visa CFO Chris Suh said on the company's fiscal fourth-quarter earnings call Tuesday that about 25% of payments volume comes up for renewal in fiscal 2027, versus about 20% in fiscal 2026. He was defending a guide for adjusted earnings-per-share growth in the low double digits to low teens.

Renewals push incentives higher

Visa, which runs the VisaNet payments network that processes card transactions among consumers, sellers and banks, expects the renewals to include several large clients. Suh said that implies a step up in the year-over-year growth of client incentives, the payments Visa makes to partners.

Incentives grew 21% in the fourth quarter, a step up of nearly three points from the third quarter, which Suh tied to new deals signed in the third quarter and early in the fourth.

The fiscal 2027 plan assumes adjusted net revenue growth in the low double digits, with the second quarter the low point as Visa laps strong results from a year earlier. Adjusted operating expense is guided to grow in the low double digits, modestly below revenue growth. Suh also guided first-quarter EPS growth to the low end of the mid-teens.

Defending the earnings gap

An analyst from Autonomous Research asked why low-double-digit revenue and expense growth yields only low-double-digit to low-teens EPS growth, and whether pricing was being reinvested or offset by incentives. Suh said pricing's contribution to growth matches fiscal 2026, weighted slightly more to the back half. He called incentives "a tool" for aligning goals with partners, and said Visa keeps investing in growth while becoming more efficient.

A Wolfe Research analyst asked whether two heavy renewal years would pressure pricing. Suh replied that Visa manages "to net revenue growth" and has a strong plan that includes all expected renewals.

The year just ended

CEO Ryan McInerney said fourth-quarter net revenue was $12.1 billion, up 13%, and full-year net revenue a record $46 billion, up 15%. Suh said fourth-quarter EPS was $3.48, up 17%, helped by a lower-than-expected tax rate. Full-year EPS grew 16% to $13.27.

In the fourth quarter Visa bought back $4 billion of stock, paid $1.3 billion in dividends and put $405 million into its litigation escrow account. At the end of September, $24.4 billion remained in its buyback authorization. The board raised the quarterly dividend 16%, and Suh said Visa intends to return excess free cash flow through buybacks.

Suh said Visa is still working through regulatory approvals on BioCatch, expects to close no later than the end of the fiscal second quarter, and will give its financial impact then.