Visa : Transcript ( PDF 275 KB )

Corrected Transcript

Total Pages: 14

CORPORATE PARTICIPANTS

Vasant M. Prabhu

Vice Chairman & Chief Financial Officer, Visa, Inc.

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OTHER PARTICIPANTS

Darrin Peller

Analyst, Wolfe Research LLC

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MANAGEMENT DISCUSSION SECTION

Darrin Peller

Analyst, Wolfe Research LLC

All right. Good afternoon, everybody, and good morning on the West Coast. But thanks again for joining. Again I'm Darrin Peller, Payments Analyst at Wolfe Research. Second day of the Wolfe FinTech Forum out of the three day conference and one of our keynotes, we're happy to have Vasant, CFO of Visa on with us to really share on some of the latest developments on the company on story we've obviously been following since the IPO many years ago. So, it's amazing to see the transformation. But Vasant, thanks again for joining us.

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Vasant M. Prabhu

Vice Chairman & Chief Financial Officer, Visa, Inc.

Thanks for having me, Darrin. Good to be here.

QUESTION AND ANSWER SECTION

Darrin Peller

Analyst, Wolfe Research LLC

Q

Look, just if we could just start off with, I think, given all that's going on in the world, just where are you spending your time? I mean the latest developments in the world have caused a lot of prioritization. So, can you give us a sense of what you see as the greatest opportunities to focus your attention towards?

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Vasant M. Prabhu

Vice Chairman & Chief Financial Officer, Visa, Inc.

A

Sure. Well, obviously, it's been an unusual year to say the least. And I'd like to say that, as the saying goes, never let a crisis go to waste. We certainly haven't wasted this crisis. We've been busy on a lot of fronts. Obviously, ensuring that the business operates flawlessly, that's priority one. And that has happened, and touch wood it continues, we've had no issues all the way through. A big focus on ensuring that everybody at the company is safe and healthy and all that.

Obviously next in line, clients, huge focus on clients through the entire timeframe here, there's been a great outreach, a lot of back and forth, working with governments and regulators around the world early in the crisis. And then we come down to sort of the aspects of our business and the things that have changed, the challenges and the opportunities and so on.

And as you know, there's been an extraordinary set of changes in our business, a massive move to e-commerce, a significant growth in our debit business, making it easy for consumers to pay and be paid, tap to pay has become so important even in a face to face environment, helping merchants get much better at e-commerce. Click to Pay and all the other things we do, tap to accept and so on.

And of course the biggest challenge is how do you allocate resources in times like these. And we've seen an extraordinary amount of growth in our new flows business. P2P, variety of earned wage access, use cases, a lot of new cases really taking off, massive growth with wallets, massive growth with a whole range of fintechs. So, there's been a big focus on resource reallocation, how do we fund all the things that will drive future growth while holding our costs in line.

Now, as we look ahead and we see the recovery coming, we're stepping up our investment, we've told you that our spend levels will now go up. So, I think the company has progressed significantly in terms of - the value-added services business has grown at a very healthy clip all the way through the pandemic. The new flows business has grown at extraordinary levels with the pandemic. And we've seen some real effort on our part to help the e-commerce business grow both domestically and cross-border. So, we think we've laid the groundwork for a fast recovery and hopefully that's coming soon.

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Darrin Peller

Analyst, Wolfe Research LLC

Q

That's helpful. Let's just jump into some of the trends. I mean if you go back first [indiscernible] (00:03:37) let's call it the second half of 2020 at this point, you set the stage on what you were seeing. And now, you - last night, you guys released your updates through the month of February. It was actually really helpful to see the four weeks, exleap year numbers, [ph] now they (00:03:52) confuse us. But if you want to - if you can give us a sense on some of the trends you're seeing right now just given what you just released that'd be helpful.

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Vasant M. Prabhu

Vice Chairman & Chief Financial Officer, Visa, Inc.

A

Sure. I mean if you cut through the numbers, you'll find that the trends have largely stayed intact in the US domestic business. January, if you go week-by-week one of the things you see is when stimulus checks hit, you immediately get the impact. So, we saw the fairly immediate impact of stimulus checks going out in early January. You saw that big spike in our debit business in the first couple of weeks. And then it gets back to a normal run rate. So, February was a little lower in the debit business. It was down from January. But that is strictly because of the first couple of weeks of January, where we saw the stimulus checks have a big impact.

The credit business has continued to improve. It was down 4%, but up 2 points from January. So, if you look at it all the way through the first week of March, our business is growing equal to or slightly better than it was in the fourth quarter in the US. So, fundamentally, the trends have stayed intact. If you look below the trends in the US at across various categories, it's not that different. We did see a big improvement in restaurant and travel. We said that they were both up almost 5 points or more than 5 points versus the prior quarter.

As always debit has continued to grow at a very healthy clip. It was up 22%. So, debit remains sort of the way in which people are adopting more digital payments. There's a whole range of reasons why debit is doing better. But credit is recovering nicely. And in fact, as you saw in early March, we're starting to see credit hit positive territory for the first time since the pandemic hit.

Internationally, it's generally strong across the board. As restrictions have been lifted, we've seen that February has been better than January in most parts of the world. There are some parts of the world that went into lockdown earlier than others like Hong Kong and Singapore and so on that are actually seeing some big year-over-year improvements. And clearly the area of our business that everybody's watching the most is the cross-border business.

We are now entering the timeframe last year when the cross-border business was very hard hit. As you know, first half of March was when it really started impacting the cross-border business. And by the second half, the impact was quite substantial. And we're beginning to see that impact. So, we're sort of looking at it more in absolute terms, how is this comparing to a baseline year like 2019. March is when we start to see the first part of the sort of the seasonal uptick in cross-border, especially on the travel side. So, we're monitoring it closely to see are we getting the normal seasonal uptick? How is this indexing to 2019? Are the absolute levels of spend starting to climb? Because the comparisons to last year now don't become that useful...

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Darrin Peller

Analyst, Wolfe Research LLC

Q

Right.

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Vasant M. Prabhu

Vice Chairman & Chief Financial Officer, Visa, Inc.

A

...because we are now seeing some extraordinary noise when you compare to last year. And so far, the trends are very promising. One of the things we've seen is that consumers react very quickly to changes, so stimulus payments hit, we see the payment impact right away. Governments lift restrictions and there's more mobility, we see the impact right away. Governments publish these roadmaps for how the future is going to be in terms of