Visa Inc. (NYSE:V) Q4 2023 Earnings Call Transcript

Visa Inc. (NYSE:V) Q4 2023 Earnings Call Transcript October 24, 2023

Visa Inc. beats earnings expectations. Reported EPS is $2.33, expectations were $2.23.

Operator: Welcome to Visa’s Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Ms. Jennifer Como, Senior Vice President and Global Head of Investor Relations. Ms. Como, you may begin.

Jennifer Como: Thanks, Jordan. Good afternoon, everyone and welcome to Visa’s fiscal fourth quarter and full year 2023 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.

For non-GAAP financial information disclosed in this call, the related GAAP measures and reconciliation are available in today’s earnings release. And with that, let me turn the call over to Ryan.

Ryan McInerney: Good afternoon and thank you for joining us. Before we begin, I wanted to take a moment to acknowledge the tragic loss of life and suffering in Israel and Gaza. We are in constant contact with our teams in Israel and throughout the region, and I have the deepest admiration for their commitment to each other and their clients during this exceptionally challenging time. We continue to monitor the situation, prioritize the safety of our people and stay close to our clients to ensure the continuity of business operations. Turning now to our results. At the beginning of 2023, there was a lot of uncertainty around the macroeconomic environment with fears of a recession. There were many unknowns around FX, volatility, interest rates and inflation.

There was also some noise in our growth rates in early 2023 due to the effects of Omicron and the suspension of operations in Russia. Against that backdrop, Visa delivered. Total full fiscal year net revenues grew 11% with GAAP EPS up 18% and non-GAAP EPS up 17%. Credentials grew 7%. We also surpassed 7.5 billion tokens. Total transactions, including cash and payment transactions, were 276 billion, which means that Visa credentials were used, on average, 757 million times a day during the fiscal year. We signed over 500 commercial partnerships with fintechs globally from early-stage companies to growing and mature players, up 25% versus last year. Merchant locations were up 17%, helped by strong growth in Latin America and CEMEA. Global Tap to Pay penetration, excluding the US, grew 5 points from last year to 76% of total face-to-face transactions.

And in the US, penetration expanded 13 points to surpass 40%. Global tap to ride transactions were 1.6 billion for the full year 2023, up over 30%, and we added nearly 150 new transit systems throughout the year, such as in Philadelphia and Bangkok, bringing the footprint to more than 750 systems. More than 40% of our transit system launches this year also included our value-added services, Acceptance Solutions. On the new flows side, total revenue grew 17% in constant dollars for the full year. I’ll note a few highlights. Total commercial volume was $1.57 trillion, up 12% in constant dollars. We have increased the number of banks that have signed on to Visa B2B Connect by more than 70% this year, and activation continues to happen with the number of transacting banks more than doubling.

Visa Direct had 7.5 billion transactions, up 19% year-over-year and nearly 30%, excluding Russia, across 65-plus use cases and over 2,800 programs helped by more than 500 enablers. Cross-border P2P transactions grew 65% year-over-year and reached a new record for payments volume in the fourth quarter. Value-added services revenue grew 18% for the full year in constant dollars. Across our hundreds of products, our top 265 largest clients used 22 products on average, up 8% from last year versus our overall clients who used 11 products on average. With all of this strong momentum and performance, we finished the fourth quarter with net revenue growth of 11% and GAAP EPS growth of 22%. Other highlights from the fourth quarter include the following in constant dollars: global payments volume grew 9%; US payments volume grew 6%; international payments volume grew 11%; cross-border volume excluding intra-Europe grew 18% with cross-border travel up 26% year-over-year; and process transactions were up 10%.

Across all our growth levers, we continued to drive progress in innovation and money movement. As I mentioned last quarter, when asked why Visa, our clients tell us they are choosing to deepen and expand their partnerships with us for a number of reasons, including our people, our products, our value-added services, our new flows capabilities and our brand. We continued to see that play out in our fourth quarter. I’ll walk through each one and highlight some examples. First, our people. We have the best team in the business, and our clients tell us that they deeply value the advice, local support and partnership from our outstanding teams who are laser-focused on helping our clients grow their businesses. Our clients also appreciate our thoughtful leadership on important and complex industry issues across the ecosystem.

An example this quarter was with US Bank, one of the largest issuers in the United States. They have renewed our long-term agreement for their consumer and commercial portfolios. In addition, we are engaging on consulting services and co-marketing projects that include leveraging our NFL sponsorship. Also in the US, we are very pleased to have renewed our long-standing relationship with top 20 US issuer FNBO across consumer, commercial and value-added services. In Brazil, credit unions or cooperatives are fast growing, and we recently reached an expanded relationship with Secovi, whose system spans nearly 340 cooperatives and 7.5 million members. In addition to our people, our payment products and innovations consistently help us win. We are constantly driving innovation and delivering next-generation payment solutions and experiences that enable our clients to better serve their customers and grow their businesses.

In terms of our capabilities to serve fintechs, in Colombia, we expanded our partnership with Nequi, the first digital wallet in the country to enable their 17 million-plus account holders for tap to pay with digital credentials. We also provide targeted offerings for certain customers. In India, we are focused on delivering market-leading offerings for affluent customers. With that in mind, we have signed with fintech Appify for a consumer credit offering for high net worth and mass affluent customers. We also recently expanded our acceptance with fintech Razorpay to enable Visa debit cards to purchase mutual funds and securities, offering greater convenience to customers with higher payment success rates versus traditional methods. And in the e-commerce seller space, we renewed our agreement with Shopify for the Balance Card, allowing Shopify’s US sellers to access funds from sales by the next business day and receive cashback on everyday business expenses like shipping and marketing.

We also signed a new issuing agreement for small business credit. Next, our value-added services are helping us win. They help our clients innovate and grow, provide risk management solutions and drive better outcomes for them and, in turn, for Visa. Our acceptance solutions, including CyberSource, have really resonated with clients this year. We sold more than 2,600 new acceptance services in over 100 countries. In North America, Costco has chosen Visa Acceptance Solutions, including CyberSource, for all of their US and Canadian e-commerce transactions. Alaska Airlines has selected CyberSource to process their kiosk payments in support of their initiative to transform the airport lobby experience. In Asia Pacific, China Merchants Bank, the largest issuer in Mainland China has renewed its consumer and small business portfolios.

In addition to our flagship risk management services, Visa Advanced Authorization and Visa Risk Manager, they will also expand their use of consulting services. Bank of China and Aon Financial Service in Japan have also signed on to use VAA and VRM. In Latin America, we have been focused on expanding our processing penetration as it allows us to offer more value-added services to our customers. In Colombia, we have recently expanded our processing penetration through the addition of four more banks under our strategic agreement with CredibanCo, the market’s largest acquirer and issuer processor. This positions us to reach nearly 80% of domestic transactions by the end of FY 2024 from essentially zero in 2019. As part of these agreements, banks have added anywhere from four to 11 value-added services, including risk and acceptance services.

As part of our network of networks strategy, we continue to both collaborate with and offer our solutions in the real-time payment space, most recently with FedNow. In Q4, Visa became a certified service provider for FedNow. Using our service, Visa financial institution clients can receive funds in real-time through the FedNow service with origination capabilities to follow. This means that Visa is now processing FedNow payments with the clearinghouse RTP to follow in the next few months. Now on to our new flows capabilities, which are increasingly an important differentiator to our clients. On the B2B side, we are pleased to have reached an expanded long-term global agreement across more than 60 countries with Citibank for their commercial card business, which also encompasses over 20 value-added services.

We also recently won the IBM commercial card business spanning T&E, meeting and purchasing card programs in over 60 countries, also with Citibank as the issuer. In Singapore, we renewed our long-standing partnership with DBS, the largest bank in Southeast Asia, to continue offering commercial debit and credit services for consumers and expanded into new commercial products for small businesses. On the Visa Direct side, we continue to expand Visa Direct’s reach, especially to wallet endpoints. Most recently, we signed an agreement with Tencent for the Visa Direct cross-border remittance business. This will bring the total wallet reach for Visa Direct to over 2.5 billion. We have expanded our partnership with Paysend from US and UK payments to enable all of Paysend’s customers across the globe to send money in real-time to eligible Visa cards across 170 countries and territories.

Paysend is also a Currencycloud customer offering compelling cross-border solutions. We also recently renewed with the largest issuer in Korea, Shinhan Card, for consumer and business credit, which also incorporates the provision of our data capabilities in value-added services and the enablement of Visa Direct for cross-border remittances. We have also continued to add new Visa Direct use cases with our partners, such as with small ticket B2B payments and bill pay. In Brazil, Banco RB will enable Visa Direct for low-value, high-velocity cross-border payments as part of their corporate banking business. In the US, payment platform everywhere will be enabling bill payments with Visa Direct. And last but certainly not least, our brand. Visa’s brand strength helps deliver added value to our clients and their customers, financial institutions, merchants and partners through a wide range of products and services as well as innovative brand and marketing efforts.

We are pleased to have signed an agreement with Universal Destinations and Experiences to be the exclusive payment network for their new co-branded credit card that will be issued by FNBO. In addition, Visa is now the official way to pay at Universal Destinations and Experiences. And together, we will provide compelling benefits to Visa cardholders across their Orlando and Hollywood properties. Also in the US, we have recently renewed the Fidelity Investments co-brand credit portfolio issued by US Bank. And we signed with Coupang, a large retailer with 20 million customers in Korea for their inaugural co-brand card. And in CEMEA, we have signed a Saudi Airlines co-brand with Riyadh Bank, and we renewed our co-brand partnership with Etihad Guest, the loyalty program of Etihad Airways.

As we look ahead, we’re excited to be activating our brand with clients and partners at the Paris 2024 and Milano-Cortina 2026, Olympic and Paralympic Summer and Winter Games. Since 1986, Visa has been a proud sponsor of the Olympic Movement, which provides an unparalleled opportunity to promote the Visa brand at a regional and global level while also facilitating partnerships and joint business initiatives with clients. The games provide a unique platform for showcasing product innovation and engaging consumers and clients with exclusive experiences. We are looking forward to the upcoming games, and we have been building momentum in the business across Europe with a particular focus on the continent. I’ll share a few recent highlights for our European business.

On the people front, payments is a local business, and we have expanded into seven new locations over the past five years and have more than doubled our workforce in the market. On innovative products, we have well over 100 fintech relationships and have expanded our capabilities through the acquisitions of Tink and CurrencyCloud. In new flows, Visa Direct has more than 100 enablers and over 1,000 programs with transactions more than doubling over the past two years. And in value-added services, we have increased our client penetration. In VAA alone, the number of clients enrolled in the service has more than doubled since three years ago, and we will be introducing nearly 20 additional products in 2024. We have been steadily building an attractive position on the continent and have built a strong pipeline of signed deals for the future by competing uniquely in each market.

Active cards across Continental Europe have grown nearly 50% since 2019. Over the next few years, we expect to migrate more than 40 million cards across nearly 40 clients. And the nature of the portfolios we are winning in Continental Europe tend to include more cross-border volume, resulting in higher yields. So our brand, our capabilities, our people, all of these make a difference for Visa’s clients. 2023 had many milestones and solid financial performance. As we are now three weeks into our new fiscal year, I would like to make a few general points, and then Chris will go into more detail. One, there is still macro uncertainty, but just like in fiscal year 2023, I am confident that we can manage through it. Our strategy and focus remain the same: propelling growth across consumer payments, new flows and value-added services.

Two, we are focused on delivering for our stockholders. In that light, I’m sure that you saw that we released an 8-K back in September regarding our potential exchange offer program. We appreciate the dialogue we’ve had with Class A, B and C stockholders and the board is evaluating next steps as we continue to engage with investors. Finally, you may have seen today that we announced a $25 billion multiyear share repurchase program, which reflects our Board’s confidence in our strategy and future potential. I continue to see tremendous opportunity ahead. Visa has the brand, the capabilities, the strategy and, most importantly, the people to propel our growth for years to come. And with that, let me hand it over to Chris.

Chris Suh: Thanks, Ryan. Good afternoon, everyone. As Ryan said, Q4 was another good quarter, closing out a strong fiscal 2023 driven by healthy growth in payments volume, cross-border volume and process transactions and continued solid execution of our strategy, with new flows and value-added services revenue growing faster than consumer payments. I’ll first start with a high-level summary of our Q4 performance and then click into more details. Looking at our drivers. In constant dollars, global payments volume was up 9% year-over-year and process transactions grew 10% year-over-year, both stable to Q3. Cross-border volume excluding intra-Europe growth was strong, up 18% year-over-year in constant dollars. Fiscal fourth quarter net revenues were up 11% and 10% in constant dollars, with minimal impact from FX, in line with our expectations.

GAAP EPS was up 22% and non-GAAP EPS was up 21% in both nominal and constant dollars. Now, on to the details, starting with the US. Payments volume was up 6% year-over-year, stable to Q3. Credit volume grew 6% year-over-year and debit volume grew 7%. Card-present spend grew 3% and US card-not-present volume, excluding travel, grew 9%. US process transactions growth was stable at 8%. Over the course of the quarter, we saw payments volume growth tick up from July to September, primarily driven by sequential improvement in ticket size growth that was mostly led by fuel with higher gas prices and easier year-over-year comparisons as well as a positive days mix impact. Consumer spend across all segments from high to low spend has remained stable since March.

Our data did not indicate any behavior change across consumer segments. In international markets, total payments volume growth was up 11% in constant dollars. Payments volume growth rates were strong through the quarter in most major regions with Latin America, CEMEA and Europe ex-UK growing about 20% or more in constant dollars. Now, to cross-border, which I’ll speak to in constant dollars, excluding intra-Europe transactions. Total cross-border volume was up 18% and up 152% versus 2019. Cross-border card-not-present volume growth, excluding travel, grew 9% year-over-year and 173% versus 2019. Adjusted for cryptocurrency purchases, cross-border e-commerce spending grew year-over-year in the low double-digits, in line with pre-COVID growth rates and consistent with the trends we have seen for most of the fiscal year.

Cross-border travel-related spend grew 26% year-over-year. The cross-border travel volume index to 2019 increased from 139% in June to 143% in September, totaling 141% for the quarter, a 5-point improvement from Q3. We continued to see healthy travel volume levels in and out of LAC, Europe and CEMEA, ranging from 145% to 165% of 2019 levels. Travel volume into Asia continued to improve, indexing at 128% to 2019 levels for the quarter, up 10 points from Q3, while travel volume out of Asia was up 7 points to 114%. Looking at Mainland China specifically, cross-border travel volume continued to improve but remain below 2019 levels. Travel volume outbound from the US to all geographies continued to be strong in the mid-150s indexed to 2019. US inbound travel recovery accelerated this quarter, pushing the index above 2019 levels for the first time even as the dollar continued to remain strong relative to pre-COVID levels.

Now, let’s review our fourth quarter financial results. Service revenues grew 12% year-over-year versus the 9% growth in Q3 constant dollar payments volume, primarily due to business mix, pricing and card benefits. Data processing revenues grew 13% versus 10% process transaction growth led by value-added services and pricing. International transaction revenues were up 10% versus the 18% increase in constant dollar cross-border volumes, excluding intra-Europe. Revenue growth lagged volume growth primarily due to declining currency volatility. Other revenues grew 35%, led by pricing, consulting and marketing services, and client incentives grew 20%. Now, let me dive into revenues growth across our three growth engines. Consumer payments growth was driven by stability in domestic volume growth and process transactions as well as strong growth in cross-border volumes.

New flows revenue grew 14% in constant dollars. Commercial volumes were up 9% in constant dollars and up 156% versus 2019. Remember that revenue is recorded based on last quarter’s payment volumes growth, which was 9% in constant dollars in Q3. Visa Direct transactions grew 19% and as we mentioned last quarter, were impacted by a client that transitioned its domestic P2P transactions to an internal ledger system and that was not meaningful to revenue. Value-added services grew 19% in constant dollars, driven primarily by strong advisory services, select pricing actions and higher volume. GAAP operating expenses increased 13%. Non-GAAP operating expenses grew 9%, primarily due to personnel expenses from growth in headcount, and FX had a nearly 2-point drag.

Excluding net gains from our equity investments of $7 million, non-GAAP non-operating income was $79 million, benefiting from higher interest income due to rising rates. Our GAAP tax rate was 16.9% and non-GAAP was 17% due to a tax benefit related to the extension of the US foreign tax credit regulations, which resulted in an indirect tax expense in the operating expense line and a much larger tax benefit in the income tax provision. GAAP EPS was $2.27. Non-GAAP EPS was $2.33, up 21% over last year, inclusive of a little more than 0.5 point of drag from exchange rates. In Q4, we bought back approximately $4.1 billion in stock and distributed $928 million in dividends to our stockholders. We also added $150 million to the litigation escrow account, which has the same effect as a stock buyback.

At the end of September, we had $4.7 billion remaining in our buyback authorization. For the full fiscal year 2023, net revenues increased 11%. GAAP EPS of $8.28 was up 18% and non-GAAP EPS of $8.77 was up 17%, inclusive of an over 2-point drag from exchange rates. Now let’s move to fiscal year 2024. Before we share our perspectives on the year, I want to make a few brief comments. In many ways, FY 2024 will be as close to a normal year as we’ve had in a while. We have fully lapped the Russia and Omicron impacts and overall inflation continues to moderate in many of our markets. As such, we’re pleased to resume our pre-COVID guidance practices and will provide our outlook for FY 2024, which we will update each quarter. At the same time, we will no longer be providing the intra-quarter 8-Ks associated with interim driver updates.

Now let’s look at what we’ve seen through the first three weeks of October. US payment volume was up 5% with debit and credit both up 5%. The sequential step down from September was primarily driven by the days mix impact in September and declining fuel prices in October. Excluding those two items, payments volume growth was relatively stable from September to October. Reg II has not meaningfully impacted volumes so far. Process transactions grew 10% year-over-year. Constant dollar cross-border volume, excluding transactions within Europe, grew 19%, and travel-related cross-border volumes were 144% indexed to 2019. Turning now to our key assumptions. As we said consistently, we’re not economic forecasters, and so at a macro level, we are assuming no recession in our outlook.

We’re also not factoring in any impact from Reg II and student loan repayments because as I mentioned before, we’ve yet to see any meaningful impact. As the year progresses and we gather more information with regard to these assumptions, we will continue to provide updates. For key drivers, we are assuming that the trends we saw in Q4 generally continue throughout the year. Overall payments volume growth and process transaction growth are expected to be in the low double-digits on a year-over-year basis. Cross-border, card-not-present ex travel and ex crypto volume growth will continue to be in the low double-digits year-over-year on a constant dollar basis. Cross-border travel volume, excluding intra-Europe, year-over-year growth will moderate to the low 20s in constant dollars and when compared to 2019 would equate to a 4- to 5-point improvement each quarter.

This assumption is driven primarily by improving AP cross-border travel volume mostly from China and, to a lesser extent, improving US inbound travel volume. In terms of what this means for the financials, I’ll speak to the numbers on an adjusted basis, which we define as non-GAAP results presented in constant dollars and excluding acquisition impacts, which you can review in the footnotes in our earnings release and earnings presentation for more detail. Okay. First, let’s discuss net revenues. For the full year, we expect low double-digit adjusted net revenue growth. Based on current currency forward curves, FX will be approximately a 1-point drag for the year. We are assuming that currency volatility moderates slightly from Q4 levels but remains relatively stable throughout the year.

On a year-over-year basis, incentives are expected to grow slightly less than what we saw in FY 2023. For new flows and value-added services, we continue to expect those to grow faster than consumer payments in FY 2024. Now moving to expenses. Our current plans are to grow adjusted operating expense in the high single-digit to low double-digits with approximately 1.5 points of FX benefit to nominal non-GAAP growth. Non-operating income is expected to be between $250 million and $300 million. The tax rate is expected to be slightly favorable to our typical rate of 19% to 19.5% due to some offsetting factors. On the one hand, we have the impact of tax rate increases in certain countries, which puts our new run rate closer to 19.5% to 20%. However, we also anticipate some onetime tax benefits in the second half related to the resolution of certain tax matters.

In total, this will put us between 18.5% and 19% for the full fiscal year. Putting all this together, we expect full year adjusted EPS growth in the low teens with about 0.5 point of FX drag to nominal non-GAAP growth. Also FY 2024 will likely be a tale of two halves with variability in our growth rate from the first half to the second half. A few aspects to keep in mind. First, cross-border volume ex intra-Europe grew 31% year-over-year in the first half of FY 2023 and 20% in the second half. Second, recall that we had relatively high currency volatility in the first half of FY 2023, and it moderated considerably in the second half. Third, incentives were 16% higher in the second half of FY 2023 versus the first half due primarily to deal timing and client performance.

As a result, we expect overall adjusted net revenue growth to be lower in the first half than in the second half of FY 2024. This will also be the case on a nominal basis, even with a slightly larger FX headwind in the second half of FY 2024 than the first half. On the expense side, as Ryan mentioned, this is an Olympics year, and we expect Q2 and Q3 expense to have the largest percentage increases as we ramp. But adjusted operating expense growth and the FX impact will roughly be the same in both half. The tax rate is expected to be lower in the second half than the first due to the anticipated onetime tax benefits I mentioned. So for the first quarter specifically, given the variables I just described, Q1 is expected to have the lowest adjusted year-over-year net revenues growth rate with an improving trend throughout the year, and Q4 is expected to be at the highest adjusted growth rate.

We expect first quarter net revenues growth in the upper mid to high single digits on an adjusted basis. A few factors to keep in mind. Again, one, currency volatility was the highest in Q1 of 2023; two, cross-border volume grew 31% in Q1 of 2023; and three, Q1 2023 other revenue was strong due to FIFA World Cup related value-added services revenue, and incentives were lower than expected due to client performance and other items. Adjusted operating expense growth is expected to be in the high single digits, driven by headcount growth and salary increases. We anticipate approximately 0.5 point FX headwind to nominal net revenues growth and approximately 1.5 point benefit to nominal non-GAAP expense growth. The tax rate is expected to be closer to a new run rate of between 19.5% and 20% in Q1.

This puts first quarter adjusted EPS growth in the upper mid-single digits with minimal impact from FX. Keep in mind that the adjusted basis is defined as non-GAAP results presented in constant dollars and excluding acquisition impacts. And non-GAAP expenses and EPS exclude acquisition related items and the litigation provision for the first quarter of 2023. For FY 2024, the estimated results exclude approximately $20 million or $0.01 of acquisition-related costs and approximately $40 million or $0.02 from the amortization of acquired intangibles. And finally, moving to capital return. As Ryan said, the Board has authorized a $25 billion multiyear share repurchase program and increased our quarterly dividend by 16%. In summary, Visa’s underlying business continues to be healthy and stable and the growth opportunities are significant.

While there continue to be macro uncertainties, we feel confident in our ability to manage the business through a changing environment and deliver value for our stockholders. And now, Jennifer, let’s move to Q&A.

Jennifer Como: Thanks Chris. And with that, we’re ready to take questions.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Darrin Peller with Wolfe Research. Your line is open.

Darrin Peller: Hey guys. Thanks for the time and congrats on the quarter. Just when thinking about your guidance for the fiscal year ahead, it’s good to see the constant currency double-digit growth rate. So, I just want to make sure we understand the inputs and how you think about structural growth as far as some of the inputs like value-added services, new flows? So, number one, I mean, maybe you can give us a little more color on what you’re assuming for some of those — some of the VAS and new flows growth potential? And then more importantly, do you believe that’s the right algorithm medium term? Is the structural growth of this company sustainably yet at the same 10% to 12% rate it’s been or has anything changed?

Chris Suh: Hi Darrin, yes, let me address that. This is Chris. So, yes, a couple of things I’ll say about the FY 2024 guide. First, the underlying drivers, as we shared, both payments volume and process transactions will be growing in the low double-digits, which is very consistent and reflects the stable business trends that we see in the underlying drivers. I also said on the call commentary that we do expect VAS, value-added services, and new flows to continue to be our growth engine, growing faster than the consumer payments part of the business. And so I think that structure, which you described, is consistent in many ways to 2023, and that’s what we certainly expect to see in 2024.

Jennifer Como: Next question Jordan.

Operator: Our next question comes from Dave Koning with Baird. Your line is open.

Dave Koning: Yes, thanks so much. Good job. And I guess two quick ones. Asia-Pacific constant currency volume growth was 4%, a little lower than normal. Maybe you could dive into that. And then tax rate longer term, basically in the out years, 19.5% to 20%, that’s how we should think about it? Thank you.

Ryan McInerney: Hey Dave, I’ll talk about Asia and maybe put it in the context of what we’re seeing around the world, and then Chris, you can take the tax rate. Just to answer your question specifically on Asia, as you said, growth ex-China slowed four points from Q3. There’s a couple of things going on there. One is we’re lapping some strong COVID ramp in Q4 of 2022, but we’re also seeing a little softness in a couple of places, notably Australia, what I’d point you to. If you guys just kind of back up and look at that in kind of the bigger picture, what are we seeing around the world, outside of Asia, it sounds like you’ve looked at the numbers and you would have seen we’re seeing resiliency. Outside of North America and Asia, if you look at Europe ex-UK, Latin America, CEMEA, most of these regions are growing at around 20% or more. So, we feel good about what’s happening there. On the tax rate, Chris, I’ll turn it over to you the long-term tax rate.

Chris Suh: Yes, sure. Hi, Dave. Yes, I do think that’s the right way to think about it. At least based on what we know now, the new run rate, we would put at about 19.5% to 20%. It does — it is related to how our tax — the mix of our tax jurisdictions around the world and certain tax increases in certain parts of the world. As we talked about in the next fiscal year, we’ll be below that due to some of the benefits that we anticipate in the second half of the year. But based on what we know today, the new run rate is as you estimated.

Jennifer Como: Next question, Jordan

Operator: Our next question comes from David Togut with Evercore ISI. Your line is open.

David Togut: Thank you. Good to see the 19% growth in Visa Direct transactions, and in particular, the 65% growth in cross-border P2P transactions year-over-year. As we look to FY 2024, what are some of the biggest, most promising new use cases you’re working on for Visa Direct?

Ryan McInerney: Hey, David. Cross-border remittances is a big one. Since you called that out, I’ll highlight it. And I mentioned, I think, on this call and some others, the work we’re doing with Paysend and Shinhan and things we’re doing around the world we’ve mentioned in previous calls with some of the both kind of traditional and fintech remittance players. 65% year-over-year growth is strong and continue to invest behind that with new partners and try to drive further growth going forward. We’re focused on bill payments. We’re focused on earned wage access. We’re focused on insurance disbursements. We continue to focus on P2P more broadly in new geographies around the world, both domestic and cross-border. If you just back up, I’ve said this, I think, on previous calls.

I believe at this point in time, Visa Direct is the largest at-scale money movement network on the planet. We have made investments consistently year-over-year to get to a point where we now have 8.5 billion endpoints, 3 billion cards, 3 billion accounts with some of the news I announced in my prepared remarks, 2.5 billion digital wallets. And we’ll continue to invest in expanding the network even further. But now we’ve got the ability to work with enablers around the world, sell new use cases in and put this network to work. And we’re going to continue to do that and look forward to hopefully talking to you about more good results to come.

Jennifer Como: Next question, Jordan

Operator: Our next question comes from Ramsey El-Assal with Barclays. Your line is open.

Ramsey El-Assal: Hi, thanks for taking my question. You guys had a lot of great commentary on commercial and B2B progress and deal wins in the quarter. Can you just give us a broader update on your commercial strategy? Where do you see the bigger opportunities there going forward?