Visa (NYSE:V) announced plans to cut approximately 2,600 jobs, representing about 7% of its global workforce, with the majority of reductions concentrated in its technology and product divisions. The move comes as the company reported a $563 million severance charge in its fiscal third quarter, which accounted for 79% of the year-over-year increase in personnel expenses.
Excluding severance costs, personnel expenses rose 8.3%, trailing the company's revenue growth of 14%. The disparity highlights Visa's focus on cost efficiency even as demand for payment services remains robust. Payment volume increased 10% to surpass $4 trillion, cross-border transactions grew 13%, and processed transactions rose 10%.
CEO Ryan McInerney attributed the restructuring to a pursuit of greater efficiency and reinvestment, stating, "I have deep conviction that we are doing what is right for Visa." He also noted that artificial intelligence is accelerating the operational transition, though the job cuts were not solely driven by AI.
The severance charge had an after-tax impact of $438 million, adding $0.23 per share in the reconciliation from reported to adjusted earnings per share. Adjusted EPS of $3.32 came in 2.8% above consensus estimates, while net revenue of $11.63 billion exceeded projections by 2.1%.
Visa's workforce reductions follow a period of significant headcount expansion after fiscal 2025. The company's implied headcount before cuts was about 37,100, representing an increase of roughly 3,000 employees, or 8.9%, from the prior fiscal year. After the reductions, employment is expected to be approximately 34,500, close to the level seen a year earlier.
The layoffs surpass those announced by Mastercard (NYSE:MA) in January, which targeted about 1,400 positions, or 4% of its workforce, with an estimated $200 million restructuring charge. Visa's cut as a percentage is 1.75 times greater than Mastercard's. Both companies characterized the measures as reallocations of resources rather than reactions to weaker transaction volumes.
Visa's stock advanced 4.3% over the five sessions ending Wednesday, reaching a new 52-week high of $373.97. The shares outperformed a broader market decline, with the S&P 500 falling 1.52% on the same day. The company finished regular trading at $368.73, up 0.58%.
Investors will watch Mastercard's earnings report and conference call on Thursday for further insight into industry trends. Key risks include potential disruption to product delivery from the tech-focused cuts, margin compression if reinvestment delays cost savings, and softer consumer spending that could dampen volume growth.
