Visa's (V 0.09%) reported net revenue of $8.1 billion and diluted earnings per share of $2 in its most recent three-month period (Q3 2023 ended June 30). Both of these headline figures were up double digits year over year. This is a usual occurrence for this huge card payments network, and investors have grown accustomed to it, regardless of the economic climate. 

But I don't believe those metrics tell the entire story for this top financial stock. Here's why the biggest number from Visa's earnings report was 62% -- its operating margin for the latest quarter. 

An incredibly profitable enterprise 

That 62% figure is a perfect indicator of just how successful Visa has become. Investors would be challenged to find a company that's more profitable.

Generating positive net income is critical as it demonstrates that a business has achieved a level of financial sustainability and doesn't have to rely on capital markets to ensure its survival. While this might have been ignored by many investors for most of the past decade, a higher-interest-rate environment has shined a spotlight on how important profits are. 

What's impressive about Visa's latest results is that even though net revenue rose 12%, operating expenses actually declined on a year-over-year basis. That shows that there's some operating leverage inherent in the business model (more on this below). 

Visa's huge operating margin has led to consistent free cash flow, to the tune of $18 billion in fiscal 2022. This has allowed the leadership team to reward shareholders with a dividend yield of 0.74%. That might not be anything to write home about, but consider that Visa has steadily raised the quarterly payout since the company went public in 2008. What's more, the payout ratio of less than 25% leaves plenty of room for future increases.  

In addition, the business continuously repurchases its shares. In the first nine months of fiscal 2023, the company spent $8.4 billion on buybacks. This boosts the ownership stake of existing investors and provides downside support to the stock. 

Benefiting from scale

Of course, Visa wouldn't be so profitable if it wasn't for its utter dominance in the industry. According to Statista, a whopping 61% of all credit card transactions in the U.S. are handled by Visa's network. Globally, this figure stands at 39%, which is still good for a first-place standing. 

The business processed $11 trillion in payment volume through the first nine months of fiscal 2023. In recent quarters, cross-border transactions have increased faster than the overall growth rate. 

Additionally, Visa says that there are currently 4.1 billion branded cards in circulation. That's a gargantuan number. Because the company works with major financial institutions, like JPMorgan Chase, Bank of America, and Capital One, Visa has broad distribution capabilities to get into more consumers' wallets. This increases the number of times one of its cards gets swiped. 

Despite what many still consider to be an uncertain economic environment, it's obvious that consumers love having these cards. That's because of the numerous perks and benefits they offer. 

These figures not only speak to Visa's sheer scale and reach, but they also help explain why the company is so financially successful. Because the communications infrastructure to authorize and settle transactions has already been built out, additional transactions typically carry high margins, leading to outsized profitability. Five years ago in the fiscal 2018 third quarter, Visa's operating margin was 55%, so there clearly has been some benefit to scaling up. 

Visa's ability to produce tremendous amounts of net income is one of the main reasons investors should add this stock to their watch lists.