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4,200 | LMT | 1 | 2,025 | 2025-04-22 11:00:00 | Lockheed Martin Corporation | 285,827 | Maria Ricciardone: And on the long-term growth, yeah, I do think we see a path to, you know, a little bit better than we laid out prior, at least at the lower end of the low single-digit growth. And, you know, that's fueled by a few things. As you point out, the strong missile orders in Q1, there's also pressure to increase international budgets around the world. And then I'd also say seeing another quarter at 4% sales growth shows that the supply chain does continue to perform. And as we've talked about, it hasn't really been a question of demand. It's been more a question of being able to execute on the supply side. And we are seeing that continue as well. So even with the NGAD loss, that was probably more impactful farther out in the future. And over the next few years, more than offset by some of these other opportunities that we're seeing now. |
4,201 | LMT | 1 | 2,025 | 2025-04-22 11:00:00 | Lockheed Martin Corporation | 285,827 | James Taiclet: Yep. And for example, like the F-35 sustainment contributing to these long-term growth trajectories, the aircraft numbers are gonna go from 1,100, you know, to we expect over time, 3,500. So that growth rate of sustainment on F-35 and this modernization will continue on a much larger number of airplanes as time goes on. So that's a big driver. CH-53K helicopter is really getting to, you know, towards full-rate production. The fleet ballistic missile program, as I said, that's a very important and a very large piece of our long-term growth rate and NGI, etc., in Golden Dome. So there are multiple long-term growth opportunities from through all of our business areas. You know, we're pivoting, by the way, in space. We'll continue to do the big geosynchronous orbit, highly sophisticated satellite units. But this LM-400 is mid-orbit. Plane. And it's more capable than a small sat. But not as expensive as a geosynchronous orbit satellite. And there's more proliferation of them, not 3,000, but maybe there's 300. So you get a lot of the benefits of both in the mid-course, the mid-orbit, if you will. And it's a good compromise for certain missions because you've got a bigger bus with more capability and more life. A small sat may last three to five years, but a mid-orbit satellite like the LM-400 could last call it ten or and then the geosynchronous can be much longer than that. So we're trying to make sure that there's a best-value solution for the mission for our customer at every level of, yeah, the orbits in space or the level of sophistication and cost of the airplane versus the mission. Again, can we get 80% of the value for 50% of the cost? That's a new way for our industry maybe to think about from, you know, 20 or 30 years ago. But that's how we're thinking about it. So we have some really solid long-term growth trajectories. We think we can strengthen the embedded base, make that embedded base live longer and that sustain a trail go farther, whether it's Blackhawk, F-35, F-22, F-16 is now again |
4,202 | LMT | 1 | 2,025 | 2025-04-22 11:00:00 | Lockheed Martin Corporation | 285,827 | make that embedded base live longer and that sustain a trail go farther, whether it's Blackhawk, F-35, F-22, F-16 is now again popular. Why? Because we could put fifth-generation electronics on a fourth-generation chassis. And that's why it's popular. It's more affordable and you get a lot of fifth-gen capability on an F-16 now. And that's why these franchises are not finite necessarily. FBM, 70 years. I mean, these chassis are so hard to make. They're so sophisticated. It's hard to replicate the hardware. But you can make it a lot better with software and with hardware upgrades as you go. |
4,203 | LMT | 1 | 2,025 | 2025-04-22 11:00:00 | Lockheed Martin Corporation | 285,827 | Maria Ricciardone: Great. Well, Sarah, I think we're coming to the top of the hour here. Why don't I turn it back over to Jim for the closing remarks?
James Taiclet: Thanks, Maria. So look, in closing, based on our substantial backlog and this best-value strategy we've been talking about today, this company is really well-positioned in a very dynamic environment. We can all admit that we're in a dynamic environment. But we're continuing to innovate and deliver these advanced and reliable technologies and executing against that long-term strategy while we do the hardware and upgrade it. We really are trying to get out in front of how do we use digital technology like AI to make our platforms work together in a way that provides a high-value relatively low-cost mission capability. And having so many of these great legacy platforms and the ones that will build for the future puts us in a really good position for this. So that ends the call today. Thank you for joining us. Look forward to seeing you all virtually again in July. On our second-quarter earnings call. So thanks everybody. Sarah, we're all concluded for the day.
Operator: Great. Thank you very much. This concludes today's conference call. Thank you for joining. You may now disconnect. |
4,204 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Good morning. My name is Julianne and I will be your conference operator today. At this time I would like to welcome everyone to the MasterCard Incorporated Q4 and Full Year 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you, Mr. Devon Kaur, head of Investor Relations. You may begin your conference.
Devin Corr: Thank you, Julianne. Good morning, everyone, and thank you for joining us for our fourth quarter 2024 earnings call. With me today are Michael Miebach, our Chief Executive Officer; and Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then that the queue will open for questions. You can access our earnings release, supplemental performance data and the slide deck that accompany this call in the Investor Relations section of our website, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis unless otherwise noted. Both the release and the slide deck include reconciliations of non-GAAP measures to GAAP reported amounts. Finally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding Mastercard's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our website for 30 days. With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach. |
4,205 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you, Devin. Good morning, everyone. We finished the year strong. Fourth quarter net revenues were up 16% and adjusted net income up 19% versus a year ago on a non-GAAP currency-neutral basis. Our diverse capabilities in payments and services and solutions, including the acquisition of Recorded Future this quarter set us apart. They also position us well for long-term growth, as we outlined at our Investor Day. And this is what you will see and the new and expand the partnerships we will discuss this morning. The macroeconomic environment continues to perform well, and it is underpinned by healthy consumer spending as we've seen in today's news. The labor market is strong with low unemployment and continued wage growth. Inflation has moderated, but to varying degrees across categories and countries. Consumers remain engaged. Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market. Our e-commerce institute expects a year of global economic expansion in 2025, defined by shifts in monetary and fiscal policy, or by geopolitical concerns remain. Overall, we remain positive about our growth outlook. We will continue to monitor the external environment and stand ready to adjust if needed. We remain hyper focused on successfully executing on what we can control. Our strategic priorities, which fuel our growth algorithm. We laid out in detail at our Investor Day, those three strategic priority areas include consumer payments, commercial and new payment flows and services and solutions. A clear proof point on how we're executing is our steady drumbeat of share wins across products and geographies. Now I often highlight our larger wins on these calls with you, but it's important to note that our local teams are competing for and winning deals of all sizes based on the differentiated value that we provide. Having a diverse portfolio with customers of all types is essential. It allows us to further expand our customer base and enables us to |
4,206 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | diverse portfolio with customers of all types is essential. It allows us to further expand our customer base and enables us to bake into new areas where we can partner and grow together. In 2024, we flipped or expanded hundreds of relationships globally. Let's first focus on the U.S. where we have won several large flips over the last few years. That momentum continued this quarter. ICBA payments, which serves thousands of community banks will significantly expand its partnership with Mastercard. This includes card issuance across their partner banks spreaded and debit portfolios. In Mid-Florida, a large credit union will migrate their credit and debit portfolios to us. Both partners highlighted our differentiated product suite, analytics capabilities and the expertise of our people as a key in their decision to expand their relationship with Mastercard. In the public sector space, we renewed our long-standing relationship supporting the Direct Express program, one of the largest social benefit card programs in the world. Direct Express disperses benefits, including social security, veterans and disability on to Mastercards held by over 3 million Americans. And the momentum also continues into travel and retail verticals. Porter Airlines and Bank of Montreal, will launch a new co-brand program with us in Canada. In the U.S., we renewed our consumer and small business co-brand credit card partnership with IHG and Chase. They will leverage our data analytics and loyalty assets to enhance their value proposition. And we renewed our co-brand partnership with Sam's Club, we will continue to leverage our products and services. Our success extends across all regions with several significant renewals and expansions. We secured long-term exclusivity on debit with Saudi National Bank. We renewed and strengthened our partnership with Nubank. We've extended our relationship with Banco Santander in the U.K., and we successfully renewed our global premier credit card agreement with HSBC in over 20 countries. All these wins |
4,207 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | the U.K., and we successfully renewed our global premier credit card agreement with HSBC in over 20 countries. All these wins are a result of the successful execution of the strategic priorities we discussed at Investor Day. I will share a few highlights on each area, starting with consumer payments. Now these flows represent a long runway of opportunity for sustained growth. Today, there's over $11 trillion and 1.5 trillion transactions and cash and check around the world. We are capitalizing on the significant secular opportunity by expanding acceptance, reimagining checkout, opening closed-loop systems and enabling new verticals. First up, we're positioned to be the most accepted payments network in the world with around 150 million acceptance locations globally today. Second, we are reimagining checkout. And that with our 2030 global plan to phase out manual card and password entry online in favor of smiles and fingerprints. Not only is that a better experience, but it's also more secure and is fully aligned with our data privacy principles. And the online space needs that. Fraud rates are 7 times higher online and in store. And approximately 25% of online shopping cards are abandoned because checkout is just too slow. Our tokenization biometric capabilities sit at the heart of these solutions. Need proof? Well, in 2024, we tokenized about 4 billion transactions per month, which is up 40 times over the past 6 years. As we have said in the past, there are many use cases for tokens. Take, for example, the next click of our multi-option payment solutions. We're rolling out the Mastercard 1 credential, which allows consumers the flexibility and control to set their payment preferences in their banking app for each transaction, if they so choose to, be it credit, debit, prepaid or buy now pay later, all behind one credential one token. And the merchant the merchant accepts that through the same simple and secure digital connections as always, no added work. Tokens provide tremendous value, and we offer a set of |
4,208 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | the same simple and secure digital connections as always, no added work. Tokens provide tremendous value, and we offer a set of services on and around those tokens such as life cycle management and authentication, which enhance that value. Now while the growth of token makes the ecosystem safer and more secure, we also benefit on the natural tailwind associated with the growth of token usage. Shifting gears. We're also driving incremental volume and transactions on our network by opening up closed-loop systems. Beyond the transit opportunities we talked about many times, we're also partnering with local wallet providers to create greater simplicity and access for the end consumer. In Sweden, we're working with Swish so that users can tap to pay and store both domestically and abroad by adding their Mastercard to the Swiss app. In Latin America, we collaborated with Davivienda to co-create a digital-first debit product aimed at driving financial inclusion. We signed an exclusive partnership with them to launch the product on the DaviPlata digital app. And our pay local service seamlessly connects with local digital wallets, enabling consumers who use Mastercard to make card payments across a broader set of local merchants. At the same time, merchants benefit from access to more consumers and the protections we provide. The solution supports local tourism, that market that we travel to where we couldn't pay, provides a seamless consumer experience and helps drive cross-border volumes. Building on partnerships with leading wallet providers like Alipay and GrabPay, several additional players in Asia Pacific will now open their wallets to cards. This include Dana in Indonesia, Touch & Go in Malaysia, Bakong in Cambodia and Lanka Pay in Sri Lanka. We're also capturing new verticals like consumer bill payments. This quarter, we partnered with Bemobi in Brazil. Bemobi will integrate Click to Pay into their bill payment platform, enabling fast and secure payments for recurring services like telecoms and utilities. Now as |
4,209 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | into their bill payment platform, enabling fast and secure payments for recurring services like telecoms and utilities. Now as a network company, we're focused on enabling the broader ecosystem, and that's exactly what we have been doing in the crypto sector. We have a well-planned, balanced strategy that serves financial institution, crypto players and, of course, consumers to drive growth and provide choice in this space. We're partnering with a wide range of crypto players to enable consumers to buy cryptocurrencies on card and spend their crypto balances anywhere that Mastercard is accepted. I'm very excited about new partnerships with Crypto.com and Metamask. Just a few of the many new players we have added in 2024. And we're enthusiastic about the future of block chain technology, but to reach its full potential, we believe there's a need for sound governance interoperability and real-world use cases. All this is a core competency of ours built over decades. To meet these needs, we develop the multi token network, MTN. This quarter, we partnered with Conexus by JPMorgan, the firm's block chain base unit to integrate MTN as a payment settlement solution. By bringing together the power and connectivity of Mastercard's MTN with Conexus digital payments, we aim to unlock greater speed, transparency and faster settlement capabilities for cross-border B2B payments. And while it's early days, we're excited about the opportunities, which digital assets can bring to the world of payments as the space evolves, complementing our existing solutions. Now while consumer payments offer a significant runway for growth, commercial flows represent an even larger $80 trillion serviceable addressable market. Only about $3 trillion is carted today. In 2024, our commercial credit and debit volumes represented 13% of our total GDV and grew at 11% year-over-year on a local currency basis, just to give you the latest stats. On top of that, disbursements and remittances represent an additional $20 trillion in addressable market. |
4,210 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | you the latest stats. On top of that, disbursements and remittances represent an additional $20 trillion in addressable market. We're pursuing that opportunity with Mastercard Move, where transactions were up over 40% year-over-year in the fourth quarter. But let's dig into commercial. First, we're expanding our global leadership in virtual cards by expanding across use cases, geographies and verticals. For example, partnering with Net Narest [ph] to distribute our new mobile VCN to U.K. companies and their employees. We're deploying virtual cards with Citi in Argentina, the first deployment of ECN in that market. And then in the travel vertical we established new partnerships with Worldpay and Emirates NBD to offer virtual cards to their customers. We're also leaning into our success in travel and applying into new high-potential verticals. For example, trade and logistics. Building on our previous announcement of Dubai First World, we're driving continued growth in this sector. Global Fintech invoice Bazar will distribute new co-branded Mastercards to help digitize payments across the trade ecosystem. And similar in consumer packaged goods, we partner with Dean [ph] Finance and Prime Dash to enable small business in the Middle East to automate payments to Coca-Cola distributors. This builds on partnerships with leading beverage distributors in Latin America that I spoke about in previous calls. They have good momentum on connecting small business in this space. We're also driving small business growth through expanded issuer partnerships. We signed an exclusive commercial deal with DNA, the state-owned bank in Argentina, AMP Bank in Australia will launch Mastercard debit cards for the new digital SME and consumer bank and ANT International's World first will expand our partnership to now issue virtual cards for SMEs and new markets, including Singapore and Australia. Now let me turn to our third strategic priority, Services and Solutions. As we outlined at our Investor Day, services represent a serviceable |
4,211 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | to our third strategic priority, Services and Solutions. As we outlined at our Investor Day, services represent a serviceable addressable market of at least $165 billion. We delivered almost $11 billion in services and solutions revenue in 2024, $11 billion. That's exciting. But it's equally exciting that we're less than 7% penetrated. That's a significant runway for growth. We have a clear plan to execute against it. First, we're developing and launching differentiated products. This quarter, we launched new services to support customer acquisition, provide unique market insights, manage subscriptions and identify threats. This includes closing on the acquisitions of both Minna Technology and Recorded Future. Let's stay right there. Cyber criminals have been around for decades, but attacks and fraud attempts are increasing at high levels as commerce increasingly move online and as AI becomes more prevalent. Our investments, both organic and inorganic, are key to fighting fraud and protecting the ecosystem. They also drive revenue growth. And add Recorded Future to this list. It is now part of Mastercard. Recorded Future is the world's largest threat intelligence company with more than 1,900 customers across 75 countries. Customers include over 50% of the Fortune 100 and government agencies in 45 countries, including more than half of the G20. We've been deploying AI at scale for well over a decade, so has Recorded Future. They leverage AI-powered insights to analyze threat data from every corner of the Internet and customers gain real-time visibility and actionable insights to proactively reduce risks. We now have an even more robust set of powerful intelligence, identity, dispute, fraud and scan prevention solutions. Together, these uniquely differentiated technologies will enable us to create smarter models, distribute these capabilities more broadly and help our customers anticipate threats before cyber-attacks can take place. That means better protection for governments, businesses, banks, consumers the |
4,212 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | threats before cyber-attacks can take place. That means better protection for governments, businesses, banks, consumers the entire ecosystem and well beyond the payment transactions. We're also leveraging our distribution at scale to deepen market penetration of our services and solutions. For example, we provide a fraud solution that facilitates real-time information sharing between merchants, issuers and consumers to streamline disputes and reduce chargebacks. This quarter, we announced a new partnership with Stripe who will offer these capabilities to their millions of users. In Latin America, Itaú Unibanco will make them available across its digital channels to suborn millions of cardholders. In Loyalty, we partnered with Nordea to consolidate their loyalty offerings with Mastercard and launch new cashback offers across Norway and Sweden. And we're also selling into new buying centers with traditional customers, opening up a larger share of wallet. For example, you partner with the CISO at Webster Bank to deploy RiskRecon and Cyber Quant solutions. And finally, we're seeing strong demand for our services and solutions across a more diverse customer base, including online delivery services, gaming companies and travel partners. For example, we expanded our partnership with DoorDash, who will use our insights and analytics to optimize business performance globally. Sony PlayStation. We leverage our capabilities to showcase digital receipt to cardholders and banking apps and provide purchase information to bank's call center agents. In currency we’ll incorporate our open banking capabilities to support Hilton's new debit co-brand offering. Services and Solutions are a large and growing revenue opportunity. They are essential, powerful virtuous cycle with our payments. We're laser-focused on executing capitalized on the significant runway in services in front of us. So in summary, we delivered another strong quarter, closed out another strong year. There is significant opportunity ahead. The fundamentals of our |
4,213 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | another strong quarter, closed out another strong year. There is significant opportunity ahead. The fundamentals of our business are strong, so I'm very optimistic about the future for us, for us here at Mastercard. Our proven growth algorithm and differentiated solutions position us to deliver and to win as we've demonstrated time and time again. And with that, I'm going to hand it over to Sachin. |
4,214 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Well, great. Thanks, Michael. Turning to Page 3, which shows our financial performance for the fourth quarter on a currency-neutral basis, excluding where applicable special items, and the impact of gains and losses on our equity investments. Net revenue was up 16%, reflecting continued growth in our payment network and our value-added services and solutions. Acquisitions had a minimal impact to this growth. Operating expenses increased to 15%, including a 1 ppt increase from acquisitions. And operating income was up 17%, which includes a minimal impact from acquisitions. Net income and EPS increased 19% and 22%, respectively, driven primarily by the strong operating income growth and further aided by a discrete tax benefit recognized in the fourth quarter. EPS was $3.82, which includes an $0.08 contribution from share repurchases. During the quarter, we repurchased $3.4 billion worth of stock and an additional $644 million through January 27, 2025. So let's turn to Page 4, where I'll speak to the growth rates of some of our key drivers for the fourth quarter on a local currency basis. Worldwide gross dollar volume, or GDV, increased by 12% year-over-year. In the U.S., GDV increased by 9% with credit growth of 8% and debit growth of 11%. Credit and debit growth was aided by the conversions of the previously announced Wells Fargo Commercial Credit and Citizens debit migrations, respectively. Outside of the U.S., volume increased 13% with credit growth 11% and debit growth of 14%. Overall, cross-border volume increased 20% globally for the quarter, reflecting continued strong growth in both travel and non-travel related cross-border spending. Turning to Page 5. Switched transactions grew 11% year-over-year in Q4. Both card-present and card-not-present growth rates remained strong. Card present growth was aided in part by an increase in contactless penetration as contactless now represents approximately 72% of all in-person switched purchase transactions. In addition, card growth was 6%. Globally, |
4,215 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | now represents approximately 72% of all in-person switched purchase transactions. In addition, card growth was 6%. Globally, there are 3.5 billion Mastercard and Maestro-branded cards issued. Turning now to Slide 6 for a look into our net revenue growth rates for the fourth quarter discussed on a currency-neutral basis. Payment Network net revenue increased 15%, primarily driven by domestic and cross-border transaction and volume growth. It also includes growth in rebates and incentives. Value-Added Services & Solutions net revenue increased 17%. Acquisitions contributed approximately half of PPT to this growth. Growth was primarily driven by growth in our underlying drivers, strong demand for our consumer acquisition and engagement and business and market inside services, the scaling of our security, digital and authentication solutions and pricing. Now let's turn to Page 7 to discuss key metrics related to the payment network. Again, all growth rates are described on a currency-neutral basis, unless otherwise noted. Looking at each key metric. Domestic assessments were up 10%, while worldwide GDV grew 12%. The difference is primarily driven by cross-border mix. Cross-border assessments increased 24%, while cross-border volumes increased 20%. The 4 ppt difference is primarily driven by pricing in international markets. Transaction processing assessments were up 15%, while switch transactions grew 11%. The 4 ppt difference is primarily due to favorable cross-border mix and pricing. Other network assessments were $239 million this quarter. As a reminder, these assessments primarily relate to licensing, implementation and other franchise fees, and they fluctuate from period to period. Moving on to Page 8. You can see that on a non-GAAP currency-neutral basis, excluding special items, total adjusted operating expenses increased 15%, which includes a 1 ppt impact from acquisitions. Total adjusted operating expenses were higher than anticipated, primarily due to the impact of the acquisition expenses. The acquisition |
4,216 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | operating expenses were higher than anticipated, primarily due to the impact of the acquisition expenses. The acquisition of the Recorded Future closed earlier than expected in Q4 2024, versus originally expected in Q1 2025, and was therefore not part of our Q4 forecast. Excluding acquisitions, the growth in operating expenses was primarily due to increased spending to support the continued execution of our strategic initiatives. Now turning to Page 9, let me comment on the operating metric trends. Starting with Q4, our switched volume metrics were strong with sequential increases versus the prior quarter, driven by healthy consumer and commercial spending. As was the case with switched volumes, cross-border volumes also benefited from healthy spending, easier comps, as well as a pull forward of travel spend. Specific to cross-border, card not present ex travel, we saw an uptick due to the purchases of cryptocurrency in Q4. Of note, the timing of high-volume versus low-volume calendar days as well as the timing of Black Friday impacted switched volume and cross-border metrics within the quarter. Transaction growth remained flat sequentially as compared to volumes due to higher average ticket sizes in Q4. Now looking through the first 4 weeks of January, the metrics are holding up well and are generally in line with the fourth quarter. The increase in switched volume growth in the U.S. was primarily driven by an easier comp. Specifically, severe weather events across the country negatively impacted volumes this year and last year. However, the impact was more pronounced last year. As it relates to the decrease in intra-Europe cross-border volumes, this is primarily driven by the mix of calendar days and travel spend pull forward I just mentioned. Turning to Page 10. I wanted to share our thoughts on fiscal year 2025. Let me start by saying that the fundamentals of our business remain strong. And we are well positioned for the opportunities ahead, driven by a diversified business model, the significant opportunity |
4,217 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | And we are well positioned for the opportunities ahead, driven by a diversified business model, the significant opportunity for further secular shift to digital forms of payment in both consumer and commercial, and strong demand for our differentiated value-added services and solutions. The macro environment remains supportive of our base case, reflecting healthy consumer spending. And we remain confident in our ability to successfully execute our strategy while maintaining a disciplined capital planning approach. Overall, we are positive about the growth outlook for the short, medium and long term. As it relates to our expectations for full year 2025, we expect net revenues to grow at the high end of low double digits to low teens range on a currency-neutral basis, excluding acquisitions. We estimate a headwind of approximately 2 ppt from foreign exchange, while acquisitions are expected to add 1 to 1.5 ppt to this growth rate for the year. From an operating expense standpoint, we expect growth to be at the low end of a low double digits range versus a year ago on a currency-neutral basis, excluding acquisitions and special items. We expect a tailwind of approximately 1 to 2 ppt from foreign exchange, while acquisitions are forecasted to increase the OpEx growth rate for the year by approximately 5 ppt. To be clear, this impact of acquisition-related expenses was already contemplated in the 3-year performance objectives that we shared with you last November at our Investor Community Meeting. Let's dig into the acquisition-related expenses a bit. We closed the acquisition of Recorded Future and Minna Technologies at the very end of 2024. And now we will see a full year impact in 2025. The 5 ppt impact can be broken down into three main components, slightly more than 2.5 ppt relates to the run rate expenses for operating the business. Approximately 1 ppt is from the amortization of acquired intangible assets related to the purchase price allocation, and the remaining relates to integration costs and other onetime |
4,218 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | intangible assets related to the purchase price allocation, and the remaining relates to integration costs and other onetime expenses. Now let me remind you about our acquisition philosophy. As you know, our acquisitions are strategy-led. We purchased companies that are complementary to our capability suite and they add to our addressable market. These companies are primarily in earlier stages with modest revenues compared to Mastercard, albeit fast growing. At the same time, these companies are in investment mode to drive longer-term growth. Post-acquisition, we look to scale revenues, drive synergies and ultimately deliver positive operating leverage over the medium term consistent with how we run our overall business. Now turning to the first quarter of 2025. Year-over-year net revenue growth is expected to be at the low teens range on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to have a 1 to 1.5 ppt impact to this growth rate, while we expect a headwind of approximately 3 ppt from foreign exchange for the quarter. From an operating expense standpoint, we expect Q1 growth to be in the low double digits range versus a year ago, again, on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to have a 4 to 5 ppt impact to this OpEx growth while we expect a tailwind of approximately 2 ppt from foreign exchange for the quarter. Other items to keep in mind. On other income and expenses, in Q1, we expect an expense of approximately $120 million, given the prevailing interest rates and debt levels. This excludes gains and losses on our equity investments, which are excluded from our non-GAAP metrics. Finally, we expect a non-GAAP tax rate in the range of 20% to 21% for the full year and approximately 20% for Q1 based on the current geographic mix of our business. A lower forecasted tax rate for Q1 as compared to the balance of the year is consistent with prior years due to expected discrete tax benefits related to share-based payments in |
4,219 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | the balance of the year is consistent with prior years due to expected discrete tax benefits related to share-based payments in the first quarter. And with that, I will turn the call back over to Devin. |
4,220 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: Thank you, Sachin. Thank you, Michael. Julianne, you may now open the line for questions.
Operator: [Operator Instructions] Our first question comes from Andrew Schmidt from Citi. Please go ahead. Your line is open.
Andrew Schmidt: Hi, Michael, hey Sachin, thank you for taking my question this morning. Good metrics across the board here. Great to see. If I could just dig into the cross-border piece, the month-to-date trends to Jan 28. Can you talk about just the drivers of the growth there, whether was relatively similar to the fourth quarter, and then your expectations for 2025? And then if I could just sneak one more in, just thinking about 2025. We get a lot of questions on [indiscernible] discover. Maybe some thoughts about how you're thinking about that with respect to the models. Thanks so much. |
4,221 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. No problem, Andrew. I'll take that question. So from a cross-border volume standpoint, just at the highest level, what I'm going to remind you is the value prop we offer from a cross-border standpoint continues to be incredibly solid. Our teams are out there. They're working hard. They're winning various kinds of portfolios, some of which Michael spoke about, even today about, which is some of the co-brand programs we've got with various airlines, etcetera. Specific to your question around the metrics. Again, really good performance from a volume growth standpoint and cross-border at 20% for Q4. First of all, what you're seeing for the first 4 weeks of January is exactly that. It's the first 4 weeks of January. And what you're seeing in the nature of the 20% going down to 18% is going back exactly the comments I made in my prepared remarks, which is at the end of the day, the vast majority of that you're seeing come through intra-Europe, which is primarily being driven by two factors. One is a pull forward of travel spend into the month of December, and you can see those metrics because you'll see intra-Europe growth in December at about 23%. And then there's the calendarization of days, which I kind of mentioned to you as well. Those are the two factors. But fundamentally, the health of what we're seeing from an overall spend standpoint on cross-border continues to be excellent. We have no real reason to believe that going forward, that there's something going to change as it relates to the value prop. Obviously, the strength of cross-border as well as domestic spend is a function of how consumer health is. And right now, we're seeing the consumer to be in very good shape. We also mentioned about how commercial is actually performing well, and you know that commercial actually also lends to our cross-border metrics. So something to keep in mind are there as well. |
4,222 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: All right. On the Cap One [ph] Andrew, let me start and then I happily hand it to Sachin for the model side of the question. But overall, the acquisition is in flight. As we know, it's going through the motions. I think it's fair to say the indications are positive that it will be approved. There's a whole range of examples where we have strategic partners will we also compete with on certain aspects of the business. Look in the acquiring space, for example. So this is not a new situation for us. Now Capital One is a tremendous part to ours. Highly strategic partner, tremendous growth that we've seen in our joint business. They have been public about shifting debit volumes to the Discover network. Now we are a competing network, and we will continue to invest in our network and ensure that we have a leading and differentiated solution out there. At the same time, we've been growing together in credit in other parts of the business. So we value this partnership. We'll continue along those lines. Fundamentally there is no surprises here to what we have said last time around. Sachin?
Sachin Mehra: Yes. And I'll just add to what Michael said. Like Michael said right now, right. I mean, they've talked about -- Capital One has talked about migrating the debit volumes over. I think you're aware about the fact that debit volume primarily on the Mastercard network. And we built in our best assumptions both from a timing and a migration pace standpoint into the full year thoughts that I've shared with you today. So again, things might move around, and they likely will just because ours is a forecast. There's no predictability. The deal has got to get approved. Migrations have to start, but we've built in our best estimates as to how that's going to roll out.
Michael Miebach: One last thing. I should add one more thing. |
4,223 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: One last thing. I should add one more thing.
Sachin Mehra: I talked about it in my prepared remarks earlier. There's great momentum in debit, which we have created in the U.S. So this isn't the only part that we have and we're building out a set of partnerships.
Operator: Our next question comes from Darrin Peller from Wolfe Research. Please go ahead. Your line is open.
Darrin Peller: Hey thanks guys. Nice job. Just -- when we follow up on what we learned at your Investor Day, which was really helpful on the long-term trajectory of growth, if we could just take that and then put it into 2025, what are you expecting more specifically around your value-added services in the year ahead of us that we're in right now versus the consumer payments just to triangulate with growth? And maybe Sachin, also just as a reminder, we're exiting the year at a 16% constant currency growth. Obviously, Discover could be a factor. But what other comp compares are lapping? Just remind us how much is in the outlook for lapping are other factors that could cause a deceleration from the exit rate down to the 12% to 13% from 16%. Thanks again guys. |
4,224 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. No problem. So first on your question around value added Services and Solutions, look, I mean it goes back to what Michael said, Darrin, in his prepared remarks, which is we continue to invest in that space. It continued to build out excellent capabilities, which are going after what is a sizable and fast-growing addressable market. So again, we're not giving you a forecast as it relates to what we expect value-added service positions to grow in 2025. The underlying fundamentals of what we're doing there continue to be very healthy. And again, remember, we gave you a little bit of color at Investor Day as to what the composition of those revenues are, what the drivers of those revenues are, including payment network drivers, including what we're doing from an overall safety and security standpoint with consumer engagement and acquisition standpoint. So there's a lot of good stuff going on. And this is broad-based. It is not region specific. I just want to be clear. Sometimes people think about this as highly U.S. centric or maybe U.S. and Europe. The reality is across the globe. We're working hard. The teams are working incredibly hard to actually keep pushing value added solutions. You can see we're strong again there, right. I mean now again, remember, value-add service solutions is one of those things where quarter-over-quarter, you might see some level of variability. But the reality is, overall, the fundamentals of the business continue to be very strong. Then your second question was around the fact that we closed Q4 exit rates at about 16% on a local currency basis, and you're kind of doing this compared with what the thoughts for 2025 are. A few things to keep in mind. Number one, there's a few things going on. Number one, you've got basically -- the fact that -- you'll know we talked about pricing coming on, starting off Q2 2024 ramping up in Q3 and Q4. You're going to start to see some level of lapping take place on that. We've had several significant wins in 2024, the likes of |
4,225 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | You're going to start to see some level of lapping take place on that. We've had several significant wins in 2024, the likes of Citizens, the likes of Wells Fargo. And these are -- and UniCredit. Now UniCredit will still continue to convert because it's a multiyear conversion. But some of those are going to start to lap as the year kind of progresses, right. The other thing is, as I sit back and I just think about basic fundamentals. The point really is, you've got to kind of remember that overall, the consumer remains healthy. We factored that in. The thoughts we shared for 2025 is a range which is high end of low double digits to low teens, right. So again, you got to keep that in mind. In that, we're building in assumptions around FX volatility. FX volatility picked up in Q4. You saw that come through in the exit rate you're talking about. Hard to predict what FX volatility looks like through the end of the year of 2025. We build in our best assumptions around that. But things could move around on that as well. So again, there are various factors which are actually influencing this. But that's what I'd kind of tell you more holistically as to what's going on here. |
4,226 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Harshita Rawat from Bernstein. Please go ahead. Your line is open.
Harshita Rawat: Good morning. I want to ask about stable coins. It's likely that we get some regulatory clarity in the U.S. this year. I know a vast majority of stable coins usage is in crypto-native use cases and trading. But are you seeing anything in the cross-border money movement fund? And more importantly, and Michael, I know you talked about kind of like the new settlement capabilities, and you've done a lot of work on crypto over the years. How are you positioned for the growth in the crypto ecosystem? Thank you. |
4,227 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. Thank you, Harshita. So overall, as I said in my prepared remarks, this is a space that we've been active in over a while. Your question doesn't really talk about the crypto space as crypto as an investment on-ramp. Off-ramp we've been doing it successfully. Crypto.com, is clearly an exciting addition to the set of partnerships. You were really talking more about the potential of the underlying technology and what can it do? And the cross-border use cases has been talking about for years now. Now we've started to move beyond the proof-of-concept stage. There are real transactions that took place, the first one in Hong Kong, last year. So we're in the business of stable coin transactions. We're in the business of having the MTN live. It hasn't scaled yet. That's also the reality. But we have a long belief that this is an interesting space for us, B2B cross-border payments to get into. So I see as a net addition and upside opportunity for us. There's enough push now. The crypto has gone mainstream with the ETFs. And there's clearly a push from the incoming administration here in the U.S. So we'll see more momentum, and I feel we're well prepared and our strong partnerships with players like JPMorgan and other large settlement players -- settlement bank players will help us on that front. Now this isn't the only cross-border solution that's out there. There is real-time payments, where there's initiatives to potentially connect those systems. It's important to keep in mind that we're in 12 of large RTP markets where we have a presence. So that's an interesting space for us to also watch. In the end, it fundamentally comes down to choice. Where do countries want to take this? Countries have looked at this as in potentially connecting in bilateral fashions. We've always been an advocate to saying multilateral approaches work better. That's what we've proven on the card side. So that's a topic that we engage on when it comes to RTP side of things, but also from the stable coin side, again, |
4,228 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | card side. So that's a topic that we engage on when it comes to RTP side of things, but also from the stable coin side, again, interoperability between different kind of stable coins also matters, which is kind of the same concept. So exciting space. Leaning in for now, we're powering on with cross-border payments on the card side, which worked really well. |
4,229 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Rayna Kumar from Oppenheimer. Please go ahead. Your line is open.
Rayna Kumar: Good morning, Michael and Sachin. Thanks for taking my questions. Could you give us an update on your progress in gaining market share in Europe and whether there are any particular countries that you're seeing stronger performance from? |
4,230 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So Europe's has been a real success story for Mastercard. If I look back over the 5 last 5, 6 years, we've seen tremendous growth on the continent. Seen tremendous growth in the U.K. In the U.K., we're market share leaders. Credit, prepaid and in debit, it's about a third of the cards, the debit cards that are now Mastercard, large conversions. I just talked earlier about extending our partnership with Santander in the U.K. So that's a growth story. On the continent, I'm particularly excited about the strategic partnership with UniCredit. That's 13 markets across continent. So there is not that many pan-European players. In fact, that is probably the most pan-European player there is. That's a fantastic partnership strategic in nature. But other breakthroughs. Deeper in Italy, Banco Popular there, that's a large win. So big momentum. I think that's the first thing to say. The second thing to say is, in these markets, it's not just about shifting share. It's also really taking advantage of the secular opportunity that still exists in Europe. If you take some of the large developed economic -- economies -- G7 economy like Italy, still significant amounts of cash to go after, and we're doing that very actively. And we're doing that very actively also deploying our services in that space. Italy has historically been one of the most significant services opportunities for us. So with all the talk that's there about Europe, concerns about Europe, Europe's competitiveness and [indiscernible] is a big theme. Really important to remember that our business in Europe is in the European economy. Overall, we're well positioned and growing parts of that economy. And this is tremendous for us. Now we've seen volumes grow in Europe at 16% level. That's a tremendous growth rate for us. So overall, I think we're pressing every button that is there to press for us to push ahead on that growth story.
Operator: Our next question comes from Tien-tsin Huang from JPMorgan. Please go ahead. Your line is open. |
4,231 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Tien-tsin Huang from JPMorgan. Please go ahead. Your line is open.
Tien-tsin Huang: I want to stay in Europe if you don't mind, and ask about Mastercard 2030. I think the whole One Click payments initiative to get rid of manual card entry in Europe. To me, it feels like eliminating signature, which ushered in growth in contactless. Is that a fair analogy to think about Mastercard 2030 potentially pushing tokenization? I'm curious why Europe, why not more regions and what makes Europe special for you to set this goal up from Mastercard? Thanks. |
4,232 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: So tokenization in Europe, when I think of the evolution of the European payment markets from PSD1 to PSD2 to PSD3, the topic of security, the topic of consumer experience, the topic of a fair and level playing field have been seen throughout all of these regulations. This is a market, in our view, that's ripe for the doing away with onetime passwords and keying in card numbers, I think all -- everything that is needed to make that successful, is there in Europe. And we want to prove it. It's been a strategy of ours to have reference markets and show that an initiative works and we go where there is open arms and where we feel this is going to be successful. In Europe, we now have very relevant share position that makes us a strategic partner across markets because if you do this just in one country in Europe, then you know it's going to be problematic. So we have the regulation. We have partnerships across the board, so that's good. Now tokens are at the core of that. And as I said earlier, and biometrics, we have that technology deployed widely in Europe. And then we'll see where we take it from that. The wider use of tokens, the wider use of tokens is -- this sets us up for exactly that, and we'll be looking at other use cases and see what that can do for our company overall. But it's a tremendous opportunity. And of course, this is not about just Europe. You asked the question about Europe. This is a global goal. This is what we can go after. As I said earlier, it's a safer ecosystem that makes sense for everybody. In the world where there's government interest and payments and so forth. If we're seen as a responsible part need it drives overall payment ecosystem safety, that's a fantastic position for us as well, and I'm sure that received well globally. We'll go region by region whenever we feel is the right time.
Operator: Your next question comes from Ramsey El-Assal from Barclays. Please go ahead. Your line is open. |
4,233 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Your next question comes from Ramsey El-Assal from Barclays. Please go ahead. Your line is open.
Ramsey El-Assal: Hi, thank you for taking my question. Michael, I wanted to get your view on potential impacts of the sort of new political environment. I'm just curious if you're expecting any, or are you seeing any tailwinds or headwinds from policy changes? And more specifically, if we do end up seeing kind of widespread tariff applied, which we may or may not, how would that impact your business? |
4,234 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Ramsey, this is -- it's a question that I think is top of mind in many industries. So here's how I would go about that. The new political environment, first of all, we've seen ways of political changes around the world. I think at the earlier part of last year, we were looking into 2024 more than half of the population of the world was going to go to the polls. From India to Europe and now in November in the United States. So there is a lot of changes, a lot of volatility. There is some political uncertainty. But when we sit in our boardroom and we sit in our management team, and we talk about this, is payments will continue regardless because the economic -- we power the economy and we power, in particular, the digital economy. And there is a fundamental underlying secular trend, as we discussed at our Investor Day that just keeps going on. So that's the fundamental starting point in response to your question. Now we have a new administration here in the United States. Confirmations haven't fully been done yet, but the Secretary of Treasury is confirmed and so forth. So some of the key partners that we would normally engage with. And we have an administration coming in that is touting a business-friendly approach, and that's fundamentally good for us. The conversation around tariffs and the intended -- intended use of tariffs that's been discussed. We have to see how it plays out and what will happen. It's also clear, we're not in the import export industry. So the way that we would be affected is really indirect ways and how potentially some of our customers and partners get affected by that. So that's something that we'll come to when we get. I think the point that I just made before, fundamentally underlying drive of a digitizing world. Questions like digital trade are going to be important questions. So how is the world dealing with digital trade and how digital trade policy will play out over the years, and we have been actively engaging here in the U.S., in Europe, in ASEAN and so forth. |
4,235 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | policy will play out over the years, and we have been actively engaging here in the U.S., in Europe, in ASEAN and so forth. So an important topic for us to continue to watch in advance because that's good for all the economies around the world. So fundamentally, positive business outlook here from the U.S. administration. And we see a Europe that is now in active conversations with the second term of Ursula von der Leyen [ph] to drive a more growth-oriented approach in Europe as well, which with our position in Europe should be a good thing. |
4,236 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Dave Koning from Baird. Please go ahead. Your line is open.
David Koning: Yes, hey guys. Thanks, good job. I guess my question, you mentioned FX volatility briefly. It got better kind of through Q4 and quite a bit better in January. I just want to refresh on that, that helps the transaction line, right in and it should help the transaction yield going forward? Should that be a nice accelerant factor to the transaction yield over the next quarter or two if it stays kind of where it is now?
Sachin Mehra: David. So yes, it's in our transaction processing assessments line. That's where it is. So you got that right. And again, volatility will be what volatility will be. But to the extent there's higher volatility, you get the impact come through in that line item, which impacts yields positively to the extent it kind of goes in the opposite direction, it has a negative impact on yield. But that's the line item where you'll see that.
Operator: Our next question comes from Bryan Bergin from TD Cowen. Please go ahead. Your line is open
Bryan Bergin: Hi, good morning. Thank you. Wanted to ask on rebates and incentives. Just how to think about the level of renewal activity here in 2025. And directionally, just any commentary you can share on how you expect R&I growth to progress versus how you finished in 2024? |
4,237 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. So Bryan, again, I think Michael kind of talked about this a little bit earlier. We continue to compete out in the marketplace. We are winning and we're winning the right kinds of portfolios, which is really important. We're not going to win every portfolio. We're going to hopefully -- yes, and we don't want to. And -- but we want to win the right kinds of portfolios, which is what we've been doing, and that's the plan going forward as well. From a renewal activity standpoint, nothing unusual to call out in 2025 as there isn't like a lumpiness in terms of renewals in 2025 versus prior years. So it's kind of business as usual. Our teams are out there engaged with our customers, selling on the basis of the value we deliver across payments, but also across value-added services and solutions. And that's been a key enabler help us win on the payment side. So super important for us to continue to do that. I'll tell you from an overall rebates and incentive standpoint. You can see what the metrics are for Q4. For Q1, we expect rebates and incentives as a percentage of payment network assessments to be roughly similar to what we saw in Q4. I'm not going to give you an outlook as it relates to the full year. I mean that's really subject to what kind of deal flow and deal activity we see. The most important thing to keep in mind is while we're all very focused on the level of rebates and incentives we pay, what we're even more focused on is driving an accretion in our net revenue yield. And that is really important. And that's what we'll continue to do from a strategy standpoint and an execution standpoint. |
4,238 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: It comes back to the virtuous cycle between payments and services. We have to be -- we have to be relevant in payments. We have to be in the flow. So we can apply our payment solutions and our services solutions. That is what's always in focus and our strategic portfolios to win and less strategic portfolio is to win, but importantly across the different spectrum of different types of wins, as I talked about smaller deals earlier. The mix of all of that is always on the outcome of an attractive net revenue yield. That is the target in mind where we press all of them.
Operator: Our next question comes from Tim Chiodo from UBS. Please go ahead. Your line is open.
Timothy Chiodo: Great. Thank you for taking the question. Just given the stronger dollar, there's been a lot of incoming questions around the hedging strategy, I just thought maybe be a good opportunity to recap some of the mechanics. I understand you've talked about doing it on a net basis, a basket of roughly 30 currencies, but not hedging some of the functional currencies. Maybe you could just recap the approach and some of the mechanics and how this all flows through to the income statement? |
4,239 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure, no problem. So let me first define where the exposure arises from and then what the hedging strategy is. So you got to think about the exposure to foreign exchange rates coming across three primary areas. One is what we call transaction exposures, which is when the transaction currency is different than the functional currency of the business unit in question. The next is what we have in the nature of monetary assets and liabilities where the currency of those monetary assets and liabilities is different than the functional currency of the business unit in question. And the third is what we call translation exposure, which is the conversion of our overseas earnings into U.S. dollars. So for example, we are euro functional for the European entities. Those euro earnings are ultimately translated back to U.S. dollars when we do our as-reported numbers. So there are three levels over which we get this exposures. We hedge layer number one, which is transaction exposures. We hedge them. We have a philosophy around that. We have hedge ratios, which vary by currency. They're generally in that range of, call it, somewhere in that 50% to 80% range in terms of what we hedge on a net basis, net of expenses. So again, that's kind of the thinking there. There are some currencies which are not necessarily hedgeable just because the market is not liquid enough and we don't hedge those. We also don't hedge right down to the smallest currency exposure, which is there. So we exercised materiality thresholds on that. On the monetary assets and liabilities, similar to transaction exposures, we hedge those as well, right. And again, it's based on what the forecasts are. On the translation exposures, we do not hedge them. And the reason you don't hedge them is we view our hedging strategy as being one of focused on driving the right economic outcome for the company. So what we try and do is we hedge cash flow exposures where we expect cash movements to take place. In the instance of translation, there is no real |
4,240 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | is we hedge cash flow exposures where we expect cash movements to take place. In the instance of translation, there is no real cash movement taking place from a euro functional entity to a U.S. dollar functional entity. The cash movement takes place when dividends are made and then we'll hedge the dividend payment at that point in time. So that's kind of the philosophy as to how we go about hedging. Also remember, on translation exposures, which are not hedged, which is what I just spoke about right now, things move around, right? I mean we all know that there's dollar strength in the last couple of months and then the zero strength or there is BRL strength, Brazilian Real strength. So these things tend to revert to the mean. We run the business for the fundamentals of the business in terms of driving underlying value. Currencies will do what currencies do. We hedge them on an economic basis, much like I just explained. |
4,241 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: And the one thing I would like to add to that is we love the fact that we have a geographically diversified business. So this comes with it. This is a fundamental differentiator for us. And many of these markets around the world are fast-growing markets where that is where we find the biggest secular opportunity. So the FX is the last thing that I think about. I think about the growth opportunity in those markets.
Operator: Our next question comes from Trevor Williams from Jefferies. Please go ahead. Your line is open.
Trevor Williams: Great, thanks very much. I wanted to go back to domestic assessments and the growth there relative to GDV and purchase volume. There's been a pretty consistent spread between those growth rates over the last few years. And then Sachin, you called out cross-border mix as a driver of that spread this quarter. If you could just unpack what that means. And if we should interpret as meaning if cross-border volume is outgrowing GDV that we'll kind of see that mix headwind persist? Thanks.
Sachin Mehra: Sure. So the first thing I'll mention in terms of the delta between what we see in domestic assessments and GDV is there's a rounding impact which is taking place there. So while you see the numbers as we've kind of talked about it as 10% and 12%. The reality is the 10% is rounded down number, the 12% is a rounded up number. So the delta isn't as big as it kind of seems out there. But kind of that's by the way, just FYI. On your question around the cross-border mix component, here's the reality. By its very definition, domestic assessments does not include cross-border revenue. GDV includes cross-border volumes. And so what happens effectively is if GDV -- if cross-border volumes are growing at 20%, which is what we kind of reported for the fourth quarter, you've got the impact of that coming through in the GDP number. You have no associated revenue coming through in domestic assessments. And that's what I mean by cross-border. |
4,242 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Will Nance from Goldman Sachs. Please go ahead. Your line is open.
William Nance: Hey, I appreciate you taking the questions. Michael, I wanted to ask you about your thoughts on the European market following up on the kind of mid-teens growth you've been putting up in that geography more recently. Just wanted to get your thoughts on the competitive dynamics with some of the local schemes being folded up into the European payments initiative, I think, including in your home market of Germany. Just any thoughts about how this kind of changes the landscape and just remind us kind of exceptionally how you think about the competitive dynamics in the continent? Thanks. |
4,243 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So that's a great question. And I always love to talk about my home country. The -- I want to put a stat into your mind. Earlier on, we talked about how we're driving payments growth by shifting volumes from domestic networks and closed-loop networks. Over the years, we have driven up our switching ratio to 70%. So that's important as a backdrop into this question. So we have success and we know how to deal with domestic competitors and partners. Now on that backdrop, particularly in Europe, there has been, over the years, push to come up with local payment solutions as an alternative offer to consumers. And there's a whole range of reasons why that is contemplated in Europe, partly sovereignty, partly more control, all of that. The fundamental truth though is that in the end, the consumer is a really deciding factor here. What's a good user experience? How about availability? If you put a new app into a payment market, it has tons of choices already, it's going to be very hard to convince merchants and consumers to change. We've seen it in the U.S. with a bank-led app as well. So all in, we feel this is good for competition. It motivates us to continue to compete and invest in our proposition across channels. We talked about the token topic earlier on and how that makes checkout easier and so forth. So right now, we are looking at particularly at Vero [ph]. So Vero is currently an initiative of 3 countries. This was multi-country in previous years, and now it's down to 3. And the first transaction took in December, so there's proof-of-concept, pilot stage, and we'll see where it goes. At this point in time, we don't see it as a material concern or threat to our business. But our approach has always been one of partnership. We partnered with domestic schemes in many countries around the world, maybe on the services side, and we'll see how that goes over time. The more choice there is because it will generally bode for a level playing field on the competition side is which we like, and |
4,244 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | The more choice there is because it will generally bode for a level playing field on the competition side is which we like, and then we'd love to compete with our solutions. |
4,245 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: Julianne we can squeeze one more question in.
Operator: Our last question will come from Sanjay Sakhrani from KBW. Please go ahead. Your line is open.
Sanjay Sakhrani: Thank you, good morning. I just wanted to go back to the volume acceleration, Sachin. I mean I know you mentioned a bunch of different things, but as we look underneath it all, is it that the consumer is really gaining strength in that sort of what's driving the acceleration? Is it shared -- part of its share gains? I'm just trying to think about the acceleration in the fourth quarter, the sustained one in -- actually a further acceleration in the United States year-to-date. Maybe you could just talk a little bit about that? Thank you. |
4,246 | MA | 4 | 2,024 | 2025-01-30 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure, Sanjay. So I'll speak to the fact that the metrics you're talking about for the fourth quarter compared to the third quarter is the acceleration you're kind of alluding to. I think at the highest level, we should all kind of take comfort in the fact that the consumer continues to be very healthy, and we're seeing strong consumer spending and good commercial spending as well. So those are important. As it relates to whether it's driven by share or not driven by share, frankly, quarter-over-quarter, there is very minimal impact, which is there from a share standpoint because the wins which we've talked about have been helping our volume growth in the third quarter as they have in the fourth quarter. So it's really the underlying trends of the consumer and the merchant spend, which is helping us. There's a little bit of lift, which is coming from crypto, which we kind of talked about, right, which is there. And there's a little bit in the nature of the travel spend pull forward kind of which I spoke about in my prepared remarks. But other than that, I got to tell you, I mean, look, I mean, when you do the right things in the market, you win the right portfolios and those portfolios grow at a good pace and there's a healthy consumer, you tend to see the kind of metrics you see, which is what we're kind of showing you.
Devin Corr: Thank you, Sachin. Michael, any closing remarks?
Michael Miebach: Well, I'm happy we got Sanjay in even though we're over time, so excellent. Good conversation. Thank you very much for your support as always. This is -- there was a lot going on this quarter. So it was good to overrun a little bit. I still want to do what I always do is thank the 34,000 colleagues at Mastercard for being out there with our customers every day and pushing in this business forward, and thank you to all of you for your support. We'll speak to you next quarter. Thank you very much.
Sachin Mehra: Thanks, everyone.
Operator: This concludes today's conference call. You may now disconnect. |
4,247 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Good morning. My name is [Brianna] (ph), and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Incorporated Third Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Mr. Devin Corr, Head of Investor Relations, you may begin your conference.
Devin Corr: Thank you, Brianna. Good morning, everyone, and thank you for joining us for our third quarter 2024 earnings call. With me today are Michael Miebach, our Chief Executive Officer; and joining remotely is Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then that the queue will open for questions. You can access our earnings release, supplemental performance data and the slide deck that accompany this call in the Investor Relations section of our Web site, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis unless otherwise noted. Both the release and the slide deck include reconciliations of non-GAAP measures to GAAP reported amounts. Finally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding Mastercard's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our Web site for 30 days. With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach. |
4,248 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you, Devin. Good morning everyone. On Halloween, well, nothing spooky here. The headline this quarter, again, we delivered strong results across all aspects of our business. We’re adding to that momentum with the announcement of two planned acquisitions, Recorded Future and Minna Technologies. In the third quarter, net revenues were up 14%, and adjusted net income increased 13% versus a year-ago, as always, on a non-GAAP currency-neutral basis. These results were underpinned by healthy consumer spending, including strong cross-border volume growth of 17% year-over-year on a local currency basis. And value-added services and solutions net revenue grew 19% year-over-year on a currency-neutral basis. The macroeconomic environment remained supportive, and continues to underpin the strength in consumer spending. The labor market remained strong, even if slightly below historically tight levels. And inflation has moderated, albeit at varied levels across categories and countries. Overall, we remain positive about our growth outlook, but we will continue to monitor the environment. We will continue to focus on the things we can control, and execute on our growth algorithm. By tapping into the sizable secular shift opportunity to electronic payments, and that across both spend and transactions. Also, by further penetrating the addressable market in commercial and new payment flows, by gaining market share, and by growing value-added services and solutions. Let’s take a look at our progress in these four areas, starting with the shift to digital. There’s still a long runway for the secular shift for person to merchant payments. Our diverse global footprint and innovative digital-first proposition enable us to maximize this opportunity. A key driver is acceptance, which we have effectively doubled over the last five years. We are increasing acceptance by digitizing untapped pools of spend in areas, like transit, to open up new transaction flows. Over the years, we have helped hundreds of transit |
4,249 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | pools of spend in areas, like transit, to open up new transaction flows. Over the years, we have helped hundreds of transit systems around the world move to open loop. And now, our contact-less technology is making it easier for international travelers in Beijing and people in Hong Kong can now seamlessly pay for their train trips. The shift to digital means turning every device into an acceptance device. Just think about that. Tap-on-phone is now live in over 110 markets. Since the beginning of this year, the number of tap-on-phone locations almost doubled. And more than 10% are net new acceptance locations for Mastercard. You see it everywhere, at food trucks in major cities, at the farmers’ market in my town, in the air to make in-flight purchases, and at sporting events like the Major League Baseball All-Star Game. We’re adding more access through acceptance efforts. In Africa, we’re partnering to make our QR pay-by-link technology available to every merchant with a KaiOS-powered phone, that’s putting affordable ways to be paid in the hands of underserved small businesses across the whole continent. We’re investing in cutting-edge technologies, like tokenization and pass keys to make the online shopping experience better and more secure. And that’s the expectation people have when they see our brand. They know it’s convenient, fast, and frictionless. And that ease and simplicity are not sacrificed for world-class security and protection against fraud. They get all that from Mastercard in every transaction. Efforts like these are being developed by our teams across the globe, including at our newly expanded tech hub, in Pune, India, where I was earlier this month. India is where we first launched the Mastercard payment pass key service, which replaces the need for passwords or texts for one-time pass codes with biometrics; simple and seamless ways to address the high levels of fraud and the need for secure payments everywhere, no matter the channel. We’re extending and scaling that into new markets with |
4,250 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | and the need for secure payments everywhere, no matter the channel. We’re extending and scaling that into new markets with partners like noon Payments, one of the largest PSPs in Middle East Africa. We’re also collaborating with India’s leading wearables brand, Bolt. We will work with them to enable quick, highly secured tokenized contact-less payments on their devices. The continued adoption of these capabilities positions us well to capture the large secular opportunity in consumer payments. Now, the consumer is one part of the story. There’s a sizable opportunity in unlocking new flows across commercial payments and disbursement and remittances. We’re seeing strong momentum in these spaces. In commercial, we have the right solutions, and we’re expanding into new verticals with specialized partners who offer significant reach. Last quarter, we announced the partnership with CBC to provide car distribution, acceptance and financial education to almost two million retailers. We’re now building on this momentum with a partnership with payment orchestrator, Yallo. They work with some of the largest consumer packaged goods distributors in Latin America, including Nestlé, Mondelez, and Coca-Cola. This partnership will enable three million small and medium-sized customers to use Mastercard small business cards to make purchases. And in the healthcare industry, we’re partnering with Fundbot, a fintech specializing in supply chain financing. We will work with them to capture additional B2B flows with virtual cards and address insurance payment delays that have historically posed challenged. Now shifting to disbursements and remittances, we’re also scaling with important players in that space. You saw our announcement at Mastercard Move, we’ll be integrated into Citi’s cross-border payments network. Citi customers in 65 countries can now make secure near real-time cross-border payment transfers to Mastercard debt cards in 14 receiving markets worldwide with more to come early next year. In the U.S., we have expanded our |
4,251 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | to Mastercard debt cards in 14 receiving markets worldwide with more to come early next year. In the U.S., we have expanded our partnership with payment platform processor Astra Inc. to accelerate the adoption of Mastercard Move for push-to-card payments. In Latin America, we announced partnerships with Paysend, Leap Financial, and Felix Pago to tackle the significant U.S. and Latin America cross-border corridor opportunity. Another important element of our growth algorithm is gaining more share of the carded market. And we are, even in today’s competitive marketplace, we do this by understanding our customers’ needs and by offering differentiated service that can help them and drive value and/or choice to the end customer. For example, this quarter, in Belgium, Brussels Airlines announced that they will migrate their co-brand card and loyalty program to Mastercard. We extended our agreement with the second largest bank in Europe, BNP Paribas Group. The extension includes additional services such as launch pads to co-create new digital experiences through our dedicated innovation hub. We’re building on our partnership with one of the largest commercial banks in Qatar; Doha Bank. In addition to renewing debit and prepaid, they will migrate the majority of their credit program to Mastercard. They were also the first bank in Qatar to launch our cross-border payment services. We’re teaming up with Alibaba.com to enable their first co-branded U.S. small business credit card. And we signed an exclusive partnership with Mobitel’s mobile wallet: e-Mola, in Mozambique. To me, all these reinforce Mastercard is a valued partner to our customers. Last quarter, I highlighted the progress we’re making against the significant opportunity in Africa. Today, let’s focus on Latin America, a diverse region that embraces new technologies and represents a large untapped opportunity to convert cash and check to electronic forms of payment. External sources estimate that more than 60% of purchase transactions in Latin America are still |
4,252 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | electronic forms of payment. External sources estimate that more than 60% of purchase transactions in Latin America are still paid in cash and check. We have been striving strong growth in the region with third quarter year-to-day GDV up 19% year-over-year on a local currency basis. And we are working locally to win share. We’re growing with two of the largest banks in Guatemala. Banco G&T Continental will migrate the majority of their debit portfolio to Mastercard. And Banco Industrial will drive new MasterCard credit and debit issuance, and use us as the network provider for their neobank. In El Salvador, Banco Agricola has agreed to migrate their debit portfolio to Mastercard and drive new credit issuance. The leading credit issuer in Uruguay, OSEA, has renewed our agreement and will convert a private label portfolio to Mastercard. We also have excellent merchant partnerships in Latin America. In Chile, we’re securing our position as the market leader with retail issuing partners. We extended our card issuing partnership with the second largest merchant in Chile, Cencosud. We renewed our exclusive card issuing partnership with Banco Ripley, the financial institution of Ripley Corp, one of the largest retail conglomerates in Chile and Peru. This snapshot of Latin America shows more examples of how we continue to win and retain customer agreements around the globe. Now, turning to value-add services and solutions. Our strong growth here is supported by strong differentiated products, transaction flows, and customer demands. And we aren’t stopping here. We are investing in new products to further expand our addressable market and address the needs of our customers. Let’s start with cybersecurity. We play a critical role advancing trust in securing a global digital ecosystem before, during, and after a transaction. Our agreement to acquire Recorded Future is expected to add threat intelligence capabilities to our leading identity solutions, real-time fraud scoring, and cybersecurity services. The company provides |
4,253 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | capabilities to our leading identity solutions, real-time fraud scoring, and cybersecurity services. The company provides real-time visibility into potential threats through differentiated AI-powered solutions. This enables customers to act on and mitigate risks before they occur. We can enhance these solutions with the addition of Mastercard Insights product. This planned addition is expected to make our cybersecurity value proposition stronger, open up cross-sell opportunities with new customers, and add to our addressable market. Another trend is the growth of the subscription economy. Subscriptions are everywhere; delivery, entertainment, shopping, software, healthcare, and much more. They play a big role in people’s lives and are supported by and help grow digital payments. With that, comes an increasing demand for more transparency and control from consumers as well as regulators. That’s why we have agreed to acquire Minna Technologies. Their payment scheme agnostic services go beyond insights. It enables consumers, like those today with Capital One, to easily modify, extend, or cancel subscriptions directly within their banking applications and websites. And merchants benefit from the ability to re-engage their customers. The technology will also add to our broader set of tools like consumer clarity to enhance the overall value we deliver, including helping merchants build long-term deeper relationships with consumers through loyalty, rewards, and personalized offers. At the end of the day, it’s about creating a win-win approach for all involved; merchants, banks, and consumers. The expectation from consumers for personalized experiences also continues to grow. To meet this demand, we acquired best-in-class personalization assets in 2022 by Dynamic Yield. Since then, we have enriched the consumer-consented personalization experience with insights from our data analytics. That’s why we’ve had a lot of success scaling with around 500 retail and commerce partners, including luxury hospitality conglomerate in |
4,254 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | we’ve had a lot of success scaling with around 500 retail and commerce partners, including luxury hospitality conglomerate in the Middle East, Kerzner. And now, we have introduced a new solution for issuing banks called Personalization Breeze. It combines our market-leading personalization offering with our propensity modeling to send individualized messages to cardholders. This is a fantastic example of the value we can deliver when we combine the proposition of our acquisitions, data, and other service offerings. Now, one of those offerings is open banking. It’s no surprise. People want greater choice, control, and access to financial services. And banks want faster and more efficient processes. Our open banking technology can deliver all that. We recently announced enhancements to our open banking lending program. Through our partnership with Argyle, lenders can now verify income and employment through consumer-permission payroll data. Fannie Mae and Freddie Mac have authorized this as a data source. And we work with them to provide asset verification, rent history, and cash flow assessment data during the mortgage underwriting process. This means a streamlined and informed lending process, especially for those with low, thin, or no credit files. We continue to add to, enhance our value-added services and solutions. We provide differentiated value at scale across a diverse set of payment-adjacent areas; cybersecurity, fraud, marketing, personalization, and insights to name a few. All with large addressable markets where we have the right to play, win, and scale, and all that while driving the positive flywheel effect where payments and services reinforce each other. Today’s call is a look at the past quarter. We have accomplished how we continue to set ourselves up for the future. We deliver it again across all facets of the business. And there’s so much opportunity ahead. We look forward to diving into this and more at our investment community meeting on November 13. Now, Sachin, over to you. |
4,255 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Thanks, Michael. Turning to page three, which shows our financial performance for the third quarter on a currency-neutral basis, excluding where applicable special items and the impact of gains and losses on our equity investments. Net revenue was up 14%, reflecting continued growth in our payment network and our value-added services and solutions. Operating expenses increased 12%. And operating income was up 15%. Net income and EPS increased 13% and 16% respectively, primarily reflecting the strong operating income growth in the third quarter. EPS was $3.89, which includes an $0.08 contribution from share repurchases. During the quarter, we repurchased $2.9 billion worth of stock and an additional $983 million through October 28th, 2024. Let’s turn to page four, where I’ll speak to the growth rates of some of our key drivers for the third quarter on a local currency basis. Worldwide gross dollar volume or GDV increased by 10% year-over-year. In the U.S., GDV increased by 7% with credit growth of 6% and debit growth of 8%. Credit and debit growth was aided by the conversions of the previously announced Wells Fargo commercial credit and citizens’ debit migrations respectively. Outside of the U.S., volume increased 12% with credit growth of 10% and debit growth of 14%. Overall, cross-border volume increased 17% globally for the quarter, reflecting continued strong growth in both travel and non-travel-related cross-border spending. Turning to page five, switch transactions grew 11% year-over-year in Q3. Both card present and card not present growth rates remain strong. Card present growth was aided in part by an increase in contactless penetration, as contactless now represents approximately 70% of all in-person switched purchase transactions. In addition, card growth was 6%. Globally, there are 3.4 billion Mastercard and Maestro-branded cards issued. Turning to slide six for a look into our net revenue growth rates for the third quarter discussed on a currency-neutral basis. Payment network net |
4,256 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | for a look into our net revenue growth rates for the third quarter discussed on a currency-neutral basis. Payment network net revenue increased 11% primarily driven by domestic and cross-border transaction and volume growth. It also includes growth in rebates and incentives. Value-added services and solutions net revenue increased 19% primarily driven by growth in our underlying drivers, strong demand for our consulting and marketing services, the scaling of our fraud and security, and our identity and authentication solutions, and pricing. Now, let’s turn to page seven to discuss key metrics related to the payment network. Again, all growth rates are described on a currency-neutral basis unless otherwise noted. Looking quickly at each key metric, domestic assessments were up 10%, while worldwide GDV also grew 10%. Cross-border assessments increased 22%, while cross-border volumes increased 17%. The five-ppt difference is primarily driven by pricing in international markets and mix. Transaction processing assessments were up 14%, while switched transactions grew 11%. The three-ppt difference is primarily due to mix and pricing. Other network assessments were $227 million this quarter. As a reminder, these assessments primarily relate to licensing, implementation, and other franchisees, and may fluctuate from period to period. Moving on to page eight, you can see that on a non-GAAP currency-neutral basis excluding special items, total adjusted operating expenses increased 12%. The growth in operating expenses was primarily due to increased spending to support the continued execution of our strategic initiatives, including planned increased spending in advertising and marketing, as well an increase in indirect access, as discussed on our Q4 2023 earnings call. Turning to page nine, let me comment on the operating metric trends. Our Switch metrics in Q3 and through the first four weeks of October remained generally stable sequentially, both in the U.S. and across the globe as spending remained healthy. Of note, in |
4,257 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | October remained generally stable sequentially, both in the U.S. and across the globe as spending remained healthy. Of note, in the U.S., a portion of the uptick in switched volumes in the first four weeks of October was related to certain events, including the mix of high-volume calendar days and the tightening of social security payments this year as compared to last year. Turning now to page 10, I wanted to share our thoughts for the remainder of the year. As Michael said, consumer spending remained healthy, and we delivered across all aspects of our business in Q3. We remain well-positioned for the opportunities ahead, driven by our diversified business model, the significant opportunity for further secular shift to digital forms of payment in both consumer and commercial, and strong demand for our value-added services and solutions. While we continue to monitor the economic headwinds and tailwinds, we remain focused on executing on our strategy. Overall, we remain positive about the growth outlook. Now, turning to Q4 2024, year-over-year net revenue growth is expected to be at the low-teens range on a currency-neutral basis excluding acquisitions. Acquisitions are forecasted to have a minimal impact on this growth rate, while we expect a zero to one PPT headwind from foreign exchange for the quarter. From an operating expense standpoint, we expect Q4 operating expense growth to be the high end of a low double-digit range versus a year ago, again on a currency-neutral basis excluding acquisitions and special items. Of note, this reflects higher spending in advertising and marketing in Q4, as compared to Q3, primarily driven by the cadence of spend related to our sponsorship activities. Acquisitions and FX are forecasted to have a minimal impact to this OpEx growth for the quarter. Other items to keep in mind, on other income and expenses, in Q4, we expect an expense of approximately $85 million. This assumes the prevailing interest rates and debt levels continue, and excludes gains and losses on our equity |
4,258 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | $85 million. This assumes the prevailing interest rates and debt levels continue, and excludes gains and losses on our equity investments which are excluded from our non-GAAP metrics. Finally, we expect a non-GAAP tax rate of approximately 17% for Q4 based on the current geographic mix of our business. A further comment on tax, there’s now more clarity on the potential impact of the Pillar Two global minimum tax rules as more countries continue to enact these rules. As disclosed in our 10-K, we have an incentive grant in Singapore. Starting in 2025, we expect the new Pillar Two global minimum tax rules will offset the benefit of this incentive brand. For reference, Q3 year-to-date 2024, this benefit had the impact of reducing our tax rate by approximately 4%. On a personal note, I’d like to thank all of you for the well-wishes I’ve received over the last several weeks. I feel good and happy to be here speaking with you today. And with that, I’ll turn the call back over to Devin. |
4,259 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: Thank you, Sachin. Brianna, you may open the call up for questions now.
Operator: Thank you. [Operator Instructions] Your first question comes from the line of Sanjay Sakhrani with KBW. Your line is open.
Sanjay Sakhrani: Thank you. Good morning, and I’m glad you’re doing well, Sachin. Just a quick question on the U.S. volume uptick, I know you mentioned some of it was related to some of those items that you mentioned. But is the rest of it just consumer picking up steam a little bit, and I’m just curious how, through your data, you’ve seen the consumer behave in a lower-rate environment, that’s rated so lower do consumers spend more?
Sachin Mehra: Hey, Sanjay, thanks for the question. Hopefully, can you hear me? Look, I mean the consumer continues to be healthy. We continue to see positive trends from a consumer health standpoint. They’re spending in a very healthy manner. So, that’s the underlying basis for what you’re seeing for our Q3 metrics, as well as what you’re seeing in the first four weeks of October. I will caution and say these are first four weeks of October, so they don’t make the quarter. But that being said, there’s no doubt in my mind that the consumer continues to show strength. But beyond that, like I mentioned, in the first four weeks, we cannot ignore the fact that there were certain one-time items such as the calendarization impact, which I mentioned, and the timing of social security payments which kind of caused that little bump that you see in U.S. metrics take place. But net-net, here’s the story, that the reality is, overall, with employment continuing to remain strong with interest rates starting to come down -- well, actually, technically, that there were reductions in the Fed-driven interest rates, but we’ve seen that the yield curve has actually gone right back up. But the reality is there continues to be confidence from a consumer standpoint. We’ve seen that come through, and it certainly came through in their spending patterns as well. |
4,260 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Tien-tsin Huang with J.P. Morgan. Your line is open.
Tien-tsin Huang: Hey, great, thanks. And Sachin, I knew you wouldn’t miss delivering these results. I wanted to ask, for Michael, I like your discussion of acceptance, and the trends and the growth, and the benefits there, can you give us -- [technical difficulty] or maybe for tokenization, and where we are with respect to penetration, growth, benefits to the ecosystem and, of course, benefits to Mastercard’s P&L?
Sachin Mehra: Right. So, tokenization cutting-edge technology, as I call it, we’ve been investing it for years. We’re in the billions of tractions now. The benefit of tokenization is pretty clear. It helps on the security side. The tokenized transaction has -- always a more secure transaction as the data will be only available for one-time use. That drives adoption across the ecosystem on the basis of higher securities. This has been rapidly around the world. We are in a whole range of markets around the world today. And it doesn’t end at security, there’s benefit that is coming to merchants from tokenization as there are higher conversion rates, and online commerce, for example. So, disability for us is -- cannot be underestimated. So, we’re going to continue to invest in it. There is a set of base functionality around tokenization as security, as I explained. There will be other solutions that we can tag on to that, for example, toke lifecycle management, and so forth. Now, we have been investing for many years in this capability. And, of course, we see this as an opportunity for us to drive our revenue line, and charge for that, but it’s very clearly related to and direct upside that our customer see, is our merchant from higher conversion or lower fraud on the securities side.
Operator: Our next question comes from the line of Harshita Rawat with Bernstein. Your line is open. |
4,261 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Harshita Rawat with Bernstein. Your line is open.
Harshita Rawat: Hi, good morning, and thanks for taking my question. Sachin, and I hope you’re feeling better. Michael, I wanted to ask about Mastercard value-added services, specifically in cybersecurity. You made a number of investments here, including the recent recorded future deals. If I look at your large disclosure from three years ago, cyber and intelligence with $3.7 billion in revenues for you already back then, can you talk about how it's being sold to clients? Is it an attached on a transaction or increasingly kind of like a new adjacency for Mastercard where you're studying synergy from the data on the platform and selling beyond just Mastercard transactions? Thank you. |
4,262 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So, when I look at our value-added service portfolios, our security solutions is a very significant share of that. Why is that? Because the world is digitizing more, there's an increasing need to secure those transactions. That's a tremendous underlying secular trend for us to be involved with. It's a huge addressable market. So, we build out a set of transaction related solutions over the years before the transaction, after the transaction. One of the more recent ones that we talked about that we invested heavily in using our Brighterion acquisition from back in 2017 to use our AI capabilities is decision intelligence. We've now boosted the product with Gen AI and the outcome that we see is tremendous. This is up to a 20% lift that we see. Now, these are solutions that our customers opt into because they like those solutions and they like the lift that they get out of that. As I was saying earlier in the prepared remarks is we're not stopping here. Clearly, cybersecurity risk doesn't stop at the transaction. It goes beyond the transaction. It goes into reacting to cybersecurity risk that you see in your business that goes beyond fraud, aware of those vulnerabilities. You recall our RiskRecon acquisition from a few years ago. Again, those are services that our customers buy from us because they feel they are under threat and they want to step up their defenses. Now, recorded future, this is a subscription-based service into threat intelligence, which is the next logical step to go even further and look even further ahead and see what threat is coming my way. So, we have a natural position in here. It starts with the transaction, but we're selling these services way beyond the transaction. We've been historically on the record to say about 50% of our services are somehow related to transactions, but the other 50% are not and we're building out that portfolio with recorded future being one example. We're very excited about that. Threat intelligence, if you look at the customer set of |
4,263 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | with recorded future being one example. We're very excited about that. Threat intelligence, if you look at the customer set of recorded future, it's very impressive and we're looking forward to bringing those into the fold as and when the approval process ends. |
4,264 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Rayna Kumar with Oppenheimer. Your line is open.
Rayna Kumar: Good morning. Thanks for taking my question. We saw some volume acceleration in Europe, which is your largest geography in the quarter. What are you seeing in terms of macro in the region as well as potential for further share gains? Thank you. |
4,265 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Hey, Rayna. Thanks for your question. So, look, I mean, Europe is clearly a very important region. We continue to perform well in that region. What we're seeing from a macro standpoint, and you've probably seen this in the most recent economic data, is you're starting to see positive trends come through there with momentum in France and Spain, and even in Germany. The reality is, Europe has kind of been a little bit of a tale of two cities. You've had Northern Europe, and then you have Southern Europe. Southern Europe has been actually performing well for the longest time. And now you're starting to see some momentum come through in other parts of Europe as well. So, net-net, I would tell you, the consumer confidence continues to improve, unemployment remains low. And so, from a macro standpoint you're in a good place from a European standpoint. As it relates to Mastercard's business in Europe, a couple of factors, there still remains a tremendous secular opportunity in Europe. We're tapping into that. We continue to actually be performing well on that basis, which is why you're seeing that come through in our drivers. And then, even beyond that, going back to the growth algorithm, which Michael was speaking about earlier, we continue to win share. I mean, the reality is what you're seeing come through in the nature of the drivers is the conversions of the UniCredit portfolio. You're seeing that come through in the nature of the Deutsche Bank portfolio. These are ones we've talked about in the past. You're just starting to see that come through in the metrics now. And also, we continue to be very focused on our efforts for migrating from Maestro to Debit Mastercard. And you're seeing all of that come through in the metrics. So, net-net, very important region; the economy seems to be holding up well, and in some cases showing renewed signs of improvement. And then, our business there, both from a secular and a market share standpoint that this should perform well. I noted such and that you said, |
4,266 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | there, both from a secular and a market share standpoint that this should perform well. I noted such and that you said, even in Germany. I wouldn't miss my chance on that, Michael. |
4,267 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Bryan Keane with Deutsche Bank. Your line is open.
Bryan Keane: Hi, guys. Just wanted to ask about incentives, there's a little bit of a debate going on. Is incentives rising? Is there more renewals going on currently that are going to push incentives higher? Just like to get your thoughts around that. And glad you're feeling well, Sachin.
Sachin Mehra: Thank you. Look, I mean, the reality is, from a competitive environment standpoint, the market continues to be competitive. We continue to compete in this environment. Nothing, from our perspective, is vastly different from what was there already a year ago or two years ago. The reality is we'll continue to compete here. From an incentive standpoint, you're very well aware that in order to actually win volume, you're going to have to incentivize customers, which is what we do. And then, when you win the volume, you have the ability to generate revenues from the volume in question, optimize those portfolios, grow them at a faster pace, and then deliver services, which helps us increase our net value yield. Really, the playbook is very much the same, and from a competitive environment standpoint, not much is changing on that front.
Michael Miebach: And you see us winning. If you look at some of the movements here in the United States recently on the debit side, there is, on the basis of our differentiated propositions, we keep winning, so that resonates. We keep investing in that, as I just spoke about, but it's also pretty clear in that competitive environment where we hope to have the better solution for our customers in the end consumer. There is not every deal is for us and we don't want to win every deal. There is competitive movement in different parts of the world and we are very thoughtful about that. There is financial discipline. In the end, what we keep in mind is the net revenue yield.
Operator: Our next question comes from the line of Tim Chiodo. Your line is open. |
4,268 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Tim Chiodo. Your line is open.
Tim Chiodo: Great, thank you for taking the question. I want to dig in a little bit on Mastercard Move, so the combination of Mastercard Send and the Cross-Border Services. Two brief topics, one around mix. Across that entire capability, would you describe the cross-border mix as similar, higher, or lower than the rest of Mastercard's business? And then, in terms of the accounting for the revenues, I believe, and maybe you could correct me, that any of the domestic-related activity tends to be a little bit more card-based, so it's sitting within payment network. And some of the cross-border activity, some at least, is more account-to-account and would be within Dash net. Thanks. |
4,269 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: All right. So, maybe I start on that. So, these are very different and complementary businesses. I think that's the first to think about. So, obviously we have a thriving cross-border driven part of our carded business and the P2M space. We make something very complex across border, pretty simple for consumers. That's a good starting point, but there's many other use cases that are not actually happening through PODS today and as part of our one-stop strategy for payments for years, we have been investing in going after those flows and having a differentiated proposition there. So, Mastercard Move, which has domestic and cross-border type of payments, currently what we see here is this is a pretty differentiated reach that we have across 95% of the world's bank population, 180 countries, 150 currencies, that's a very different proposition. There are kind of use cases that you think about, think insurance distribution, gig workers that work remotely and develop an application for another company somewhere else around the world. So, it's a pain point for many companies how to do this effectively and at attractive price and our growth rates tell us that we're having a right proposition out there. In the third quarter, we're seeing over 40% of transaction growth in this business. So, differentiated solution and I come back to the announcement with Citi here. So, Citi is a strong player in cross-border and here this is one plus one is three as we have more endpoints and starting points for a transaction that we can bring into this partnership.
Michael Miebach: And then, on your question around the accounting, you have it right, I mean, the stuff which is on card rails, for example, domestic send, related revenues, send and payment network, and then the cross-border volumes, which flow on non-card rails are sitting in our value-added services and solutions.
Operator: Our next question comes from the line of Darrin Peller with Wolfe Research. Your line is open. |
4,270 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Darrin Peller with Wolfe Research. Your line is open.
Darrin Peller: Hey, guys. Thanks. Sachin, first of all, I just want to reiterate, it's great to hear you on the call again. Guys, I just want to start off first. I mean, the yield and the spread and what we're seeing in growth of transaction revenues and cross-border, continuing to outperform the KPIs, I think it just shows the value add you're bringing to your customers. Can you just touch on the expansion of that and what kind of opportunities you're seeing taken on by the customers to allow you to have those better yields relative to the volumetrics, so just basically incremental VAS or services or even pricing. And then, Sachin, just a quick follow-up on tax rate, I think you said four points, so just want to be clear, we should be expecting around 20% tax rate next year? Thanks. |
4,271 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Yes. So, sure, Darrin. Thanks for your question. So, let me take the tax rate question first, and I'll come back to your question around what you're seeing in terms of yield trends. So, on the tax rate look, now we see greater clarity as it relates to the implementation of this bill of two global minimum tax. And what we thought, and you've seen this in our 10K disclosures in the past that we've had this incentive agreement with Singapore. The reality is now Singapore has actually enacted those rules. There's one final step which is left to be done in Singapore, but the reality is it's getting pretty close. So, what we wanted to do was help our investors understand the impact of Q3 year-to-date that we had experienced as a result of these incentive plans from Singapore on our tax rate. And that's that four percentage number which I kind of shared with you. I can't tell you exactly what our tax rate is going to look like on a going forward basis, but order of magnitude, right, the impact of not getting the incentive grant in Singapore this year would have had an impact about four points on our tax rate. So, I wanted to get that clarity out for the investor community on that. On the first part of your question, which is around yields, look, we're very pleased with the value we're delivering to our customers, whether it's in cross-border, whether it's in domestic, whether it's through the services we bring. And the reality is what you're seeing come through is, I think you were talking about the spread between the driver metric and the revenue metric here, look, there are a number of factors which go into this, right? So, for example, on the transaction processing side, you can see the impact of mix come through. And this is a mix from both a cross-border and domestic standpoint when you're comparing the driver trend with the revenue trend, but it's also geographical mix, depending on which geographies are going faster and which geographies are going slower. So, you've got to take those factors into |
4,272 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | on which geographies are going faster and which geographies are going slower. So, you've got to take those factors into consideration. We certainly do when we're running the business. We look, like Michael said, we're not looking to win every portfolio. We want to win the right portfolios in the right regions with the fastest growth opportunity, which have the best yield. Because at the end of the day, what we're trying to optimize is driving that yield up. And that's what you're seeing come through in my comments around the mixed spread, which is there both on cross-border as well as in transaction processing. The other factor I'll point out is in the third quarter, you did get a little bit of a lift come through from FX volatility. Now, that sits in our transaction processing assessments line item. That is very hard to predict. I will tell you right now, FX volatility is running at record low levels over the last few weeks. So, it's a little bit of what we can do to enable the yield, which is what we do by delivering good value, good products, good services, as well as winning the right portfolios. And then, there's a little bit of stuff which happens from a macro standpoint, such as FX yield, et cetera, et cetera, which kind of plays into that. So, hopefully, Darrin, that gives you a little bit of color as to how we're trying to optimize the mix between what we're seeing from a driver trend standpoint and what we're seeing from an overall assessment revenue standpoint. |
4,273 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of James Faucette with Morgan Stanley. Your line is open.
James Faucette: Great. Thank you very much. I wanted to dig in a little bit into B2B and commercial volumes. I think there's been good and steady progress there over the years, including this year. But at the same time, a lot of us are surprised that there hasn't been an acceleration. So, I'm just wondering kind of how you would assess that situation and what are the tools and capabilities of Mastercard? We should think about that Mastercard is bringing the market to help accelerate that market, or you think this is going to continue to be the cadence that we should expect, that it'll be steadily contributing to growth, but it just takes time? Thanks. |
4,274 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you. Great question. One of my favorite topics to talk about commercial, earlier, I spoke about the tremendous secular opportunity we see in consumer, and then build on that and said, what is an even bigger opportunity in commercial? So we like it for those reasons. As I commented on previous calls, there were various structural issues over the years why this hasn't really unlocked in emerging markets, there were issues that we're not familiar with the risk. There wasn't technology that was available in back offices of smaller companies and so on and so on. If you pass forward to today, we're seeing a situation where this the momentum feels solid. We're seeing 11% growth in commercial. And that's good. And that's above consumer. And that's we like that. So, when I look ahead and say, what should we expect going forward? I'm not going to give you an outlook right now. Maybe you should dial into the Investor Day in a little while. But the point here is, we see our ability to put out solutions with different partners more globally into the back office systems of companies, our partnership with Oracle and SAP, for example, we see a whole new generation of treasurers that are digitally minded and businesses that are having an expectation that their digital lives in the office should be not worse than their digital lives and their personal lives. So, when we put out our mobile based T&E card proposition, then people are saying that it's cool. We like that. So, there is definitely changes happening. The most significant change that I see is really the interest of our issuing partners around the world to start to see this is a proposition to go into. I can talk to my customer about the working capital effect of a virtual card as part of their payment. That's 30 days of working capital. That is a real winning argument that everybody can understand, including our issuers getting very excited about. So, we see this as a space that's going to continue and drive growth for us. And you saw our |
4,275 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | getting very excited about. So, we see this as a space that's going to continue and drive growth for us. And you saw our reorganization where we align behind commercial and new payment flows because we believe it's going to be a tremendous growth driver. |
4,276 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Hey, I'll just quickly jump in and clarify when Michael talked about the 11% growth rate on commercial, he was talking about the currency neutral growth rate for the third quarter of this year. Just want to be sure that we have that.
Michael Miebach: Sachin, thank you for clarifying.
Operator: Our next question comes from the line of Craig Maurer with FT Partners. Your line is open.
Craig Maurer: Hi, thanks, and good to hear you, Sachin. I want -- there's a lot of discussion around VAS and it's difficult for us to really get under the covers on that too much, but wanted to ask you, Michael, if you could characterize perhaps where you think Mastercard is better than your closest competitors in VAS when you're presenting to an issuer or merchant and it allows you to win that business. Thanks. |
4,277 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So, value-added services and solutions, it's been a true differentiator for Mastercard for the last seven years at least. And we anchored around two fundamental points. I talked about one earlier, which is in a digitizing world, keeping that digital ecosystem in a company or in a consumer context or a bank context safe. So, our security solutions have been a differentiator and I think it's a truly differentiated proposition. The second big underlying trend here is with a highly and a rapidly digitizing world, more and more data becomes available and a lot of more businesses want to make sense of that data. So, this is another powerful trend. So, the second leg of this tool was we're building out a set of data insights solutions. So, that is the general proposition. Now, if you look under the hood of that, to your point there isn't much of a hood under look under the hood that you have. Well, I think we actually did share quite a bit of that over the years. So, on the security side, it's before the transaction, during the transaction, after the transaction, that's our digital identity solutions before. Those are per click solutions where we provide data to give an identity score to somebody that wants to find out, is this the real customer? And then, all the way to our fraud scoring solutions directly linked to the payments, all of that. So, that is pretty known. And on the data insight solution here again, it is a whole set of solutions that help customers that could be a merchant, that could be a bank to engage their customers, their end consumers in a better way through campaign management solutions, test and learn through marketing services, through loyalty and so forth. They are all very different business models, some of them subscription based, some of them per transaction clicks in a very different way. So, all of it, it's a whole mix. The point of all of this is two powerful underlying trends. And within each of these solutions, you have an arc where all of these solutions build |
4,278 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | this is two powerful underlying trends. And within each of these solutions, you have an arc where all of these solutions build on top of each other. They are finely and clearly curated for us to provide an end-to-end solution. So, I can say to our customer, I don't have this widget and that widget for you. I have a solution that can allow you to run your business better. Our engagement is always to help our customers drive their top line. And that's what we do. This is a different proposition than maybe others have out there. We like that because that makes us a strategic partner for our customers, for our customers. Overall, we believe this is differentiated. You've seen strong growth for us for years. You've seen another set of strong numbers for this quarter. And it's been boosting the revenue of the company and our yield. |
4,279 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Trevor Williams with Jefferies. Your line is open.
Trevor Williams: Great. Thanks a lot. With the Q4 outlook for low teens growth, if we think about that as the stepping off point for '25, is there anything in that fourth quarter growth that we should be mindful of either working for or against you that might not carry into next year or that a reasonable baseline for us to use as we start to think about '25? Thanks very much. |
4,280 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. So, first of all we'll talk about '25 at the right time, but let me give you a little bit of color and things to think about between what you're seeing in 2024 and 2025, right? Obviously, you guys know about the leap year effect. And I know you're asking a few poor questions, but more broadly speaking, you've got the leap year effect taking place in 2024. You're not going to have that in 2025. The things which you've got to keep in mind are, number one, we've had significant share wins, which have started to actually roll on in 2024. So, we talked a little bit about the citizens win. We talked a little bit about the Wells Fargo win. We talked about UniCredit, Deutsche Bank. Now, these will lap and the lapping effect of this will come through four quarters after they typically come on our books. So, for example, take something like the Wells Fargo commercial credit win. That was completely migrated onto Mastercard in the second quarter, second quarter of this year, 2024. So, you'll see the lapping effect of that come through in 2025. Similarly, as it relates to citizens, the vast majority of the ramp up on citizens took place in Q2 of 2024 with a little tail effect in Q3. So, you'll see that again lap off in 2025. So, I want to kind of just make sure that you've got that as a line of sight element. The other element is around pricing, right? I mean we've talked a little bit about some of the pricing actions which we've taken for all the innovation investments that we've been doing as a company. You're going to see the lapping effect of that come through as well. So, these are a couple of things which I would keep in mind as you go in from 2024 to 2025. But we'll talk in more detail about '25 at the right time over the next few months.
Operator: Our next question comes from the line of Jamie Friedman with Susquehanna. Your line is open. |
4,281 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Jamie Friedman with Susquehanna. Your line is open.
Jamie Friedman: Let me echo my warm wishes, Sachin. I wanted to ask about China, if I may. You obviously have high ambitions there and are well positioned and you've had some significant developments on the operating side. So, I was just wondering how you're performing relative to your expectations as you roll out in China. |
4,282 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Thank you. So, you mentioned it, I think, in the July call, you said we're alive now in China. So, we're alive as of May with a whole number of issuers and we're alive in China with a very unique proposition, which is a single use card that can be used domestically as well as cross-border. We've been in China for a long time, but that was a cross-border only use case. Now, this single proposition is a card that gives full global acceptance and it gives increasing domestic acceptance through a combination of measures. One is some of the local QR wallets that you can load your card into so you can benefit from that acceptance. And then, we're busy investing in acceptance across the country. There's interest from the Chinese government to link their economy more closely to the global economy. So, they're keen on building out acceptance so that people who travel into China can use cards as they would normally anywhere else in the world. Now, we're excited about the opportunity for a number of reasons. It's a huge economy, obviously, and we want to participate. So, that is a significant secular opportunity for us as we invest in this market. And this is regardless of up and down of the overall economy in China. This is a share situation. It's a secular opportunity as a starting point. But it will take investment. It will take investment. It will take time. Coming back to the acceptance part, issuing is a little easier to solve, but without acceptance, then that's going to be hard to do. So, we will continue to focus on that. As you know, we have a joint venture there and we have our own set of activities in China through services and so forth, which we continue that we have always done in China. So, exciting opportunity, medium to long term, the fact that we are in China does make us now the most accepted payment solution in the world and that is a differentiating factor for us as we look ahead.
Operator: Our next question comes from the line of Fahed Kunwar with Redburn Atlantic. Your line is open. |
4,283 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Fahed Kunwar with Redburn Atlantic. Your line is open.
Fahed Kunwar: Hi, thanks, and also part of my well wishes to Sachin as well. Love to get just a bit more on price and we've touched on it a few times over these questions, but you've obviously taken pricing, I think, on cross-border and elements of that. But is there more room for pricing increases? And if we were looking across your stack and suite of products, where do you see that kind of potential for pricing more for value? Thank you.
Sachin Mehra: Sorry, just want to make sure. Can you hear me, Fahed?
Fahed Kunwar: Yes. |
4,284 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sorry, just want to make sure. Can you hear me, Fahed?
Fahed Kunwar: Yes.
Sachin Mehra: Yes. Okay. I'm looking at the end of the day. Yes. Yes. I just want to be sure you can hear me. Look, at the end of the day, I think the way you should think about our philosophy along both our investments as well as how we drive remuneration from those investments is unchanged. We've always been in the business of investing heavily in driving innovation. As we drive innovation, we deliver value to our customers and to our merchants and consumers. And like with every other business, when you make investments, you want to realize the value for that. And that's what we talk about in the nature of pricing. And that's what we do. So, nothing's changed philosophically. I would tell you in terms of how we're running the business there, you can see that year-over-year, we look to make investments from an OpEx standpoint for all the investments we're doing in our people to drive our strategic initiatives that comes up with value propositions, which allows us to price for them. And that's really the way we're executing on our business. I would tell you that if you think about our business, broadly speaking, you should think about it as no different than in the past, right? On the one hand, we're operating in a very competitive market where you're seeing us compete for winning important portfolios. When you do that, you pay rebates and incentives. So, we like to think about pricing in the context of net pricing, which is net of the compression we take on rebates and incentives. And we continue to still see that environment as one where we have minimal net pricing, which is the combination of what we do in the nature of investments and the reiteration we derive for it, net of what we have to do in order to stay competitive in the marketplace. So, it's a combination of both of those factors which we're balancing.
Operator: Our next question comes from the line of Ramsey El-Assal with Barclays. Your line is open. |
4,285 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Ramsey El-Assal with Barclays. Your line is open.
Ramsey El-Assal: Hi, thanks for taking my question this morning. Michael, I was wondering if you could give us your reaction to the DOJ antitrust suit against Visa. Comment on whether you see a potential opportunity for Mastercard if the legal and regulatory kind of pressure faced by your competitor ends up shifting some market share around.
Michael Miebach: Right. Ramsey, thanks for the question. So, obviously, we all read the headlines, we saw that allegations have been made. Obviously, we can't comment on that. Our view always has been we have to compete in a competitive market. We're doing it exactly in the way that Sachin just laid out, investing our products and solutions. That's how we win. And that's what we believe in. We believe in choice back in 2016 when we stepped into real time payments we were clearly the first in the industry to do that in a significant way. So, all of that, I think, is true. And we see all of that being differentiated and helping us win. If I look at how we've moved, make moves here in the market, in the U.S. with citizens, how we make moves in the market in Europe with UniCredit or NatWest. So, that model isn't changing. That's exactly what we're doing. If you look back at my prepared remarks, all that we're doing on strengthening our product solutions and our acquisitions and everything there, I think is going to be the way for us to win. I see there is a tremendous opportunity for us and that it's unrelated to this particular set of headlines that are out there. And we'll see how that plays out. But we will lean in with our customers and be there with them for their needs and push on.
Operator: Our next question comes from the line of Will Nance with Goldman Sachs. Your line is open. |
4,286 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from the line of Will Nance with Goldman Sachs. Your line is open.
Will Nance: Hey, I appreciate you squeezing me in here. I just wanted to kind of follow up on the earlier question around the value-added services that you're attaching to kind of transactions around the world and heard the earlier context around some of the breakouts you provided historically. But I wanted, I was wondering if you could kind of talk specifically to the kind of multi-rail strategy and the embrace of new networks and just what the progress has been and where you see the most opportunity to attach your value-added services to other networks, what those conversations look like? And if there are any kind of areas in the VAS portfolio where you think that you could potentially add more capabilities over time to address some of the needs of other networks. Thanks. |
4,287 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. It’s interesting when you look at the rise of alternative payment tools, or basically the breadth of the choice that is available to consumers and businesses in terms of payments today. So, you’ve got cards obviously. Then, you have account-to-account payments. You have digital public infrastructure government-sponsored account-to-account, you have P2P systems and so forth. So, the choice is broader than ever before. But if you look at the world outside of cards and you compare it to the world of card payments, wherever cards are available in a competitive-level playing field, a lot of businesses and consumers opt for cards because they give them protections. They give them protections for fraud. They give them protections around digital identity, theft and so forth. And this is coming right back to your question. We see tremendous opportunity here in the cybersecurity space. That is where I think there is the opportunity, the foremost, first and foremost opportunity for our vast portfolio to apply to non-Mastercard transactions. We talked about MasterCard access in the past. So, we have found ways through technology to make the connection into non-Mastercard brand and transactions easier for customers. So, we’re a truly scheme-agnostic provider for a whole range of our services because everybody needs security solutions. So, that’s how we think about it. But data analytics solutions, test and learn, campaign management, what should I have on my shelves, when should I open my branches, these are a set of common questions that customers, particularly in the retail and commerce space, ask us. Again, that’s a set of services that goes way beyond the relationship that we have on the payment side. Again, that is an ability for us to continue to diversify and pull in new customers. So, for us, keeping other payment networks’ transactions safe is an opportunity. We will continue to do that wherever we can and lean in with that. |
4,288 | MA | 3 | 2,024 | 2024-10-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: Thank you. Brianna, I think we’re out of time for questions. Is there anything, Michael, you’d like to wrap with?
Michael Miebach: Well, I just want to thank everybody again for your support. We’re looking to have you all and hopefully everybody else who’s not on the call, to join us for the Investor Community Meeting on November 13. As I said earlier, this has been a bit of a look back onto the quarter, onto this year, into the fourth quarter. And then, we’re going to take a look further out when we get together in a couple of weeks from now. I’m excited about that. As always, everything that we share with you is the fruit of the work of the 34,000 people here at Mastercard. And I will never have a call where I don’t thank them for everything they do, and that goes out to everyone here at Mastercard. Thank you very much, and speak soon. Take care. Bye-bye.
Operator: This concludes today’s conference call. Thank you all for your participation. You may now disconnect. |
4,289 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Incorporated Q2, 2024 Earnings Conference Call. [Operator Instructions]. Mr. Devin Corr, Head of Investor Relations, you may begin your conference.
Devin Corr: Thank you, Julianne. Good morning, everyone, and thank you for joining us for our second quarter 2024 earnings call. With me today are Michael Miebach, our Chief Executive Officer; and Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then, that the queue will open for questions. You can access our earnings release, supplemental performance data and the slide deck that accompany this call in the Investor Relations section of our website, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis unless otherwise noted. Both the release and the slide deck include reconciliations of non-GAAP measures to GAAP reported amounts. Finally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding Mastercard's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our website for 30 days. With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach. |
4,290 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you, Devin. Good morning everyone. The headline this quarter we delivered very strong results powered by broad based momentum across all aspects of our business. Second quarter net revenues were up 13% and adjusted net income up 24% versus a year ago on a non-GAAP, currency neutral basis. These results were underpinned by healthy consumer spending, including strong cross border volume growth of 17% year-over-year on a local currency basis and value added services and solutions. Net revenue grew 19% year-over-year on a currency neutral basis. The macroeconomic environment remains mixed and we continue to monitor the positives and negatives. A few to note, strength in consumer spending continues to be supported by a solid labor market and wage growth. While there are some signs of labor market growth moderating, this is off very strong levels of job creation, as in also, inflation and interest rates remain in focus. We've seen inflation cool, but to varying degrees across carded and non-carded categories. Price levels are still elevated for many goods and services. Interest rates also remain elevated, but many central banks have started to ease and economic indicators support broader rate reductions. While tailwinds and headwinds to economic growth remain on balance, we remain positive about our growth outlook, but that as a backdrop, we remain focused on executing our strategic priorities, which fuel our growth algorithm across core payments, new payment flows and services. You may remember that we recently announced organizational changes to further increase our focus on these priorities. They included the realignment of both regional operations and payments and services to support our growth algorithm. These changes were designed to accelerate growth and unlock capacity to invest in long-term business opportunities. This also helps us continue to deliver positive operating leverage over the long-term. For example, we plan to redeploy resources into growth markets with high cash levels. We |
4,291 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | operating leverage over the long-term. For example, we plan to redeploy resources into growth markets with high cash levels. We will invest in opening acceptance in new verticals, and we will continue to apply technology to help us realize even more of the shift to digital across both consumer and commercial. We will also enhance and expand our value added services, such as in data analytics, fraud and cybersecurity, particularly as we further embed AI into our products and services. As a result of this organizational realignment, which positions us well for the long-term growth, we expect to incur a onetime restructuring charge in the third quarter. Now, moving on to an update on some specific elements of our growth algorithm. In payments, we're driving growth by winning and retaining deals, and we're tapping into the vast secular shift opportunity by expanding in new geographies and further digitizing the payments ecosystem. Let's start with our continued deal momentum. I'm happy to announce that Varo Bank will convert their debit and credit portfolios to Mastercard. They were the first all digital bank to receive a national charter in the United States. Varo chose Mastercard due to our differentiated data insights, merchant funded offers platform and our ability to seamlessly integrate into their technology stack. We extended our enterprise agreement with Wells Fargo and partnered to launch the Attune World Elite Mastercard. This is our first proprietary consumer credit program with the bank. We also want to renew deals this quarter with key US prepaid partners, including our H&R Block, Blackhawk network, relevate and dash solutions. In aggregate, these partnerships will drive meaningful increase in our US prepaid market share. In Canada, we extended our longstanding partnership with the National Bank of Canada across consumer credit, commercial and prepaid for the next decade. And PostaPay, who already issues millions of Mastercard cards in Italy, has expanded our collaboration to drive additional growth |
4,292 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | PostaPay, who already issues millions of Mastercard cards in Italy, has expanded our collaboration to drive additional growth across debit and prepaid. Let's deep dive into a few specific verticals and geographies. Travel is, of course a key focus. It has strong growth potential and a meaningful cross border component. Travel is also a natural fit with our virtual car technology and our marketing loyalty and consulting capabilities. We executed several new travel partnerships this quarter. We signed a deal with global digital payments provider checkout.com to enable them to deploy their virtual card issuing solution to their online travel agency customers. We also announced a multi-year agreement with Wells Fargo and Expedia to launch two new co-brand cards with a range of unique travel benefits. And we executed a new co-brand deal with Dashen and Ethiopian Airlines, the largest airline in Africa.This builds on a co-brand deal with RwandAir and INM Rwanda that we initiated earlier this year. I'm sure it wasn't lost on you that these two last deals I mentioned are in Africa. The continent is a great example of the vast secular opportunity in emerging markets. External sources estimate that approximately 90% of transactions in Africa are made in cash. We are committed to the digital transformation of the regions and we're doing so by ranking up our investments, developing new partnerships and rapidly expanding our acceptance footprint. For example, Africa is the world's largest adopter of mobile money accounts. Our partnerships with large Telco's and mobile network operators like Airtel, MTN, Vodafone Egypt and others put us in a great position to accelerate inclusion and cash conversion. On the acceptance front, we've more than tripled the number of acceptance locations in Africa over the last five years. We recently signed deals with the Commercial bank of Ethiopia, the largest bank in the country, and I&M Bank in Kenya. These partnerships will enable us to increase share in both markets. In Nigeria and Ghana In |
4,293 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | country, and I&M Bank in Kenya. These partnerships will enable us to increase share in both markets. In Nigeria and Ghana In Nigeria and Ghana, we partner with BlueSoft Financial, who will work with fintechs across the region to issue Mastercard cards. Also, our Mastercard move capabilities are the foundation for a new cross-border money movement solution with Access Bank Group. Together, we're enabling businesses and consumers in several African markets to send and receive international payments across over 140 countries. Now this secular opportunity is not limited to Africa, we see opportunities around the globe. Think about emerging markets in Latin America and Asia Pacific. Fully capitalizing on that secular trend requires that we continue to innovate to support the digital economy at scale, and we're doing just that. We're enhancing the checkout experience and expanding our tap-on-phone acceptance capabilities. We're scaling our contactless technology in areas like transit, and we are driving the ongoing conversion of Maestro to Debit Mastercard. Let's dig into one, online shopping. It must be simple and it must work on all devices and all channels. That's why we are leaning into a new area of one-click payments. We announced that we will phase out manual card entry for e-commerce payments in Europe by 2030 in favor of a one-click checkout button. There are three foundational components to this effort, all anchored on driving simplicity and security. First, tokenization. Tokenization replaces payment credentials with a digitally secure token. When deployed, fraud rates decrease and approval rates improve. So launching a decade ago, the technology has been broadly adopted around the world. In fact, we surpassed $22 billion tokenized transactions in the first half of 2024, up 49% versus a year ago. Second is Click to Pay. Click to Pay simplifies online guest checkout by eliminating the need to manually enter payment credentials. Guest checkout becomes as easy as remembering your e-mail address. It also makes |
4,294 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | need to manually enter payment credentials. Guest checkout becomes as easy as remembering your e-mail address. It also makes checkout more secure using the token technology I just mentioned. We are working with our merchants and bank partners to drive adoption. Click to Pay transactions more than doubled year-over-year in the first half of 2024. And third, up payment passes. Passkeys eliminate the need for passwords or text for onetime pass cold. They allow consumers to authenticate online, purchases using a fingerprint or facial features that you use every day when opening your phone. When combined, these powerful technologies are enabling us to deliver on our promise of a simple and secure one-click online checkout experience for consumers. We also continue to enhance in-store checkout. For example, we are scaling our biometric checkout program to new regions. In Europe, we're partnering with Polish Fintech payee to allow shoppers to pay with a simple glance. And in Latin America, we are working with Ingenico, so that consumers that participate in supermarkets can pay with a wave. We're also working at pace to migrate Maestro cards to Debit Mastercard outside the United States. Shifting to Debit Mastercard is a critical element of our strategy as we see a 2x spend lift on cards once they are migrated. This is primarily due to the ability to capture both cross-border and online spend on debit Mastercard. The first half of 2024, we converted over 14 million cards, which brings us to almost 300 million cards migrated since 2016. These innovations are examples of the investments we are making to differentiate the MasterCard experience versus other payment methods like P2P or local payment schemes. We also continue to capture the large secular opportunity in targeted new payment flows. Today, I will focus on commercial, starting with accounts payable payments. We are operating from a position of strength. Our market-leading virtual card capabilities have been deployed with over 90 issuers worldwide. Additionally, |
4,295 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | of strength. Our market-leading virtual card capabilities have been deployed with over 90 issuers worldwide. Additionally, we are integrating our technology into four of the top five leading global procure-to-pay solution providers, completed the integration of our virtual card technology into Oracle Cloud ERP and commenced invoice payments for the first HSBC corporate customer in US. On the supplier side, we signed several acquirers onto Mastercard receivables managers. This includes Elavon, whose customers are using our AI-powered platform to streamline the process of accepting virtual cards. We also continue to expand distribution of our virtual cards, signing new deals with Brex and ad groups world first. On commercial point of sale, we're increasing the distribution of our commercial card products worldwide. In the US, the Wells Fargo small business credit card portfolio migration is now complete. In Europe, we've extended our partnership with Virgin Money to continue growing our small business portfolio, and our partnership with SAP Concur, which automatically integrates our corporate card data into Concur expense is yielding results. Large insurer Score awarded their T&E card program to Mastercard based on the value delivered through this joint offering. And finally, we're executing against our strategy to penetrate new B2B verticals. This quarter, we signed an exclusive partnership with Latin America, with CBC, the largest Pepsi distributor in the region, and the fintech enabler YalloTech Migo payments. This partnership will provide car distribution acceptance and financial education to almost two million retailers. These small businesses can now use their Mastercard small business cards to purchase inventory and other items. In the health care space, we signed an exclusive partnership with the Medical Tourism Association. They will now accept cards from consumers and utilize virtual cards to make cross-border payments to medical providers. Separately, we are working with Square to broaden card |
4,296 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | virtual cards to make cross-border payments to medical providers. Separately, we are working with Square to broaden card acceptance amongst smaller health care providers in the U.K. Now turning to services, payments support our services and vice versa. Services played an important part in winning many of the deals I just mentioned. And the strong payments drivers helped fuel services growth. That, coupled with strong demand drove 19% value-add services and solutions net revenue growth in the second quarter on a year-over-year currency neutral basis, this is our powerful flywheel turning. I'm excited about our momentum and the future potential whether it's deepening penetration of existing customers, launching new capabilities or distributing our services in new ways and across new customer and transaction types. A few examples. First, our services help to improve MasterCard issuer portfolio performance, thereby supporting our customers' core business objectives. For example, SEB in the Baltics is building their customer loyalty strategy together with Mastercard and Revolut is working with us to develop and execute their marketing strategy, launching campaigns across the U.K., Ireland and Italy. We're also deploying our services across non-FIs, helping to diversify our business and capture a new set of growth opportunities. Customers as varied as Paramount and McDonald's in Taiwan are using our test and learn capabilities to address core business needs, including media measurement and new product introductions. And we're working with LATAM Airlines in Brazil to optimize their co-brand portfolio and develop innovative marketing campaigns. We're partnering to distribute our capabilities in new and more efficient ways, Salesforce has integrated our dispute resolution services into its financial services cloud. This enables banks and other financial institutions to handle disputes and prevent chargebacks more effectively. And KPMG Norway has partnered with the Norwegian government to distribute our risk recount |
4,297 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | chargebacks more effectively. And KPMG Norway has partnered with the Norwegian government to distribute our risk recount capabilities. The solution will help hundreds of local governments evaluate their cyber risk posture and that of their suppliers. Turning to open banking, we continue to make strong progress in scaling new use cases. I'll use our account opening and account linking use case as an example. Klarna in the US is now using Mastercard's open banking for this purpose. PayPal will leverage account linking, balance check and transaction history for their wallet in the US and Jack Henry will distribute these capabilities to streamline the account opening process for hundreds of issuers they support. So with that, I'll wrap it up. In summary, we delivered another strong quarter of revenue and earnings growth. We're driving growth by winning and retaining deals, we're penetrating the substantial secular opportunity, and we continue to see strong demand for our services. Now our differentiated capabilities, diversified business model and focused strategy position us well to capitalize on the significant opportunity ahead of us. Sachin, over to you. |
4,298 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Thanks, Michael. Turning to Page 3, which shows our financial performance for the second quarter on a currency-neutral basis excluding where applicable, special items and the impact of gains and losses on our equity investments. Net revenue was up 13%, reflecting continued growth in our payment network and our value-added services and solutions. Operating expenses increased 10%, including a minimal impact from acquisitions. And operating income was up 15%, including a minimal impact from acquisitions. Net income and EPS increased 24% and 27%, respectively, both reflecting the strong operating income growth as well as a lower tax rate in the current quarter compared to Q2, 2023, primarily due to a sizable discrete tax expense in the prior year as well as the change in the geographic mix of earnings. EPS was $3.59, which includes a $0.07 contribution from share repurchases. During the quarter, we repurchased $2.6 billion worth of stock and an additional $820 million through July 26, 2024. So let's turn to Page 4, where I'll speak to the growth rates of some of our key drivers for the second quarter on a local currency basis. Worldwide Gross Dollar Volume, or GDV, increased by 9% year-over-year. In the US, GDV increased by 6% with credit growth of 6% and debit growth of 7%. Debit growth was aided by the conversion of a previously announced debit win in the US Outside of the US, volume increased 11% with credit growth of 10% and debit growth of 11%. Overall, cross-border volume increased 17% globally for the quarter, reflecting continued strong growth in both travel and non-travel related cross-border spending. Turning to Page 5. Switched transactions grew 11% year-over-year in Q2, both card present and card-not-present growth rates remain strong. Card present growth was aided in part by an increase in contactless penetration as contactless now represents approximately 69% of all in-person switched purchase transactions. In addition, card growth was 7%. Globally, there are 3.4 billion Mastercard and |
4,299 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | all in-person switched purchase transactions. In addition, card growth was 7%. Globally, there are 3.4 billion Mastercard and Maestro-branded cards are issued. Turning to Slide 6 for a look into our net revenue growth rates for the second quarter discussed on a currency-neutral basis. Payment network net revenue increased 9%, primarily driven by domestic and cross-border transaction and volume growth. It also includes growth in rebates and incentives, which were lower than anticipated, primarily due to the timing of planned deal activity. Value-added services and solutions net revenue increased 19%, primarily driven by growth in our underlying drivers Strong demand for our consulting, data analytics and marketing services and the scaling of our fraud and security and our identity and authentication solutions. Now let's turn to Page 7 to discuss key metrics related to the payment network. Again, all growth rates are described on a currency-neutral basis unless otherwise noted. Looking quickly at each key metric. Domestic assessments were up 7%, while worldwide GDV grew 9%, primarily due to mix. Cross-border assessments increased 21%, while cross-border volumes increased 17%, the four ppt difference is primarily driven by mix and pricing. Transaction processing assessments were up 13%, while switch transactions grew 11%. The two ppt difference is primarily due to mix and pricing. Other network assessments were $244 million this quarter. As a reminder, these assessments primarily relate to licensing, implementation and other franchise fees and may fluctuate from period to period. Moving on to Page 8. You can see that on a non-GAAP currency-neutral basis, excluding special items, total adjusted operating expenses increased 10%, which includes a minimal impact from acquisitions. The growth in operating expenses was primarily due to increased spending to support the continued execution of our strategic initiatives as well as an increase in indirect taxes as discussed on our Q4 2023 earnings call. This was partially |
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