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4,300 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | strategic initiatives as well as an increase in indirect taxes as discussed on our Q4 2023 earnings call. This was partially offset by the timing of advertising and marketing spend within the year. Turning to Page 9. Let me comment on the operating metric trends in the second quarter and then through the first four weeks of July. As a reminder, our Q1 switch metrics include the impact of the leap year in 2024, which added just over one ppt to growth across each of switched volumes, switch transactions and cross-border volumes. In addition, our switch metrics in Q1 and April were impacted by the timing of Easter, which occurred at the end of Q1 this year as compared to in April in 2023. After adjusting for the leap year, the timing of Easter and excluding the benefit from the US debit portfolio when I previously discussed, our switch metrics in Q2 were generally stable sequentially in the US and across the globe. Looking at the first four weeks of July, trends remained generally stable versus Q2. Turning to Page 10. I wanted to share our thoughts for the remainder of the year. As Michael said, there are a number of economic headwinds and tailwinds that we are monitoring, and we remain focused on executing on our strategy. Business fundamentals remain strong as evidenced by the results we delivered this quarter across all aspects of our business. Our diversified business model underpinned by healthy consumer spending, the continued secular shift to digital forms of payment and strong demand for our value-added services and solutions continues to position us well for the opportunities ahead. Overall, we remain positive about the growth outlook. Now turning to Q3, 2024. Year-over-year net revenue growth is expected to be at the high end of a low double-digit range on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to have a minimal impact to this growth rate while we expect a one to two ppt headwind from foreign exchange for the quarter. From an operating expense standpoint, we expect |
4,301 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | we expect a one to two ppt headwind from foreign exchange for the quarter. From an operating expense standpoint, we expect Q3 operating expense growth to be at the low double-digit range versus a year ago, again, on a currency-neutral basis, excluding acquisitions and special items. We expect higher growth in advertising and marketing in Q3 compared to the first half of the year primarily driven by the cadence of spend related to our sponsorship activities. Acquisitions are forecasted to have a minimal impact to this OpEx growth for the quarter, while we expect a 0 to one ppt tailwind from foreign exchange. Separately, as Michael mentioned, as part of our recent reorganization, we expect to record a onetime restructuring charge in Q3 of approximately $190 million. This will be recorded as a special item and excluded from our non-GAAP metrics. We expect these actions will free up capacity to further invest in our strategic priorities as we continue to execute on our growth algorithm. We also expect they will contribute to delivering positive operating leverage over the long term. As it relates to the full year we expect net revenue to grow at the high end of a low double-digit range on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to have a minimal impact for the year, and foreign exchange is now expected to be a headwind of approximately one ppt for the year. In terms of operating expenses, our expectations for the full year are to grow at the low end of a low double-digit range on a currency-neutral basis, excluding acquisitions and special items. Acquisitions and foreign exchange are forecasted to have a minimal impact to this growth for the year. Other items to keep in mind. On other income and expenses, in Q3, we expect an expense of approximately $100 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 |
4,302 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | and losses on our equity investments, which are excluded from our non-GAAP metrics. Finally, we expect a non-GAAP tax rate of between 17% and 18% for Q3 and 17% to 17.5% on a full year basis, all based on the current geographic mix of our business. One last point. I wanted to let you know that we are planning to host an Investor Day in New York on November 13. We look forward to discussing our future plans with you at that time. And with that, I will turn the call back over to Devin. |
4,303 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: Thank you, Sachin. Julianne, please open the call for questions now.
Operator: [Operator Instructions] Our first question comes from Harshita Rawat from Bernstein. Please go ahead, your line is open.
Harshita Rawat: Good morning. Michael, can you talk about US merchant litigation, the settlement rejection and the ball forward from here? How should we think about the range of outcomes?
Michael Miebach: Right. Thanks, Harshita. You're not asking about the secular opportunity. I know the same. So the merchant settlement. So the first thing I would say is we're disappointed where this has landed for now. And I would describe it as we respectfully disagree with the court's ruling to reject the settlement. This has been negotiated over many years across many parties. I think with best intentions, and they would have produced a lot of benefits for consumers, for merchants and across all parties. So this is now not happening. We are obviously ready and we will take all efforts to ensure that a solution is found before it goes to trial, engage our parties. We've done this in previous scenarios before. It's difficult to speculate our outcomes at this point. But I think this intention to lean in and see how we can provide more security predictability to merchants and to banks and our parties here is what's driving us. So there's a number of co-defendants in this, and everybody will obviously take their own decisions here. But across the board, obviously, there has to be a dialogue and we find the best outcome of this.
Operator: Our next question comes from Trevor Williams from Jefferies. Please go ahead. Your line is open.
Trevor Williams: Great. Thanks a lot. I wanted to ask on rebates and incentives growth. I think that came in a little bit better than you guys have been expecting for 2Q. Sachin, if you could just unpack some of the upside there relative to expectations and then any help for what you're expecting for R&I growth over the next couple of quarters. |
4,304 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. Thanks, Trevor. So you're right. As I mentioned in my prepared remarks, our rebates and incentives did come in slightly lower than our expectations for the second quarter. I just want to kind of take it up a level, just to kind of remind everybody, we're very active in the markets. We are constantly looking at what opportunities exist with existing customers and then with who could be potential new customers. And we have a view on what our pipeline of activities is. So the vast majority of what we had in the nature of better or, I would say, lower rebates and incentives in the second quarter were driven by some of those -- that deal activity not materializing in the second quarter. It still remains in the pipeline. It's still something we expect will occur as the year progresses. And then more specifically, as it relates to Q3, we expect that our rebates and incentives as a percentage of our payment network assessments will be higher than it was in Q2. And it's essentially based on exactly what I just said, which is it's a very rich deal pipeline that we have. And again, this is more of a timing issue than anything else.
Michael Miebach: It comes back to the point. In the end, we want to be in the transactional floor. We want to be relevant to our customers. We want to be relevant in the eyes of the consumers that they have a Mastercard product in their hand, and we fight for the deals that we find strategically relevant that also meet our financial criteria. In the end, it all has to add up in combination between payments and services that our net revenue yield develops positively and that we keep in focus.
Operator: Our next question comes from Dan Perlin from RBC. Please go ahead. Your line is open. |
4,305 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Dan Perlin from RBC. Please go ahead. Your line is open.
Daniel Perlin: Thanks. Good morning. Can we just spend a second on the realignment of the organization a little bit? I know you talk about it to create capacity and drive incremental growth. I think the question I have is how should we think about that in driving kind of new constituencies as you talk about new verticals and maybe expansion of data analytics. And then more specifically, how does that open up the aperture of the network as we think about that going forward? |
4,306 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right, Dan. So as I said earlier, the idea here is to accelerate growth. The idea is not to reposition our strategy. We've articulated our strategy. You'll hear more of that in the investor community meeting in November and how we see that play out in more detail across our core payment solutions, new flows and the services portfolio. I purposefully stated the point on markets with high cash penetration. So here is as I laid out in the context of Africa, but there's more in other emerging markets around the world, there's a tremendous opportunity here. So we want to strengthen our front line. It's also clear that the recipe to participate in the secular opportunity emerging markets isn't the same as in developed markets. So we're investing in product and so forth. It's pretty clear that on the services side, as far as the areas of focus are concerned. We continue to be guided by underlying strong secular trends, and one of that is for really any of our corporate partners and B2B partners that they want to make sense of their enterprise data and make better decisions. And how do we do that? We do that by leveraging our artificial intelligence solutions set of assistance, a set of fine-tuning how they could have more personalized suggestions to their end consumers, et cetera, et cetera. That's one part, help our customers make better decisions, not changing, but very specific solutions with a higher weightage to AI. And then on the security side and the cybersecurity side, all of this data has to be kept safe. We kept saying that for years. That's a strong secular trend in itself, and making sure that we fine-tune our solutions here. We've got to move faster because the bad guys are also moving faster, and they have the similar technology tools at their hand now. So leveraging artificial intelligence, an example I gave last quarter around Decision Intelligence Pro, that's predicting what is the next card that might be frauded. Before it actually happens, those kind of solutions provide significant |
4,307 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | predicting what is the next card that might be frauded. Before it actually happens, those kind of solutions provide significant lift to our customers in terms of preventing fraud obviously giving peace of mind to their consumers and overall helping our business, and it's a close link to our payments underlying payments business. So all of that -- it's largely the same strategy, but we're really focusing on very specific aspects of that, and there are other aspects of our portfolio that we're going to dial down as a result of this effort. |
4,308 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from David Togut from Evercore ISI. Please go ahead. Your line is open.
David Togut: Thank you. Good morning, Michael and Sachin. Europe continues to be your largest geo by GDV and also highly differentiated growth there continues. Would appreciate your look forward on cash digitization opportunity, thoughts on the consumer. And then the outlook also for cross-border travel in and out of Europe. |
4,309 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So let me start. I want to anchor on what you -- how you framed your question. It's been a strong growth story for us in Europe. That's Continental Europe as well as the U.K. We've seen tremendous share growth there. And that's really focusing down and investing more locally in Europe, have a better presence there, engage with national governments as well as with European institutions, which we feel very European and Europe. That's the first thing I would say. When I come back to the times of COVID, it was -- there was a large set of economies in Europe that were lagging, I would argue on the digitization front, changing behaviors to consumers have increased the pressure to digitize further, and it has happened. So we've seen Europe catch up and obviously shows in our numbers. But back to the point of secular opportunity we just discussed. If you look at the economies in Germany, in Italy, there's significant cash in the higher double digits that we're seeing that and we can go after and we will continue to go after. So I continue to expect a growth opportunity there. But it's also true that there are markets that are so highly digitized today that the secular opportunity in itself is something that from cash to check isn't really happening. And there, you come to the point about what are the emerging business models in a highly digitized world. The Nordics is a good example of that. There's a whole new set of business models coming up, and we're supporting those fintechs which is why Europe is one of the geographies around the world where we have a tremendous position in fintech and other market leaders in those partnerships. So I'm excited about the Europe outlook, and we continue to invest there. Bottom line. |
4,310 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: And David, on your question around cross-border in and out of Europe, a couple of thoughts around there. Look, I mean, globally, I would say we're well positioned from a cross-border standpoint. You can see that in our metrics. And then as it relates to Europe, back to what Michael just said, as we've been winning portfolios, there's been a mix of portfolios We've been there, some of which are high cross-border and others are lowered from a cross-border standpoint. The idea is to actually be in the flow, participate and create opportunities for ourselves to actually leverage our services, our loyalty assets in order to drive cross-border, whether it's Europe or anywhere else in the world. Last point I'll make is sensitivity to foreign exchange rates, right? Strong dollar certainly helps in terms of the inbound into Europe because you tend to see a lot more travel from the US actually show up in Europe as part of that process. So again, we feel good about the cross-border opportunity, not only in out of Europe, but globally for the company.
Michael Miebach: Right. And one last point to add on -- based on the financial frame that Sachin just put around it, back to the R&I question. So in Europe, we really feel we are well positioned in the market from a share perspective. So this aspect of financial discipline as we continue to look for deals and partnerships in Europe really rises to the top.
Operator: Next question comes from Darrin Peller from Wolfe Research. Please go ahead, your line is open. |
4,311 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Next question comes from Darrin Peller from Wolfe Research. Please go ahead, your line is open.
Darrin Peller: Hey guys, thanks. It's good to see the stability into July and the US volume side. So if you could just help us understand a little more on the cadence if there's anything from CrowdStrike or weather? And then I guess, really, Michael, also, more importantly, just the ability for you guys to win these portfolios, if you could help us just remind us understanding what the driving factors are? How much of it is -- if there's any competitive pricing dynamics, how much of it might be just mass, maybe a little bit more of what you see ahead.
Sachin Mehra: Yes. Why don't I take the first part of that question, Darrin. In terms of the trends we've seen for the first four weeks of July, like I said, look, I mean, general stability and drivers across the board. And you can see that on Page 9 of our presentation. And really, I mean, to your question as to whether there was an impact from the events over with CrowdStrike or weather. I mean the reality is the weather piece has a little bit of an impact. That's what I would actually mention. But it's kind of muted in terms of the context that we've got now four weeks' worth of data in there. And so the reality is these things kind of happen, they come a particular week, if you look at it, it might look lower or higher and then there might be a catch-up factor which takes place as we tend to follow. By and large, we feel good about what we're seeing from a consumer spending standpoint, and that's reflective of what you see on the metrics right here. |
4,312 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. And then the second part of your question, the [indiscernible] market in the US and same as Europe since we just talked about, remains incredibly competitive. I think we haven't seen such elevated level of competition and payments that we're currently seeing. You see a lot of movements in the market. There's banks looking at network opportunities and so forth. So there's a lot going on. But it's also true that for us, we continue to broaden our payment solutions and our service offerings. And really, that comes to that part of your question is what matters here. What matters here is that we can help our customers run their business in a better way. So what are they trying to do and our solutions helping data insights, cybersecurity certainly matter. The fact that cards isn't the best answer to all payments, but there is also a multi-rail set of solutions that customers are looking for. We have all of that. So that puts us in a differentiated position. We're trying to not to sell product but really come in with solutions through our sales force. That's working for us, but it's pretty clear. We have to be financially competitive. That always matters. But if you can have a conversation around the top line outcome with your customer vis-a-vis the cost of payments that changes the dialogue quite significantly. So when I talk to CEOs and the customer side, that's what they're really interested in. So that's working. That's a lot of value that we bring, and we price for that. So we continue to price for that. You've heard us mention pricing changes in the last quarter. So we do that wherever we see the opportunity. Tokenization is a great example. We've invested in tokenization and we needed to scale it up. Now we have an opportunity to build a whole set of services on top of the basic token that we can price for and that we feel we should price for because they drive a better outcome in terms of better approval rates, lower fraud and so forth for our customers. So I think we're well positioned |
4,313 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | better outcome in terms of better approval rates, lower fraud and so forth for our customers. So I think we're well positioned in a very competitive market, and we're going to continue to try to keep that edge. |
4,314 | MA | 2 | 2,024 | 2024-07-31 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. Thank you. And I guess my question on the cross-border line, you've had a very nice positive divergence between constant currency revenues and constant currency volumes. This quarter was about 4%. And I think for 13 quarters in a row, it's been nicely positive. In prior years, it was pretty close to neutral, sometimes even a little negative. Why does that continue to be positive? And how should we think of that going forward? Is that going to stay that nice positive divergence?
Sachin Mehra: Yes, David. So look, I mean, it's like I said, right, it's been driven by favorable mix and a little bit of pricing in the second quarter. The reality is that the mix piece is really what's been actually causing that positive divergence you're talking about. As you are aware, our cross-border volumes are -- and we show you the metrics on this. We have intra-Europe cross-border and then we have other cross-border. Intra-Europe is lower yielding, other cross-border is high yielding for us. And so as you think about this, if the other cross-border volumes are growing at a faster pace than intra-Europe, you tend to see that positive divergence. I'll remind you, during COVID, we actually had the reverse phenomenon take place. We had intra-Europe growing faster than other cross-border and you actually had the reverse happening, which is you had cross-border assessment is growing at a slower clip than the actual underlying driver growth. So that's really what we mean by mix there. And then, of course, there's a pricing which we do back to the point Michael was making around the value we deliver, which is another contributing factor in the second quarter.
Operator: Our next question comes from Sanjay Sakhrani from KBW. Please go ahead. Your line is open. |
4,315 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Sanjay Sakhrani from KBW. Please go ahead. Your line is open.
Sanjay Sakhrani: Thanks. Good morning. I was wondering, Sachin, could you just talk about the share gain benefits in the quarter and maybe what's on the horizon. I think you mentioned it in the context of incentives. And then just specific to some of the revenue items or revenue lines. When I look at domestic assessment revenue, that kind of slowed from a trend line that we've seen that was much stronger. I know some of it was FX. But was there anything else similar for other revenues. Those were down a little bit. I know it's a smaller line, but any call-outs there? |
4,316 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: So I'll take -- I think there are three questions there. So I'm going to take all three of them, which is -- on domestic assessments, it's -- the delta you're seeing in terms of domestic assessment is growing at 7% compared to GDP growing at 9%, and is primarily being driven by mix. I need to remind everybody that GDV and domestic assessments is not a perfect proxy, just because in domestic assessments, there's a whole bunch of other stuff which is there. You've got card fees. You've got a bunch of stuff going on in there. So there's always going to be some level of kind of difference in terms of growth rates there. But what we like to call out is what are the salient features or factors which are causing for that -- for the different growth rates between domestic assessments and GDV growth. And when I talk about mix there, just so that you're clear, I mean, the mix could come from a whole host of things. So for example, our GDV includes our cross-border volumes. Our domestic assessments do not include our cross-border-related revenues. And so what you've got is with GDV growing you don't have the associated cross-border revenue, which is there, which would come in terms of domestic assessments. You could also have changes in geographic mix. You've got high-yielding and lower-yielding regions and depending on the growth rate of regions, you might see deltas come to the positive or the negative there. So that, Sanjay, is the domestic assessment piece. On the other payment network revenues, again, look, I mean, this is not something which we are necessarily focused on as a business. That is -- it's one of the things which is required to run the network. It's a range of things from licensing fees, implementation fees, franchise fees, things of that sort. And those things move around. So I wouldn't get too fussed about the fact that in one quarter, it grows at an exceptional pace in the next quarter is actually going the opposite direction. Just because, first, the number is fairly small. And second, |
4,317 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | pace in the next quarter is actually going the opposite direction. Just because, first, the number is fairly small. And second, it's -- there's a whole host of reasons why that might happen. For example, as customers get more compliant, you might have less than the nature of compliance fees that you're charging them. So that's a good thing for the network, by the way, over the long term. And then the last point you asked, actually the first question you asked, which was around share gain benefits in the quarter -- the one I called out really was around the debit conversion in the US And we have previously announced this. We announced our win of the debit portfolio from citizens. We are super pleased with our relationship with citizens. That conversion is going exceptionally well. That conversion for the most part was complete in the second quarter. So we had new [ costs ] which were sent out to customers. So there's a little bit of that, which is there. Again, but what I wanted to share was that when we're looking at drivers, right, between Q2 and the first four weeks of July, or for that matter between Q1 and Q2. When you take out the impact of these share wins, there's still underlying stability in terms of consumer spending trends. On share gains, just so that you've got the overall picture, right? So we've talked a little bit about systems. We had the Webster win. You've got a whole bunch of stuff which will roll on, and those will be multiyear kind of conversions, which will come through. In particular, I'd call out UniCredit. So in UniCredit, we had announced this deal win in 2023. While that conversion is underway. That will be over a multiyear kind of time frame again. Deutsche Bank, again, the conversion is underway. It will take a couple of years before you actually start to set of completion of that. So all of these things will play out over time. |
4,318 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Tien-Tsin Huang from JPMorgan. Just go ahead, your line is open.
Tien-Tsin Huang: Thank you. Good results here. Just on the value-added services and solutions, that accelerated. I know there's an easy comp from the first quarter, but any interesting trends in terms of composition of growth within VAS and any call out for the second half of the year in terms of VAS growth?
Michael Miebach: Right. Tien-Tsin, good to hear you. 19%, a strong growth rate for sure. The usual suspects in terms of driving for growth is the payments related part of this, particularly on the cybersecurity side. So that continues to grow and grow very well. So there's more need for more fraud solutions. That's one thing. And on the data analytics side, we continue to see great interest, as I laid out in remarks, test and learn, for example. So I'll give you a number of examples how customers are trying to figure out what kind of campaigns make sense, how can they serve their customers better and so forth. So no particular change there. I think the fundamental trend that I touched on earlier in an earlier response, more infusion of AI across the board to make these products scale better and be more effective, that's certainly a trend. Overall, the whole mix of this is largely unchanged. We continue to invest in newer aspects of our services portfolio, particularly in the open banking side. I talked through a couple of use cases here. They still have scale up in a significant way, but we feel we're well positioned in Europe, Australia and the US on the open banking side. So good to see. We said in the first quarter where we had a slightly lower growth rate. We're going to be higher quarter -- every single quarter for the rest of this year, and that is playing out as predicted. So occasionally, you have tougher comps and so forth, but this is a pretty solid trend for us.
Operator: Our next question comes from Dan Dolev from Mizuho, please go ahead. Your line is open. |
4,319 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Dan Dolev from Mizuho, please go ahead. Your line is open.
Dan Dolev: Oh, hey, guys. Good morning. Thank you for taking my question last quarter. I believe you gave us a cadence on rebates and incentives, growing slower in the second half versus the first half. Can you maybe give us a little bit more color on to the cadence of rebates and incentives this year. And great results again.
Sachin Mehra: Dan, yes, last quarter, I shared with you a point of view around what we thought rebates and incentives would look like in the second quarter. And what we had said is it would be flat to slightly lower for the second quarter. And in the second quarter, rebates and incentives came in lower than the first quarter, lower than even what we had expected for the reasons which I mentioned earlier, which is the timing of deal activity. And then today, I shared with you what I think will be rebates and incentives in the third quarter, which we expect that rebates and incentives as a percentage of payment network assessments will be higher in the third quarter compared to the second quarter. We really haven't shared much on nature of rebates and incentives beyond that. So really just for clarification, that's what I want to share with you.
Operator: Our next question comes from Andrew Jeffrey from William Blair. Please go ahead. Your line is open.
Andrew Jeffrey: Hi. Good morning. Thanks for taking the question. Michael, I want to ask about open banking and particularly in the US hearing some conflicting things about the price of real-time payments, interchange in real-time payments, I guess, versus debit, especially Durbin-regulated debit and perhaps the enthusiasm on consumers' behalf to pay from their bank accounts, but maybe some charge back and customer service dispute issues that banks are facing. I just wonder if you could maybe parse some of the puts and takes and give an outlook on the future of open banking, particularly in the US |
4,320 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So interesting, you call that out. I just mentioned that just before. And I said it's not quite where I think most market participants would have wished open banking got to over the years. And that applies, I think, globally. Here in the United States, when I look at open banking with a focus on particular services, a set of actions around account opening or account linking or data aggregation or things like that, we see good momentum. I talked about that earlier. When it comes to payments, the payment side of open banking, it's still true that the value that the card ecosystem brings is significant, and you made a point on chargebacks. That is -- it's not comfortable if there is a problem, and then there is no established way to get your money back. On cards, we do that. The same is for fraud protection. I think we know exactly how that works in the world of card payments. It's not so clear yet in the world of counter account payments. Nevertheless, it's our role as an ecosystem custodian to understand where emerging technologies are going, whereas customer interest going that consumers want to use their data footprint to get better services, well, absolutely. First of all, that starts with data protection and data consent management, which we invest a lot of energy on. But then to say, all right, how could this kind of technology be used. So we do invest in it, which is why we called out open banking as an element of kind of future-oriented activity for us and investment. What we currently see are those use cases that I mentioned, they are the most near-term opportunity. And this is around lending. It's around account Opening, account linking, asset verification, and more recently around data aggregation. Our smart subscription solution is one example of that. That works really well for consumers. If you got 15 subscriptions and you see them in one place and it makes a real difference. So I think it's evolving. It's evolving and we're at the forefront of evolving it, but we're also |
4,321 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | it makes a real difference. So I think it's evolving. It's evolving and we're at the forefront of evolving it, but we're also trying to make sure that it's understood that the value we bring through cards is really unparalleled. |
4,322 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Our next question comes from Fahed Kunwar from Redburn Atlantic. Please go ahead. Your line is open.
Fahed Kunwar: Hi both. Thanks for taking the question. Just wanted to ask about profitability. Obviously, there's a lot of various moving parts with VAS growing really nicely, cross-border. How do you think about margin expansion, though versus kind of investing in all of these various product areas in distribution and the products themselves, should we expect margins to carry on expanding as they have been? Or will there be continued areas of investment that you think will kind of drive expenses higher from here? |
4,323 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: So a couple of thoughts here for you, which is, number one, I think we mentioned in the past and this philosophy of ours remains unchanged, which is we aspire to deliver positive operating leverage, which is showing -- driving net revenue growth at a faster clip than operating expense growth over the long term. So that's really what the aspiration is for how we're running the business. The most important thing to remember is we're running the business for top line growth and bottom line growth. And in order to do that, we keep a very close eye on making investments to drive growth in the near term, medium term and long term. So yes, we are investing in things which will drive growth in the near, medium and long term. That is super essential from our perspective, not only because that's what our shareholders desire, but also because we believe the set of opportunities in front of us are sizable. And so for us to leave those opportunities underinvested would be a bad move for the long-term health of our company. So we will continue to invest in the business. We will do that with the strategic priorities, which Michael has laid out. With that focus, we will constantly look at those priorities to see how the market conditions are evolving, and we will pivot as necessary. But the general kind of flow is, yes, we will continue to invest in the growth of our business because we see tremendous opportunity on a going-forward basis.
Operator: Our next question comes from Paul Golding from Macquarie Capital. Please go ahead. Your line is open.
Paul Golding: Thanks so much for taking the question. I wanted to ask about AI in a fraud sense. I know that you're incorporating AI into your products and presumably as part of VAS to combat fraud. Just wanted to ask what you're seeing in terms of the offense of fraud using AI and how that might accelerate the adoption of your new products and your investment in new products around AI to combat that. |
4,324 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So with rapid digitization around the world, we've seen a lot of new entrants into the ecosystem. A lot of small businesses have digitized post-COVID as you see in emerging markets, a lot of people for the first time using digital solutions. So digitalization is growing, vulnerabilities are growing and technology in the hands of fraudsters is also evolving. So this makes for an environment where players like ourselves who oversee an ecosystem, a franchise between banks and merchants and for the benefit of the end consumer need to really invest in safety and security. We've done that. And AI isn't actually anything new for us. So we've -- for the better part of a decade, we've been using AI. This is a discrete machine learning technology to really predict where is the next problem and analyze data of -- that we have and the data that our customers have to prevent fraud. So that's been very successful. As far as generative AI is concerned, evolving technology here, there's obviously an opportunity for us to understand more data in a quicker way. And we have used that initially to you to train our AI models, our discriminative AI models using generative AI to create artificial data set. So that was the first step. And then we went into putting out a new set of products. I mentioned Decision Intelligence. Our Decision Intelligence is that we've had for a long time, machine learning driven that was predicting fraud outcomes and now we're using more data sets to -- that are externally available, stole the card data and so forth to understand where our fraud vulnerabilities might be. The lift is tremendous, 20%, we see in terms of effectiveness out of that product. So we start to see demand for the whole reason on the vulnerabilities that I talked about. So we expect continued growth. We also expect the fraudsters to come up with new techniques themselves, we need to continue to evolve. So I believe that the penetration of generative AI and our fraud and cybersecurity product that will only |
4,325 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | continue to evolve. So I believe that the penetration of generative AI and our fraud and cybersecurity product that will only expand. Now I talked a lot about transaction-related fraud. The vectors around cybersecurity, obviously much broader. It's prediction of fraud. It is what's the general cybersecurity posture of a company, risk recon capabilities and so forth. We try to cover the whole ecosystem and become a true strategic partner of our customers. So if anything, this whole space is going to grow further, and you're going to continue to see us invest in that area. |
4,326 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr: We time for one more question, Julianne.
Operator: Our last question will come from Andrew Schmidt from Citi. Please go ahead. Your line is open.
Andrew Schmidt: Hi, Michael. Hey, Sachin, thanks for squeezing me in. I just want to double-click on macro viewpoint. If I hear in the message correctly, it sounds like not mix, but consumer spend trends are stable for the most part. If you could just double click on that and let us know if there's any divergence amongst different consumer demographics and correspondingly what that might mean for debit versus credit, transaction sizes, anything like that, that would be super helpful. |
4,327 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So at the outset of my prepared remarks, I talked about the puts and takes on inflation, on the prices. The bottom line there is that for now, the consumer is supported, and that's pretty much irrelevant of income cohort, is supported by a strong labor market. So that's fundamentally true, and it's fundamentally true around the world. But it's in aggregate, but it's not a uniform answer. The picture obviously plays out very differently country-by-country. We have a very global business. So we look at what is the Central Bank of Japan doing and we saw that today. They raised rates. And then Europe, you see Germany came through with actually a small recession in the past quarter. So there's a lot of back and forth. But that fundamental point that the consumer is supported by a strong labor market and some wage growth. I think that's true, and we don't expect any dramatic changes on that front, and that's why we remain positive about the outlook. You peel the onion a bit further, you look into different cohorts. And it's pretty clear that when it comes to higher income versus lower income, if you spend on an expensive trip or an experiences during the summer, whatever you're trying to do, you have more income, then you can do more of that and you have less income and you can do less of that. What we generally see though as a function of the digital economy. The higher-end consumer, but certainly the mid-income and lower-income consumer is much more empowered, empowered by having more data and the ability to look for a better deal. And that's what everybody is trying to do to make things add up and work for them that they still want to do that trip. So all of that together overall adds up to a picture that we feel pretty good, at least about our side of the business. And why do I say that? Because inflation and prices cut across carded and non-carded. But we are obviously particularly positioned. So you saw that rise. And right now, you see a lot of inflation in auto insurance and rent. |
4,328 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | obviously particularly positioned. So you saw that rise. And right now, you see a lot of inflation in auto insurance and rent. That's not necessarily so much carded. So these are all the things that we think through comes back down to the fundamental point in aggregate, we see healthy consumer spending and don't see that changing in the short term. |
4,329 | MA | 2 | 2,024 | 2024-07-31 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: And Andrew, I'll just add one point, and Michael touched on this before, which is at the end of the day, our diversified business model lends really well in different environments because at the end of the day, right, we are geographically diversified. We've got great diversification across debit and credit. We've got good diversification around channels of spend. So the reality is when these puts and takes take place in certain sectors of the economy, a dollar spent on one sector versus the dollar spent on the other sector, we're relatively indifferent so long as it's got to spend. And that diversification really helps our business the way we are actually structured, which has not happened by chat. It's happened by design. And so that's something which is super important for us.
Devin Corr: Thank you. Now I'll hand it back to Michael for any closing comments.
Michael Miebach: All right. Thanks, Devin. So everybody past, we talked about the momentum and a good quarter. all of this obviously only happens because it takes the hard work of our colleagues at Mastercard, I thank them, and I also want to thank you for your support for Mastercard. We're looking forward to speak to you in a quarter from now and hopefully see some of you at our Investor Day Community Meeting on November 13 in New York. Thank you very much.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. |
4,330 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Inc. Q1 2024 Earnings Conference Call. [Operator Instructions]
Mr. Devin Corr, Head of Investor Relations, you may begin your conference.
Devin Corr: Thank you, Audra. Good morning, everyone, and thank you for joining us for our first quarter 2024 earnings call. With me today are Michael Miebach, our Chief Executive Officer; and Sachin Mehra, our Chief Financial Officer. Following comments for Michael and Sachin, the operator will announce you opportunity to get into the queue for the Q&A session. There 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 would 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. |
4,331 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you, Devin. Good morning, everyone. Our momentum continued this quarter as we once again delivered strong revenue and earnings growth. Quarter 1 net revenues were up 11% and adjusted net income up 16% versus a year ago on a non-GAAP currency-neutral basis. These results were powered by healthy consumer spending and strong cross-border volume growth of 18% year-over-year on a local currency basis. We had new deal wins in every region, and we're driving growth by scaling our innovative technologies. That's why people choose Mastercard, a simple, seamless and secure way to pay. With these strong results, we are reiterating our full year 2024 outlook for both net revenue and operating expense on a currency-neutral basis, excluding acquisitions and special items. On the macroeconomic front, the picture remains mixed. First, strong labor markets and solid wage growth remain in countries across the globe. This is supportive of healthy consumer spending. Second, inflation has been moderating with a path towards normalization of monetary policy in most countries. Persistent inflation in the United States could delay rate cuts here. And third, geopolitical uncertainty remains in several countries. In addition to these areas, we are closely monitoring the strength of the dollar, commodity prices and consumer balance sheet health. With tailwinds and headwinds to economic growth remain on balance, we are positive about the growth outlook. With this backdrop, we are focused on our strategic priorities: consumer payments, new flows and services and new networks. The recent realignment of our organizational structure will help our teams to execute on these priorities faster to deliver more value to our partners and customers. |
4,332 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | In payments, our growth algorithm consists of being in the flow to capture the natural growth of economies, accelerating the secular shift to electronic payments, further penetrating new flows, growing market share and optimizing our customer portfolios. I will address a few of those. Starting with the shift to digital for person to merchant payments, this secular opportunity has been a very important component of our growth algorithm across both volume and transactions. We are confident this will continue over the long term. Our acceptance footprint is a key competitive advantage, and we continue to expand our reach globally while enhancing the user experience for digital transactions through our technologies. Our fast and secure Contactless technology has been instrumental in displacing cash. Contactless now represents more than 2 of every 3 in-person [ switch ] purchase transactions, up from 1 in 3 prior to the pandemic. And our Tap on Phone capabilities are simply a cost-effective way for merchants of all sizes to accept digital card payments. We're now live in over 100 markets. In Brazil alone, the number of active devices is now over 1.5 million. And Apple continues to expand Tap to Pay on iPhone in markets like Brazil, where recently the solution was rolled out by fintechs, Stone, [ NuBank ], SumUp and Cloud Walk. As payments become more digital, there is an increasing demand from consumers and merchants for a simpler and more secure payment experience. Whether online or through a wallet provider, our tokens, deliver an elevated level of security and payment credentials are shared between the bank and the merchant. This improves the performance of a client's portfolio while supporting new ways to pay. This key differentiator creates a flywheel effect. Lower fraud, higher approval rates and a better consumer experience bring more transactions and volume to the MasterCard network, which in turn drives more payments revenue and brings more data. Tokens also create a streamlined way to accelerate the |
4,333 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | which in turn drives more payments revenue and brings more data. Tokens also create a streamlined way to accelerate the monetization of associated services to our customers. |
4,334 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | In quarter 1, tokenized transactions grew over 50% year-over-year with more room to go as only approximately 1 in 4 transactions on the MasterCard network are tokenized today. Further opportunity lies in the verticals traditionally underpenetrated by Card. Merchants are embracing solutions to simplify checkout, reduce missed payments and drive engagement. We are focused on segments such as housing and health care that have sizable spend and where our solutions can address the needs of providers and consumers. Rent payments is one vertical where we are working with aggregators to enable digital payments.
In health care, we're partnering with several providers to grow acceptance in key markets like Germany. And we are playing in the gaming community or puns intended, with partners like global video game commerce company, Xsolla to improve the payment experience. The opportunity to bring more transactions onto the Mastercard network remains. We now switch approximately 2/3 of our total transactions worldwide, up from approximately 55% in 2018. Our actions in markets where switching penetration was historically low like Japan, Mexico, Colombia and Chile have increased this penetration, and we will continue to focus on this. My takeaway for you is the secular opportunity is large and it's lasting, and we are well positioned to go after it. Our momentum also continues with issuers and co-brand partners as we are winning new deals and retaining key business in every region. |
4,335 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Starting in the Americas. In the fi quarter, we further solidified our position in Brazil. signing an agreement with Banco Bradesco, one of the largest banks in the market across credit, commercial and services. We're making great progress in converting the previously announced debit wins in the United States. The Fiserv Money Network card program for the California Employment Development Department has now gone live with Mastercard. On the conversions of Citizens and Webster, we are well underway. We're further strengthening our leadership position with retail co-brands in the U.S., Mastercard will be the exclusive network for the Citi issued Dillard's co-brand. We have also extended our long-standing partnerships with Target and the TJX companies. In Asia Pacific, Middle East and Africa, we signed a 10-year exclusive partnership with First Abu Dhabi Bank, the largest bank in the UAE. The agreement spans consumer and commercial issuance across UAE, Saudi Arabia, Oman and Egypt. We entered into a new exclusive co-brand agreement across the EMEA region with Global Hotel Alliance, the world's largest alliance of independent hotel brands. And in India, we signed a 10-year consumer credit issuance deal with Axis Bank. And finally, in Europe, we extended our long-standing partnership with [indiscernible]. The deal renews our payments relationship with one of the largest banks in the region while continuing to embed comprehensive marketing, consulting and loyalty solutions. These examples, like many others, are true partnerships. Our teams are invested in making them a win-win experience, and we will continue to use our innovative product capabilities and differentiated service offerings and our solution selling approach [ produce ] positive results for our customers and for Mastercard. Now you asked before, why are we winning? That's exactly why we're winning. |
4,336 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Moving next to the new flows pillar of our growth algorithm. We continue to execute against our strategy to further penetrate the addressable market in targeted areas like commercial payments, and disbursements and remittances. Growth in commercial is about making sure we are connected to the right partners and have the right solutions to power growth. made great strides in securing key partnerships, including traditional banks, travel and ERP providers. We previously announced our expanded agreement with Wells Fargo in the U.S. As part of our small business relationship, I'm happy to share that we've made significant progress in the conversion of this card portfolio to the Mastercard network. Also this quarter, we won our first commercial credit issue deal with SBI Card in India. In commercial solutions [ we're ] components of the Banco Bradesco and First Abu Dhabi Bank deals I mentioned earlier.
In addition to aligning with the right partners, it's also about having the right solutions to help commercial clients address their needs, like consumers, they want an easy and secure payment experience. Our new innovative mobile virtual card app enables commercial cards to be seamlessly added to digital wallets as we do as a consumer, but businesses can easily enable employees to pay for expenses with a click and a smile. At the same time, they can optimize back-office processes with robust spend controls, enhanced reconciliation data. HSBC Australia and Westpac will be the first financial institutions to offer this solution. The same principle applies to the open-loop commercial fleet space, where we are the market leader. Our differentiated capabilities have positioned us as a preferred partner with the market-leading fleet providers such as Corepay. And fleet fintech AtoB has announced they will now convert their commercial credit card program exclusively to the Mastercard network. |
4,337 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | And sticking to new flows, disbursement and remittances, we continue to extend our reach to new markets. In quarter 1, we grew transactions by over 40%, [ in combined ], our portfolio of domestic and international money movement capabilities into 1 offering, Mastercard Move. It includes our Mastercard Send and cross-border services and reaches nearly 10 billion endpoints worldwide. This quarter, we extended our reach further in China with our connection to Alipay, in the U.S., we're partnering with Verituity to create a white label solution for banks to modernize their disbursements and remittances through a plug-and-play solution. And we will work with Sweden based Pagero to support account-based cross-border and domestic payments.
Now shifting from payments to services and new networks, another important component of our growth algorithm. It starts with a powerful set of diversified solutions with best-in-class fraud capabilities, data analytics, consulting, marketing, loyalty, identity and open banking assets. These carefully curated assets help us grow and diversify our revenues and differentiate our payments. We drive growth in services and new networks across several vectors. First, remember, a portion of our services revenue is driven by payments. and these metrics continue to perform well. In addition, we're driving growth by increasing the penetration of existing customers. We're extending our services across new customers and new payment flows and we build and deploy new solutions. |
4,338 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Here are a few examples of how we're executing against these. Starting with increasing penetration with existing customers, success in delivering our services, strengthen relationships and can generate opportunities for future service engagements. Our best-in-class conversion support is often an entry point. A great example is with Westpac in Australia and New Zealand, where we expanded our service offerings to include digital strategy, marketing solutions, innovation sprints and portfolio optimization campaigns. We have a diverse set of solutions to also help banks manage critical business needs outside of payments, take credit risk, for example, core to all banks. Our consultants are working with Ford Brazil to improve their credit policies and management. |
4,339 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | In a Saudi National Bank, we are enabling new credit risk modeling and scoring capabilities. There's still room to further penetrate services. Our top 50 services customers on average are using 2 to 3x more services than the balance of our issuing and acquiring customer base. We're also driving growth by extending our reach across multiple rails and networks outside of the Mastercard network. Mastercard Access provides customers with a single trusted connection to quickly and easily source a suite of services and we are seeing great traction. For example, Saudi National Bank will leverage Access to deploy a set of scheme-agnostic services across their portfolio. We also continue to innovate and develop new services and solutions. This helps us to meet the evolving needs of our clients while growing our addressable target market. Here's an example. Think about how people are shifting to streaming and other digital services. As they do, they're looking for 1 simple view of all their subscriptions. I think we've all been there. It's why we developed smart subscriptions. It's an open banking powered solution that puts a simple dashboard of all subscriptions regardless of network right into their consumer banking application. Cybercrime is a growing concern, last year alone, people in the United States lost over $12 billion to Internet scams. Scam Protect builds on the cybersecurity protections we have delivered for years, combines our identity biometric AI and open banking capabilities to identify and prevent scans before they occur. As part of this, we're partnering with organizations around the world, including Verizon, to collaborate on new solutions to protect consumers. By combining Mastercard's Identity Insights with Verizon's robust network technologies, new AI power tools will be designed to more accurately identify and block scammers. We continue to enhance our solutions with generative AI to deliver even more value, a world-leading real-time fraud solution, Decision Intelligence, has been helping banks |
4,340 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | AI to deliver even more value, a world-leading real-time fraud solution, Decision Intelligence, has been helping banks score and safely approve billions of transactions, ensuring the safety of consumers and the entire payments networks for years. The next-generation technology, Decision Intelligence Pro is supercharged by generative AI to improve the overall score and boost fraud detection rates on average by 20%. So overall, there's a strong demand for our services and new networks across a diverse customer base. They continue to grow faster than the core, and we remain optimistic about the opportunity ahead. With that, I will wrap it up. In summary, we delivered another strong quarter of revenue and earnings growth. We are successfully executing against our strategy in realizing our growth algorithm. Our differentiated capabilities, our diversified business model and our focused strategy poses well to capitalize on the significant opportunity in front of us. Sachin, over to you. |
4,341 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Well, thank you, Michael. Turning to Page 3, which shows our financial performance for the first quarter on a currency-neutral basis, excluding where applicable, special items and the impact of gains and losses on our equity investments. In line with our outlook, net revenue was up 11%, reflecting continued growth in our payment network and value-added services and solutions. Operating expenses increased 9%, including a minimal impact from acquisitions. And operating income was up 12%, including a minimal impact from acquisitions. Net income and EPS increased 16% and 19%, respectively, both reflecting the strong operating income growth as well as [ the ] lower tax rate, primarily due to a change in geographic mix of earnings and discrete tax benefits related to share-based payments. EPS was $3.31, which includes a $0.07 contribution from share repurchases. During the quarter, we repurchased $2 billion worth of stock and an additional $815 million through April 26, 2024.
Let's turn to Page 4, where I'll speak to the growth rates of some of our key drivers for the first quarter on a local currency basis. Worldwide gross dollar volume or GDV increased by 10% year-over-year. In the U.S., GDP increased by 6% with credit growth of 6% and debit growth of 6%. Outside of the U.S. volume increased 13% with credit growth of 12% and debit growth of 13%. The Overall, cross-border volume increased 18% globally for the quarter, reflecting continued strong growth in both travel and non-travel related cross-border spending.
Turning now to Page 5. Switched transactions grew 13% year-over-year in Q1. Both card-present and card-not-present growth rates remained strong. Card-present growth was aided in part by increases in contactless penetration as Contactless now represents approximately 67% of all in-person, Switched to Purchase Transactions. In addition, card growth was 8%. Globally, there are 3.4 billion Mastercard and Maestro-branded cards issued. |
4,342 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Turning to Slide 6 for a look into our net revenue growth rates for the first quarter discussed on a currency-neutral basis. Payment network net revenue increased 8%, primarily driven by domestic and cross-border transaction and volume growth and also includes growth in rebates and incentives. Value-Added Services & Solutions net revenue increased 15% despite tougher comps in Q1 2023. This growth was primarily driven by strong growth in our underlying drivers and continued demand for our Consulting and Marketing Services, Loyalty Solutions and Fraud and Security capabilities. This was partially tempered by slower relative growth in our other 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 10%, while Worldwide GDV also grew 10%. Cross-border Assessments increased 22%, while Cross-Border volumes increased 18%. The 4 ppt difference is primarily driven by favorable mix and pricing. Transaction Processing Assessments were up 12%, while Switched Transactions grew 13%. The 1 ppt difference is primarily due to lower revenues related to FX volatility versus the prior year, partially offset by favorable mix. Other Network Assessments were $226 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 9%, 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 earnings call. This was partially offset by the timing of advertising and marketing spend. |
4,343 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Turning to Page 9, let me comment on the operating metric trends in the first quarter and through the first 4 weeks of April. As a reminder, our Q1 Switched metrics include the impact of the leap year in 2024, which added just over 1 ppt of growth across each of Switched volumes, Switched Transactions and Cross-Border volumes. In addition, our Switched metrics in Q1 and in the first 4 weeks of April were impacted by the timing of Easter, which occurred at the end of Q1 this year as compared to in April in 2023. After removing the impact of those 2 items, our operating metric trends were generally stable for the quarter as well as when looking at the first 4 weeks of April. A few items to note. U.S. Switched volume and transaction growth benefited from the commencement of the conversion of the Citizens debit portfolio to Mastercard. Outside of the U.S., growth was negatively impacted primarily by the lapping of the conversion of the NatWest debit portfolio to Mastercard. Cross-border card-not-present, ex travel continues to show strength and cross-border travel growth was impacted by tougher comps as we continue to lap the recovery of travel, particularly in Asia Pacific, which opened up later from COVID restrictions than the rest of the world. |
4,344 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Turning to Page 10. I wanted to share our thoughts for the remainder of the year. Our business fundamentals remain strong and our diversified business model and momentum with customers position us well for the opportunities ahead. This is all underpinned by healthy consumer spending, the secular shift to digital forms of payment and strong demand across our value-added services and solutions offerings. As Michael said, there are a number of headwinds and tailwinds that we are monitoring, and we stand ready to manage investment levels as appropriate, while maintaining focus on the execution of our strategy. Overall, we remain positive about the growth outlook. As it relates to the full year 2024, our thoughts for net revenue and operating expenses remain unchanged on a currency-neutral basis, excluding acquisitions and special items. We expect net revenue to grow at the high end of a low double-digit range on a currency-neutral basis, excluding acquisitions. This reflects continued healthy consumer spending and higher value-added services and solutions growth in all quarters for the balance of the year as compared to Q1. Acquisitions are forecasted to have a minimal impact for the year. And foreign exchange is now expected to be a headwind of 1 to 2 ppt for the year, primarily driven by the recent appreciation of the U.S. dollar.
In terms of operating expenses, our expectations for the full year are to grow at the low end of a low double-digit range on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to have a minimal impact to this growth rate for the year, while we expect a 0 to 1 ppt benefit from foreign exchange. |
4,345 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Now turning to Q2 2024. Year-over-year net revenue growth is expected to be at the low double-digit range on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to have a minimal impact to this growth rate, while we expect an approximately 2 ppt headwind from foreign exchange for the quarter. From an operating expense standpoint, we expect Q2 operating expense growth to be at the low end of a low double-digit range versus a year ago, again, on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to add 0 to 1 ppt to this OpEx growth and foreign exchange is expected to be a tailwind of approximately 1 ppt for the quarter.
Other items to keep in mind, on other income and expenses in Q2, we expect an expense of approximately $85 million. This expense is higher than what we had in Q1, driven by lower forecasted net average cash balances in Q2, primarily due to higher working capital requirements as well as the geographic mix of cash. 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 both Q2 and on a full year basis, all based on the current geographic mix of our business. And with that, I will turn the call back over to Devin.
Devin Corr: Thank you. [ Audra ], you may open up the line for Q&A now.
Operator: [Operator Instructions] And we'll take our first question from Sanjay Sakhrani at KBW.
Sanjay Sakhrani: Yes. Sachin, just a question on the guide. I mean, it seems like a lot of the guide lower on revenues is just FX, but I'm just confirming when we look at the volume and yield trends, those seem to be doing fairly well, if not slightly better than expectations. And you mentioned the conversion beginning, just trying to think through as we look ahead, it seems like those trends seem constructive. I just want to make sure that's the way you're looking at it. |
4,346 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sanjay, I think you said it exactly right. First of all, just to be very clear, like I said, our guide for the full year on a currency-neutral basis, excluding acquisitions, is unchanged relative to what we shared at the last earnings call. what we're seeing, generally speaking, is healthy consumer spending. These trends are very much in line with what we expected when we put the guide out in the first place. So nothing unusual to report from an overall spending trend standpoint. Obviously, the U.S. dollar has appreciated quarter-over-quarter. And what you're seeing is really our best reflection of what we think the impact of the strengthening U.S. dollar is going to be on our as reported numbers, which is what we shared with you. That's the only real update. Our guide otherwise is very much unchanged. And as it relates to your question on conversions, the conversions which are taking place are very much things which we had contemplated in our original guide. So that's very much part and parcel of what we had contemplated. So business as usual, I want to be very clear, there's nothing which has really changed from a guide standpoint, when you look at it on a currency-neutral basis, excluding acquisitions.
Operator: We'll move next to Craig Maurer at FT Partners.
Craig Maurer: Two questions. First, it looks in the April trends as if the most material slowdown was intra-Europe cross-border. Could you just confirm if that's the case and if that was really predominantly Easter like you suggested. Secondly, we should be coming up on the 6-month anniversary of your announcement of Chinese domestic market approval. When should we expect the first transaction to be processed? And have you been able to work out whether you'll be able to use existing issued cards in the domestic market after a workaround on the EMV code or will you have to reissue? |
4,347 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Craig, I'll take the first question. Your observation on intra-Europe is exactly right. What you're seeing in the first 4 weeks of April is exactly what you said. It's related to the timing of Easter. Easter has actually a more pronounced impact in intra-Europe and that's why you're seeing a more exaggerated number out there. And then on your second question, as it relates to China, Michael is going to just take that right now.
Michael Miebach: So on China, we got the license in November, and we shared our excitement about that. So the excitement continues. The teams have been busy building out issuance relationships with our banking partners in China and building out the acceptance footprint. We're obviously not starting from 0 here. We had a strong cross-border business. So we have relationships in play that give us a heads up. There was a time line associated with the license, and we're expecting to go live with the first transactions to a very specific question here in the month of May. As far as using existing cards in China, I think the key question here behind that is -- how can you use existing acceptance in China and start to generate volume. And here, our approach is through the partnership with the digital wallets to have cards put into the digital wallet so they can be used at the whole wide range of merchants in China. So I do want to say we are excited. At the same time, it's clear we're going to start processing, [indiscernible] transactions domestically, this is a medium- to long-term opportunity. In the short term, there's more work that we need to do to build out more acceptance and continue to get more card programs out, but we feel very encouraged about that. Our teams are very busy with that activity. |
4,348 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: And Craig, I'll just add a couple of points as it relates to China. One, I think you might have seen in the press that the Chinese government is pushing hard to increase inbound cross-border travel by expanding acceptance of international cards. That's their way of making sure that they're encouraging tourism inbound into the country. And we're actively working on expanding our footprint there, just expanding on what Michael said. That's point number one, as it relates to how we're seeing the China play, play out. The second point I'll make on China is -- it's kind of interesting when you think about a MasterCard card issued in China going forward, that will probably be 1 of the few networks which is most widely accepted across the globe, just by virtue of the fact that those cards are now going to be accepted in China and they're already accepted across the globe, different from our competitors in many ways. So we like what we're doing in terms of pursuing our strategy down there. I just wanted to make sure I kind of brought those 2 points out as well.
Operator: We'll go next to Ramsey El-Assal at Barclays.
Ramsey El-Assal: Michael, how would you characterize or how do you think about the penetration rate of existing customers when it comes to value-added services. It's more important part of the growth algorithm, how do you measure -- how do you think about how mature the long-term opportunity is when it comes to cross-selling value-added services into your base? |
4,349 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Ramsey, you are hitting on a really important point. value-added services, a key differentiator for our payment solutions, payment solutions. The link is pretty clear, more volume, more data, and I talked about the whole growth algorithm earlier on the call. Now this doesn't just naturally have to us. It requires really focused execution. To your point, we are all at any point in time, very clear what our cross-sell ratios are, what value we can offer to our customers and who we have it offered to and who we haven't offered it to. I give you a stat earlier that talked about that you have 2 to 3x more services with our top 50 customers. So there is tremendous potential in there. And our teams are very focused on that. Across the company, we have our existing relationship manager, sales force out there across the whole world, but we're also having a set of very specific more hunter-oriented sales forces that drive very specific new products with deep value that we drive into separate selling centers into these customers. So it's a pretty broad approach. At any point in time, we see that data, and we drive that because as you said, this is a near-term growth opportunity that we should leverage and we will.
Operator: We'll go next to Harshita Rawat at Bernstein.
Harshita Rawat: Michael, can you talk about the U.S. merchant class action settlement. I know this still needs to be approved by the courts, but how should we think about the implications from the changes proposed on surcharging for specific brands? And how do you think you stay down? |
4,350 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. Thanks, Harshita. So the first word, I would say, relief. This has been long standing, and we are happy that there was an agreement found with the merchant community as well as with Visa and this is behind us. So what this was about is the U.S. merchant rules class. So what was in focus here was the business rules that make up the Mastercard promise. And the conversation was around how can we provide opportunities to merchants to manage their cost of acceptance on 1 hand, at the same time, how do we keep the major promise to consumers of the Mastercard brand and that is, you can pay anywhere and you will not be discriminated against your payment. So that was the toggle over the years and an agreement was reached. And basically, what happens is we're going to have a mild reduction of interchange rates, number one. and we're providing more clarity and simplification around surcharging rules and discounting rules on the 1 hand. At the same time, we retain the promise of [ to ] honor all card rule out there. So that is what is out there. We don't expect any dramatic impact on the business from the interchange changes. And for merchants, they -- we will see what the choices they make on surcharging and on discounting. We've seen in the past that surcharging is not always clear to consumers. It's not always prepared, so we'll see what choices will come up. So broadly speaking, I don't expect a major impact on our business. In terms of financial impact, we have accounted for the legal fees associated with that. Otherwise, there is no impact directly on Mastercard. So all in, a very good outcome, and it proves 1 point. It proves the point that there is a lot of momentum and a lot of competition in the payments market and yet again another moving item and merchants agreed to this, and this is a good step forward for everybody.
Operator: We'll take our next question from Dan Dolev at Mizuho. |
4,351 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll take our next question from Dan Dolev at Mizuho.
Dan Dolev: So rebates and incentives were a little bit higher than what we had expected in the first quarter. How should we think about the remainder of the year? And do we expect it to cool off a little bit?
Sachin Mehra: So on rebates and incentives, very much in line with what I kind of shared in terms of our thoughts at the last earnings call, very much in line with our expectations as how we ended up in the first quarter. As it relates -- and you know what the usual puts and takes are as it relates to what drives this incentive, so I won't kind of repeat that. But the reality is, we continue to be out in the market, working to win business. We've got a strong pipeline of deals. We'll continue to execute on that. You hear about them on every earnings call. As it relates to the second quarter, as we see it right now, we expect rebates and incentives as a percentage of our payment network assessments to be roughly similar to slightly down from what we saw in the first quarter. So the reality is -- I want to kind of just make sure we put this in perspective, right? We do these rebates and incentives to bring more volume onto our network. When we bring more volume onto our network, it gives us the opportunity to optimize those portfolios to grow them at a faster pace, it helps us deliver more services, which helps us drive net revenue accretion from a yield standpoint. And so it's very much in line with our strategy, and that's what I've got in the nature of thoughts for the second quarter. |
4,352 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Yes. It's a competitive marketplace. So we have to be competitive on the financial side. We clearly see the flywheel effect that Sachin just talked about between payments and services, more volume on, more ability to sell our services. But it's also clear that we are very, very focused on what deals we want to win. So we don't want to win every deal and we're very, very targeted here whatever meets our financial criteria and our strategic focus in certain markets and certain verticals.
Operator: We'll go next to Darrin Peller at Wolfe Research.
Darrin Peller: Maybe we just hit on some specific travel trends. I mean, and really more broadly, consumer trends. If you could just give us a little more on what you're seeing from a travel dynamics standpoint. It did decel a bit into April. And I know Easter timing was a factor, but it seems like it could be a little more than that. So is there anything you're seeing behavior-wise that's impacting that? Do you expect that to rebound and then maybe just, Michael, if you can give us a sense of your view of where we are in the, the dynamic of conversion on to electronic payments for the consumer payment side. Any changes in patterns we're seeing in terms of the U.S. growth rate in particular and then more broadly. |
4,353 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. I'll take the first part of your question. As it relates to cross-border travel, really, what we are seeing is exactly what we said, which is the lower growth rate that you're seeing in the first 4 weeks of April, as we've seen and we've analyzed as being primarily driven by just the timing of Easter. There's nothing unusual to call out. The only thing I will say is when you think about cross-border travel, you should think about it in the context of also tougher comps, particularly as it relates to Asia because Asia was late to come out of the restrictions of COVID. So last year, you saw a strong recovery take place in terms of cross-border travel in Asia and then it just creates [ for ] tougher comps this year. But fundamentally, the value prop is very sound. We've got great portfolios, we continue to win portfolios which are travel leaning, cross-border travel leaning, and we're executing on this portfolio. So nothing unusual that I'm seeing, travel growth rates are very healthy, and they're actually, I would say, are running at a cliff, which is -- when I go back to the pre COVID days, it actually is running at a cliff, which is pretty comparable to what we used to see in the pre COVID days when adjusted for the timing of Easter and the comp impact. |
4,354 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right, just a last comment on travel and tourism in general. Sachin earlier mentioned that the Chinese government is really focused on driving inbound tourism. I just came back from a series of trips Indonesia, 1 of them, and you see yet another government that is driving inbound tourism. We see it in India. We see it in Spain and so forth. In order to work with governments and how to actually do that. There's a whole practice around our public sector business to build out, use the data that we have to create not -- in order to aid the portfolios that we have, create approaches with governments to promote their respective destinations. And all this comes hand-in-hand to a much more holistic approach that we're now seeing around travel vis-a-vis competitors out there. So that was 1 thing I wanted to add.
On the conversion piece and the shift to digital payments, you asked specifically about the United States. I want to hang it up a little bit broader. Starting off with -- there is a tremendous secular opportunity from a geographic perspective. So there is opportunity left here in the United States, but if you look around the world and you see some other countries, G7 economies like Italy, you have 45% cash. So tremendous opportunity even in developed opportunities to -- developed companies to go after that. I just mentioned Indonesia. In Indonesia, you have over 70% cash. So this is a country where the President has put out by 2045. They're going to be the fourth largest economy in the world, 280 million people. So there's the whole range across developed and developing economies for us to continue to go and push into. |
4,355 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | You heard us talk about changing behaviors post-COVID. People are ordering more takeout foods and doing more things generally online, and that is generally a preferential place for card transactions. So going into these verticals is important. We gave you the example on a number of occasions of takeout food. That's 1 transaction in the restaurants, but multiple transactions as you pay your platform, the platform pays the restaurant and so forth. But think about public transport is another example. Here, we're talking real scale around the globe. So that is multiple transactions as consumers get into open-loop systems multiple times a day. And when they get out of the station, they use that same tapping behavior as they buy a coffee and so forth. So there's tremendous transaction opportunity driven by change in behaviors of consumers. And there's whole new sectors, as I mentioned about in the prepared remarks, health care, rent and so forth. So the secular opportunity, this was not just a throwaway comment earlier when I say it's big and it's lasting. It goes up exactly in those layers, and we are very focused on each and every 1 of those layers. So this is around for a while.
Operator: We'll go next to Tien-Tsin Huang at JPMorgan.
Tien-Tsin Huang: Just wanted to ask on value-added services. The the outlook here. Can you just elaborate on the visibility for a faster growth beyond the first quarter? I know comps are -- is a big part of it. Just curious about visibility beyond the comps. And then is there potential to catalyze growth in the other category within value-added services? |
4,356 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. Tien-Tsin, I'll take that. So like I mentioned, right, I mean, first of all, our overall outlook and the demand we're seeing for our value-added services and solutions continues to be quite compelling and strong. I mean we're out there actively, as Michael mentioned earlier, driving and pushing harder across the various sectors, which we kind of talked about. So I won't repeat them. As it relates to the thoughts I shared as it relates to growth rates for value-added services and solutions for the remaining quarters of the year, which I said that the growth rates would be higher in each of the quarters compared to Q1. It's really based on what we're seeing in the nature of the pipeline, how we're seeing things shape up in terms of the cadence of how we're going to deliver on these value-added services and solutions, we feel pretty good about the outlook there, which is why we're sharing with you what we're thinking about in the nature of this higher growth relative to Q1 in each of the quarters.
The only other comment I'll make is it's a little bit of a reminder out here, which is, as we deliver on these value-added services and solutions, we're obviously generating revenue from the value-added services and solutions but that's also driving very compelling kind of cases for us to accelerate our payments growth, right? So that's part and parcel of the strategy. It's all kind of very independent, one or the other. On your other question, which was around other solutions growth, look, we continue to remain focused on growing the other solutions. It's primarily comprised of our real-time infrastructure assets as in our bill payment assets. |
4,357 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | That inherently is slightly slower growth compared to what we've got in our safety and security solutions, our consulting and marketing, loyalty solutions, so we'll continue to drive on that. I don't necessarily expect that the growth rates there are going to get comparable to what we see on the safety and security side as well as in the consulting and marketing and loyalty solutions side, primarily because the opportunity which is there on Safety and Security and Consulting is a much larger TAM and it's a faster-growing TAM, and we're continuing to execute on it. The good news is -- the safety and security fees as well as the consulting and marketing and data analytics and insights component is the lion's share of what comprises our value-added services and solutions.
Michael Miebach: [indiscernible] back to the piece, Tien-Tsin, as we discussed earlier about existing customers and the cross-sell. So that's an opportunity. We laid out the drive into new customer segments. So that's pretty clear. In here, give you an example, on the personalization thing, our Dynamic Yield acquisitions dating back to [ 2020 ], you have a lot of high-end retail and commerce brands that I want to engage on that. Everybody is trying to cut through the clutter, take Saks Fifth Avenue, they're using our personalization services. So those are all opportunities to get into certain verticals that we're not even in today in a significant way. So that is what gives us great confidence, there's great demand as we look ahead into services, and that's why we're saying they're going to be higher than the first quarter.
Operator: We'll move next to David Togut at Evercore ISI. |
4,358 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll move next to David Togut at Evercore ISI.
David Togut: Are you seeing any change in competitive intensity in Europe, primarily for your payment network. Your primary competitor called out share gains local payment networks in the quarter that has long been a source of growth for Mastercard. So either changing competitive intensity from the principal competitor in Europe and/or any initiatives by local payment schemes to become more competitive themselves?
Michael Miebach: David, Europe's a fantastic growth story for Mastercard, starting off with some of the big shifts in debit in the U.K., some great wins on the continent. Earlier, I was talking about the renewal of [indiscernible], some big deals that are still in flight on conversion if you think about UniCredit, 13 markets across the continent. So we're well positioned here. Obviously, Europe is in focus from a set of competitors that is local players as in local schemes and so forth, but we've long found a way to partner with them. we feel they have a great proposition on credit and debit to compete. At the same time, there are services partnerships that we drive across and then more traditional competitors, of course, we're all eyeing Europe. Europe is too much of a growth story overall for everybody to keep competing. But we, as I said earlier, we try to turn these relationships into win-win partnerships. UniCredit in the end decided to go with us because they feel we have shown better traction in serving their customer needs. So it comes down to that, and I feel pretty confident as I look across Europe. And it continues to be a growth opportunity. Back to this question about secular opportunity. Europe still has a lot to offer on that front, and we have a whole set of solutions to go after that. |
4,359 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Just 1 more point I'll add, David, as it relates -- we've had this long-standing focus on conversion of Maestro to Debit Mastercard, and that's very much the case in Europe as well that we continue to execute on that. I feel like that's going to be one of those things which will continue to provide us a natural tailwind as we continue to execute on that capability. For example, in this quarter, we migrated or converted very roughly 7 million consumers from Maestro to debit Mastercard. And that's a global number. That's not just a Europe number, but I just want to share that with you as another piece of how we're executing in Europe.
Operator: We'll move next to James Faucette at Morgan Stanley.
James Faucette: I'm wondering, you talked about strong cross-border and travel trends, et cetera. We've seen some more indications of uneven consumer spending development in other parts of the economy generally. I'm wondering if you can call out whether it be in the U.S. or in other markets, if there's anything discernible at your level in terms of consumer shifting, spending preferences or categories that are noteworthy. And if we should take in if there's anything that could impact Mastercard or other indications that we should be aware of? |
4,360 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: All right. Let me start off on this and then Sachin can comment further. So you've seen the 18% growth, so this is strong. So there's a travel component to that, and there is an ex travel component to that. Ex travel continues to be particularly strong, it's cross-border e-commerce and the [ likes ]. On the travel side, if you break that down, we talked about the trends. I want to lift it up a little bit to the broader -- I think the broader angle of your question. So what are the various things that consumers think about as they make spending decisions, how did it make ends meet and travel has been strong ever since COVID, particularly strong from a recovery perspective and has been strong even for COVID because the seeking of experience is just a fundamental trend that hasn't gone away.
So it's not one of those circular things. This is just a secular trend that we see. People are seeking services and experiences and travel is the top of the list. Now as you go and break this down into different countries, you're going to see different stages of inflation. You're going to see different monetary policy and fiscal policy, how governments and regulators are reacting to inflation and so forth. And that affects consumers in different ways. If you see inflation in non-carded verticals, that's going to impact your payment decisions or your spending decisions on carded verticals and so forth. So it's a pretty not uniform story around the world. that's why I come back to the fundamental trend. Travel is winning. People want to go out and make that trip. And hence, we remain pretty optimistic around that. |
4,361 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: As it relates to while we're on the topic of cross-border travel, I just wanted to kind of share where we are in terms of where we see potential for some recovery, which is particularly in Asia Pacific, which has got still some room to grow. [ Case in point ] would be China, where we've shared these metrics with you in the past, but I'll share with you what the Q1 metric was inbound and outbound of China. So in Q1, cross-border travel, inbound and outbound into and from China stood at approximately 80% of the pre-COVID level. So there's still room to recover. And granted China is going through a little bit of a slower period in terms of how the domestic economy is performing. But the reality is there still remains an opportunity over the medium to long term to see how this recovery comes through in the nature of travel even from that corridor, per se.
Operator: We'll take our next question from Tim Chiodo at UBS.
Timothy Chiodo: I want to talk a little bit about U.S. debit trends. So you mentioned the Citizens Bank beginning -- portfolio beginning to come through. But also on Reg II, more specifically, we've talked about it in the past as a small portion of your overall net revenue in terms of U.S. online debit. And often, we talk about the risk or the threat to that small portion. But could you also talk about the flip side to that, so the opportunity for Mastercard to gain the position on the back of the card for some of the Visa debit cards in the U.S. |
4,362 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right, so Tim, great point. We love to talk about debit. You saw the 6% growth rate. So this is good. We're doing well, and the impact of the conversions is felt. As far as it comes to routing and Reg II, this question comes up for now for a couple of calls. And I have to say where we are, we're seeing some impact, but it's not material. That comes to the bigger question that you raised, how do we look at that? So it's not material, that's great. That gives us even more reason to look at the opportunity side of this and you're fighting for back of card. And in the end, it comes down to the routing mandates, such as just distorting the market. I think what's happening here is it's ignoring the fact that in the end, a merchant will make a decision on the basis of a net economic outcome. And the net economic outcome is not just the cost of operating related to some routing costs but it is fraud costs, et cetera, the whole package altogether. And this is, I think, where we score well because we have a better proposition. Last 5 years, we've invested $7 billion into Safety and Security Solutions and that makes a competitive advantage for us. So -- and that makes for a competitive advantage for us. So I see the opportunity, our teams are out. They're talking to merchants that saying, "Here's what the net proposition is if you choice A versus choice B. And so far, that is an encouraging set of dialogues.
Operator: Our next question comes from Bryan Bergin at TD Cowen.
Bryan Bergin: I wanted to just ask about the change in the organizational structure. Any financial implications to be [ aware ] from that? Just how you're feeling about those early changes as you pursue the growth opportunities across the business. |
4,363 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. So what we're doing here is you heard us talk about the growth algorithm, about our strategic priorities. In the end, what's happening here is we're realigning our portfolio of activities, always recognizing these are all interdependent. We're talking payments and services and altogether, it makes our competitive advantage position. But we basically say, we want to focus on core payments. We want to focus on new payment flows, and we want to focus on an integrated services set of offerings. And that is what is part of this announcement, plus we see tremendous opportunity on the AI side, particularly on the generative AI side, and we've created a central role for that. So these are 4 very seasoned leaders in the company that have tremendous experience around these topics. They're going to take this on and the whole idea is to move faster and drive more value to our customers. In terms of financial impact, what I hope to see is we kind of deliver the growth that we think is out there in terms of potential. That is the impact that I'm looking for. So that's really the play. There's nothing else to say beyond that. I'm looking -- talking to Craig, who's going to lead the services [ saying ], what is going to be on our product road map going forward? How do we drive even more services growth, et cetera. So that's the whole play. It's bringing structure strategy in line and move forward.
Operator: Next, we'll move to Bryan Keane at Deutsche Bank.
Bryan Keane: Just want to ask about the continued positive yields you're getting in cross-border, your major peer isn't seeing the same kind of positive yield and they talk about low currency volatility as part of the reason. So I think you mentioned Sachin pricing and mix and just helping us understand how much is sustainable of those changes for yield in cross-border and the differences maybe between your closest peer. |
4,364 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Sure. So first, I just want to quickly remind you that as it relates to the impact of FX volatility in our instance, that shows up in our transaction processing assessments. It doesn't show up in our cross-border assessment. So the impact of the, what I would say, the drag associated with FX volatility shows up in this transaction processing assessment line. It doesn't show up in our cross-border assessment line, point number one. Point number two, you're right about the yields. Our portfolios continue to perform well. It goes back to what Michael said earlier, we want to win not only every portfolio, but we want to win the right portfolios. And that's what we focused on doing over the last few years, which is winning the right portfolios for cross-border and what that's helped us do is see this favorable mix come through where we are seeing the inter cross-border grow at a more rapid pace than the intra-Europe cross-border.
And you do know that the yields on the inter cross-border side are higher than the yields on intra cross-border, intra-Europe cross-border. So that certainly helps from a yield standpoint. And then as it relates to your question on pricing, look, we've always kind of done pricing for the value we deliver when we deliver value to our customers, whether it's on the issuing side of the acquiring side, we price for it. I called out that in this quarter, we had a little bit of a lift come through on pricing in the cross-border assessments line. And you'll see that come through the ensuing quarters as the year progresses as well.
Operator: We'll take our next question from Dave Koning at Baird.
David Koning: Nice job. I guess advertising is my question. It was the lowest in a long time by quite a bit, too. And I'm wondering if there's some correlation between how much you have to advertise and even rebates that if you're giving back some in dollars to your clients, you don't have to advertise quite as much. Is there a correlation there? And maybe just why is it down so much? |
4,365 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra: Yes. Look, I mean, the A&M spend is typically -- it's a cadence of how we see the promotions we want to do. So let me just step back and kind of think a little bit about why we spend on A&M. You could do it at the brand level, but you could do it towards activation of sponsorships. And depending on when your sponsorship assets are in play is when you want to do the activation around those sponsorship assets. So that influences the cadence of spend on A&M. So you're right, we had lower A&M in the first quarter. I kind of mentioned in my prepared remarks about how it's the timing of A&M. What I was basically alluding to is that as the year progresses, we will be spending more on the advertising and marketing line.
On the second part of your question as to the toggling factor between the expense line and what we might be giving in terms of marketing or marketing spend in terms of [ contract ]. There is an element of marketing, which we do give in terms of rebates and incentives to drive portfolio spend. We work very closely with our issuing partners on that. And so it's across both of those that we are looking to actually optimize from a marketing standpoint. |
4,366 | MA | 1 | 2,024 | 2024-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Right. The last comment I want to make on this. So we are a very large fintech, but we're not just a fintech. We have a massive consumer brand. It's a fast-moving brand. It's amongst the top 10 brands on Brand Z, so investing in marketing is absolutely critical. This is not a trade-off that we make to -- from quarter-over-quarter, it fluctuates at exactly the way that Sachin just talked about, when is the Champions League on? When is this on this on, when is that on, and we have a very carefully curated set of sponsorship assets and it drive a bit of the timing. But we love our brand, we invest in it. I think for the fifth year in a row, we have been the #1 Sonic brand in the world. So there's a lot going on, on the marketing side that we are very proud about. And I think that brings us to the end. What a great question to end the call on. Thank you so much. It is Labor Day in most parts of the world today. So when I thank our colleagues yet again, which I do in every call, on Labor Day, it makes even more sense. SO a big call out to the 33,000 at Mastercard, and thank you to you and our shareholders for your continued support. Thank you very much. Speak to you next quarter. Bye-bye.
Sachin Mehra: Thank you.
Operator: And this concludes today's conference call. Again, thank you for your participation. You may now disconnect. |
4,367 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: Good morning. My name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Incorporated Q1 2025 Earnings 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] Thank you, Mr. Devin Corr, Head of Investor Relations. You may begin your conference.
Devin Corr: Thank you, Audra. Good morning, everyone, and thank you for joining us for our first quarter 2025 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. |
4,368 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Thank you, Devin. Good morning, everyone. Before I dive into the specifics from the quarter, a few things stand out for me. First, we delivered a fantastic first quarter. Net revenues were up 17% and adjusted net income up 13% versus a year ago. As always, on a non-GAAP currency neutral basis. Second, we are successfully executing against a significant secular opportunity in payments. It's a core part of our growth algorithm and an opportunity in any economic environment. Third, we are at the forefront of digital transformation, delivering a diverse set of solutions that address the evolving needs of our customers. Capabilities that make payments simple, smart and more secure and services that go beyond our rails and beyond payments. Now let's get into the details. We're operating in an uncertain environment. Consumer and business sentiment has weakened primarily due to concerns surrounding the impact from tariffs and geopolitical tensions. On the other hand, so far this year the fundamentals that support consumer spending have been solid and our drivers are generally stable. No matter what, it remains clear that we have intentionally embedded resiliency. We have a well-diversified business, both from a geographic and product perspective as well as across a wide range of discretionary and non-discretionary span categories. We closely manage our expenses and have levers to pull, if needed. And we remain focused on executing against our short, medium and long-term objectives. There's a substantial opportunity for us to drive sustainable growth across consumer payments, commercial new payment flows and value-added services and solutions. That's what I will focus on today. Starting with consumer payments, our innovations including contactless capabilities and tokenization have become a foundation for payments in today's digital economy. Today 73% of all in-person switch transactions are contactless and approximately 35% of all our switch transactions are tokenized. These technologies will continue |
4,369 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | are contactless and approximately 35% of all our switch transactions are tokenized. These technologies will continue to play an important role as we move forward into the next phase of digital commerce, such as Agentic AI. We announced Mastercard Agent Pay that leverages our agentic tokens as well as franchise rules, fraud and cybersecurity solutions combined. These will help partners like Microsoft, facilitate safe, frictionless and programmable transactions across AI platforms. We will also work with companies like OpenAI to deliver smarter, more secure and more personalized agentic payments. The launch of Agent Pay is an important step in redefining commerce in the AI era. We are thrilled with these collaborations as we work together to scale and build trust in agentic commerce. We also continue to advance crypto payments with an end-to-end approach. We're collaborating with cryptocurrency platforms to allow consumers to spend their cryptocurrencies, including stablecoins, at more than 150 million Mastercard acceptance locations worldwide. Kraken, OKX and Bleap are among our newest card issuance partners helping to connect the crypto economy to everyday spending. And behind the scenes we have enabled stablecoin settlement on the Mastercard network itself. We're working with FinTech acquire Newway to enable the option to settle payments in stablecoins for their merchants. And we help make these payments secure with Crypto Secure, now actively monitoring risks for hundreds of issuers globally. This is in addition to our work on blockchain technology to unlock faster and more transparent cross-border B2B payments with our multi-token network which we discussed last quarter. Our consumer payment technologies also enable us to further capture the significant secular opportunity and expand into new markets. China, for example. As we approach the one-year anniversary of the first locally switched transaction, we launched domestic on-soil tokenization capabilities. These were developed through our joint venture to |
4,370 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | switched transaction, we launched domestic on-soil tokenization capabilities. These were developed through our joint venture to make online transactions more safe and secure. Additionally, we're working to scale commercial as well as consumer payments. Over the last year we have launched 10 new small business programs. We also continue to win and renew partnerships around the globe to drive growth in consumer payments. CIMB Niaga, Indonesia's second largest private bank, has chosen to transition their international branded consumer card portfolio to Mastercard. We have embarked on this long-term partnership to help enhance customer acquisition and experiences through analytics and technology. We're also expanding our partnership with one of the leading regional financial groups in Latin America, Grupo Promerica, across eight countries. In addition to incremental card issuance, they will utilize our consulting and data analytic capabilities to drive growth. Such strategic partnerships also play an important role unlocking cash and new consumers. There's tremendous secular opportunity in Africa. One way we unlock it is by partnering with mobile network operators across the continent. For example, we're partnering with MTN Mobile Money in Uganda to give their subscribers the option to pay using card credentials without the need for a physical card or a bank account. And in the UAE, we're partnering with Al Etihad Payments to launch co-batch, debit, and prepaid cards with the domestic scheme Jaywan. This gives us access to a new set of consumers and flows in this large, high-growth market. Travel remains an important vertical and one where we are seeing continued success. Our acceptance footprint and robust service offerings are key to capturing this category of spend. This quarter, we launched a new debit co-brand card with Wyndham Rewards, and we renewed our credit co-brand partnership with Spirit Airlines with an additional agreement to launch a new debit program with them in the future. Putting it all together, |
4,371 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Spirit Airlines with an additional agreement to launch a new debit program with them in the future. Putting it all together, we are partnering in creative ways to win share and capture the secular shift. Our decades-long innovation in payments has placed us at the forefront of today's digital commerce. And now we're positioned to lead tomorrow's advancements, such as Agentic AI in crypto, as I mentioned earlier. Commercial new payment flows represent another large addressable market opportunity. This quarter, we launched two commercial point-of-sale solutions. Each combine our product capabilities in a modular way to meet the specific needs of varied businesses. Our business builder product combines commercial cards and tools to help entrepreneurial clients launch and scale their ventures. b1Bank will be among the first issuers to offer the program. We developed Mid-Market Accelerator to address the critical needs of the largest and fastest-growing commercial segment, mid-market. It combines our digital payment technology rewards and security solutions with custom-selected features like cash flow and expense management tools. We're working with citizens to bring this to market in the United States with plans to scale globally. Beyond commercial point-of-sale solutions, we are working to unlock the substantial invoice payment opportunity by enhancing our capabilities. We entered into a new partnership with Corpay to enhance our current corporate cross-border payment solutions with industry-leading currency risk management and integrated large ticket capabilities. This will give our financial institution partners a simple connection to a comprehensive suite of cross-border payment offerings, regardless of ticket size and geography. At the same time, the partnership expands the distribution reach of Mastercard Move. And this goes to a broader set of small and mid-sized businesses, including the existing Corpay customers. Finally, we extended our agreement for Corpay to exclusively offer Mastercard virtual card |
4,372 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | the existing Corpay customers. Finally, we extended our agreement for Corpay to exclusively offer Mastercard virtual card programs to its customers. Furthermore, we're extending our leadership in virtual cards by making them easier for businesses to access and deploy. We launched B2B Rate Manager to equip Mastercard virtual card issuers with a faster and more scalable way to implement and use flexible interchange rates. We're also streamlining the onboarding process for issuers to deliver embedded virtual card technology into partner platforms that end corporates use every day, such as HRS and CVent. To further scale, we continue to embed our virtual card technology into widely used platforms. ERP software company Odoo, in collaboration with Stripe, will exclusively issue Mastercard corporate cards integrated into Odoo's Expend module, available for their users in more than 20 countries. We're also seeing strong demand for our Mastercard Move capabilities, with transaction growth up more than 35% year-over-year this quarter. This solution has extensive reach and broad applicability to meet the ever-growing needs of customers and businesses. Let's look at some of the most interesting use cases here. In the person-to-person space, we now facilitate domestic transfers by simply tapping your phone, partnering with Samsung, to power their new wallet P2P offering. And we support near real-time person-to-person cross-border remittances, adding partners like MoneyGram, Instapay Technologies, and Curfex this quarter. Mastercard Move also enables disbursements like gig economy wage payouts to offer more flexibility and speed to businesses and individuals. Checkout.com is using Mastercard Move to help enable disbursement and payment use cases for the gig economy, as well as for insurance and healthcare merchants. And our technology can also speed up purchase return payments within minutes rather than days or weeks, which is clearly something we can all benefit from. Worldpay is now using this with multiple UK merchants to |
4,373 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | days or weeks, which is clearly something we can all benefit from. Worldpay is now using this with multiple UK merchants to deliver faster refunds. Across commercial point of sale, invoice payments, and Mastercard Move, we are expanding across use cases while making it easier and more attractive to use our solutions. The third pillar of our strategy is services and solutions. We've made targeted investments in diversified solutions and high-growth areas. As we said at the Investor Day last year, approximately 85% of our value-added services and solutions revenues are recurring in nature, providing a stable baseline for growth. And we are well-positioned for future growth as we continue to scale by further penetrating existing customers and targeting new buying centers and new services. We are leveraging one-to-many distribution with global technology partners who can embed our services as part of their value proposition. Galileo will enable ethical alerts for most of their card portfolios and integrate our open banking powered capabilities onto their platform. Global cybersecurity company VikingCloud will distribute our risk scoring and cyber security remediation capabilities to further enable their small business clients to protect against cybercrime. And financial crime prevention company Feedzai is extending their use of Mastercard's consumer fraud risk solution. It's already live in the UK with 14 major banks and this partnership streamlines our ability to scale account-to-account fraud solutions to new markets globally. To further penetrate existing customers we bring differentiated solutions that drive impact throughout their value chain. This can be across consumer onboarding, activation, and usage, all the while making payments safe and secure. Our services help balance a positive frictionless consumer onboarding experience with ensuring consumers are who they say they are. Tangerine Bank in Canada is using our account opening identity solutions to do just that. And bringing our identity attributes and |
4,374 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Bank in Canada is using our account opening identity solutions to do just that. And bringing our identity attributes and open banking solutions together we have helped experience enhance their digital checking account offerings with inexperienced smart money. Once those customers are onboarded, our assets can support their ongoing engagement and loyalty resulting in improved customer satisfaction. For example we help power Sam's Club's loyalty rewards program. We're working with First Abu Dhabi Bank to develop an AI-powered concierge integrated into the bank's Mastercard offers platform. This innovative solution will help customers discover and access card offers and benefits in a contextual manner. Additionally our business and market insight services help our customers with portfolio optimization. We've combined our consulting expertise analytics insights to help customers like Intesa Sanpaolo to optimize the program performance. We also provide tools to protect our customers and the ecosystem more broadly. Last year, we enhanced our AI-powered decision intelligence to supercharge our fraud scoring and detection rates and it's working. Detecting more than 40% more fraud versus quarter one last year. On the cyber security front Recorded Future just unveiled malware intelligence. It's a new capability enabling proactive threat prevention for any business using real-time AI-powered intelligence insights. These are just two examples how we deploy AI. Taking a step back AI is deeply ingrained in our business. We have access to an enormous amount of data and this uniquely positions us to enhance our AI's performance resulting in greater accuracy and reliability. And we're deploying AI to enable many solutions in market today. In fact in 2024 AI enabled approximately one in three of our products within value-added services and solutions. Simply put, our services are focused on areas that truly matter to our customers both in payments and beyond and we're intentionally investing in areas like AI-powered threat |
4,375 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | truly matter to our customers both in payments and beyond and we're intentionally investing in areas like AI-powered threat intelligence that are ripe with opportunities for growth. Today, I've shared numerous wins, new partnerships and new product innovations. The execution is evident and our momentum continues. So I want to wrap up with some key takeaways for you. We delivered another quarter of very strong results. We're monitoring the macroenvironment and prepared to adjust as needed. We have a broad set of solutions that drive value for our customers. We have a strong, resilient and diversified business model and most importantly we are focused on delivering our strategy and growth for the long term. Sachin over to you. |
4,376 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Thanks Michael. Turning to page 3 which shows our financial performance for the first 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 17% reflecting continued growth in our payment network and our value-added services and solutions. Acquisitions contributed one ppt to this growth. Operating expenses increased 14% including a 4 ppt increase from acquisitions and operating income was up 19% which includes a 1 ppt headwind from acquisitions. Net income and EPS increased 13% and 16% respectively driven primarily by the strong operating income growth partially offset by a higher effective tax rate due to the impact of the global minimum tax rules commencing in the current period. EPS was $3.73, which includes an $0.08 contribution from share repurchases. During the quarter, we repurchased $2.5 billion worth of stock and an additional $884 million through April 28, 2025. Now turning to page 4, let's first look at some of our key volume drivers for the first quarter on a local currency basis. Worldwide, gross dollar volume, or GDV, increased by 9% year-over-year. In the U.S., GDV increased by 7%, with credit growth of 6% and debit growth of 8%. This growth was impacted by the lapping of the Citizens Debit Portfolio migration to Mastercard, which commenced in Q1, 2024. Outside of the U.S., volume increased 10%, with credit growth of 9% and debit growth of 12%. Overall, cross-border volume increased 15% globally for the quarter, in line with expectations and reflecting continued growth in both travel and non-travel related cross-border spending. Turning now to page 5, let's talk about switch transactions, which grew 9% year-over-year in Q1. 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 73% of all in-person switch purchase transactions. In addition, card |
4,377 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | penetration, as contactless now represents approximately 73% of all in-person switch purchase transactions. In addition, card growth was 6%. Globally, there are 3.5 billion Mastercard and Maestro-branded cards issued. Turning to slide 6, for a look into our net revenue growth rates for the first quarter, discussed on a currency-neutral basis. Payment network net revenue increased 16%, 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 18%. This includes a 4 percentage point increase from acquisitions. The remaining 15% increase was driven primarily by the scaling of our security and digital and authentication solutions, as well as demand for our consumer acquisition and engagement services. It was also driven by growth in our underlying drivers and price-set. 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 12%, while worldwide GDV grew 9%. The 2 ppt difference is primarily driven by mix and pricing. Cross-border assessments increased 18%, while cross-border volumes increased 15%. The 3ppt difference is primarily driven by pricing in international markets. Transaction processing assessments were up 17%, while switch transactions grew 9%. The 7 ppt difference is primarily due to revenue related to FX volatility, favorable cross-border mix, and pricing. Other network assessments were $231 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 14%, which includes a 4 ppt impact from acquisitions. This growth was primarily driven by increased |
4,378 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | expenses increased 14%, which includes a 4 ppt impact from acquisitions. This growth was primarily driven by increased spending to support the continued execution of our strategic initiatives. Total adjusted operating expenses were lower than expected this quarter, primarily due to the cadence of expenses between the first quarter and the remainder of the year. Turning now to page 9, let me comment on the operating metric trends for the first quarter and the first four weeks of April. Starting with Q1, we saw healthy consumer and business spending. Our operating metrics remained generally stable after adjusting for the following three items. First, the leap year in Q1 2024, which reduced Q1 2025 growth by over 1 ppt across switch volumes, switch transactions, and cross-border volumes. Second, the timing of Easter and other holidays. Easter occurred in April this year, as compared to the end of Q1 in 2024. And finally, as it relates to cross-border travel, we saw a pull-forward of spend into Q4 2024 from Q1 2025, as we mentioned on our last earnings call. Now, turning to the first four weeks of April, sequentially, switch volumes, switch transactions, and cross-border volumes also remained generally stable after adjusting for the points I just mentioned. Let me double-click on cross-border for a minute. Cross-border travel growth broadly remained strong, but we are seeing some moderation in select markets in the Middle East and Africa as they come off recent periods of extremely high growth. Cross-border, card-not-present, ex-travel growth continue to be very strong. Summing it up, total cross-border continue to grow at a healthy clip with 16% growth year-to-date through April 28th on a local currency basis. Turning now to page 10, I wanted to share our thoughts for the remainder of the year. The headline is that our business remains strong and consumer spending remains healthy. On the macroeconomic front, the fundamentals that support consumer and business spending have been solid to date. Specifically, |
4,379 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | On the macroeconomic front, the fundamentals that support consumer and business spending have been solid to date. Specifically, unemployment rates remain low, and for the most part, wage growth continues to outpace the rate of inflation. At the same time, increased economic and geopolitical uncertainty has weakened sentiment and creates risks. But remember, our business is diversified, and that is true across products and services, discretionary and non-discretionary spend categories, domestic and cross-border spend, and countries and corridors. For example, when looking at cross-border corridor pairs, meaning the inbound and outbound flows between two countries, no cross-border corridor pair represented more than 3% of our total cross-border volume in 2024. This diversification brings resilience, as does our disciplined approach to capital allocation. We will continue to monitor the external environment and have expense levers to adjust, if necessary. Now turning to our expectations for the full year 2025, our base case assumes consumer spending remains healthy. We continue to expect net revenue to grow at the high end of a low double digits to low teens range on a currency neutral basis, excluding acquisitions. Acquisitions are expected to add 1 to 1.5 ppt to this growth rate for the year. Given recent currency fluctuations, we now estimate a minimal impact from foreign exchange. From an operating expense standpoint, we continue to 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. Acquisitions are forecasted to increase the OpEx growth rate for the year by approximately 5 ppt, while we expect a minimal impact from foreign exchange. Now turning to the second 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 minimal impact |
4,380 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | acquisitions. Acquisitions are forecasted to have a 1 to 1.5 ppt impact to this growth rate, while we expect a minimal impact from foreign exchange for the quarter. From an operating expense standpoint, we expect Q2 growth to be at the low end of a 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 minimal impact from foreign exchange for the quarter. Other items to keep in mind. On other income and expenses, in Q2, we expect an expense of approximately $135 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. This expense is higher than the first quarter, primarily due to three factors. First, Q1 benefited from a one-time interest income impact related to a tax matter. Second, we expect interest income to decrease in the second quarter due to an expected lower average cash balance. And third, we expect incremental interest expense in Q2 related to our recent debt issuance. Finally, we expect our non-GAAP tax rate to be at the 20% to 20.5% range for both Q2 and the full year, based on the current geographic mix of our business. As a reminder, the Q1 tax rate was lowered due to discrete tax benefits related to share-based payments in the first quarter. And with that, I will turn the call back over to Devin. |
4,381 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Devin Corr : Thank you, Sachin. Thank you, Michael. Audra, you may now open the call for questions.
Operator: [Operator Instructions] Your first question comes from Harshita Rawat at Bernstein.
Harshita Rawat: Sachin, can you give us more color on the composition of a cross-border business? I know you said no cross-border corridor is more than 3% of volume. Is it fair to say that travel is about two-thirds e-commerce remainder, and within e-commerce is the bulk of it e-retails? I'm just trying to get a sense of like U.S. inbound overall on travel and income. Thank you. |
4,382 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Sure, Harshita. So, just a little bit of color. One of the reasons why we wanted to kind of share that statistic, which I did, which was around the fact that no cross-border corridor pair is greater than 3% of total cross-border volume in 2024 was essentially to share with you that we have a very diversified portfolio. There is no over-dependence on any one corridor pair, which actually is going to influence our numbers one way or the other. So, that's kind of point number one. The second thing I'll mention to you is I think we had shared some statistics back a few years ago as it relates to what our mix of cross-border travel is vis-à-vis cross-border -- travel, and this was back, I think it was during the COVID timeframe, where we had mentioned that card-not present and card present cross-border was roughly half and a half, and one-third of the card not present was travel-related. So, we've kind of given you some general sense on that, and you should assume with a business of our size that things generally tend not to move around big time over the course of a couple of years as it relates to the mix. So, that's generally what we kind of shared with you there. As it relates to the card not present X travel component, you can see some really solid growth there. You can see that in the metrics that we've got here. And look, I mean, when COVID happened, COVID changed a lot of things, right? I mean, the world went more digital, merchants went more omnichannel, more people were shopping online, and this was true both in the domestic environment as well as in the cross-border environment, and you've kind of seen that sustained growth come through even now. So, net-net, what I tell you is I feel pretty good about how our portfolio is positioned. We continue to stay very focused in growing our portfolio, which is cross-border focused, for all the right reasons. Not every portfolio is going to be the ones we'll go after, but the ones we do go after, we see good, promise for growth, and you're seeing that |
4,383 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | is going to be the ones we'll go after, but the ones we do go after, we see good, promise for growth, and you're seeing that come through in the metrics which we've shared with you. |
4,384 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll move next to Andrew Jeffery at Truist Securities.
Andrew Jeffrey: Hi. William Blair these days, fortunately. Thanks for taking the question. I appreciate it. I wonder if I could dig in a little bit on the economics of your tokenized offerings. Michael, I think you said they're 35%, I guess, I'm assuming, card not present transactions have token, are now tokenized. Can you just speak to where you think that number can go and what that means economically for Mastercard over the next several years?
Michael Miebach: Right. First of all, this is our approach around tokenization, very important technology, drives more security, makes a user experience, and we wanted to scale this. I gave you a stat earlier that 35% of our switch transactions are now tokenized. So initially the strategy was put it out there and get a base level offering across the world. And we said, okay, let's start to build solutions on top of our tokenization platform, and we put in life cycle management and the likes, and we started to price for that because that is additional value that we put out and we've seen the benefit of three quarters of that pricing from our international market. So that is where we are today and we're going to continue to monitor that as great demand and tokenization. I gave you an update that even in China, we built a locally-based developed solution to drive the same kind of impact in China for us. When you start to think about where we are going, as we were talking about Agentic commerce, where, again, token technology is at the center of that, you can start to see there's a lot of value created and you know how our pricing strategies, we always strive to recoup some of our investments and share in the value that we create for our customers, so that's the broad direction.
Operator: We'll go next to Tien-tsin Huang at JPMorgan. |
4,385 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll go next to Tien-tsin Huang at JPMorgan.
Tien Huang: Hey, good morning, Michael, Sachin, and Devin. I want great results, of course, especially on the growth side. I just want to dig into the operating expenses and the cadence there. Sachin, I think you said slow start to some spending. I just want to understand the cadence a little bit more and what's discretionary versus non-discretionary growth versus maintenance, and I think there's some one-timers for Recorded Future integration, so I just want to better understand that given it's running double digits overall. Thanks. |
4,386 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Sure, Tien-tsin. So on OpEx, like I mentioned, operating expense in the first quarter came in slightly lower than what we had originally anticipated, primarily due to the cadence point that you're mentioning out here, which is specifically as it relates to there's several areas in which we were expecting to actually incur expense in the first quarter. For example, in A&M, we were expecting -- A&M being advertising and marketing, which I know you know, was expected to be higher. It came in slightly lower. Again, it's not because we're not going to do the spend, it's just a question of timing based on when sponsorships take place, when we have to activate around those sponsorships, when we do the media around those sponsorships. So, that's kind of one area. But in addition to that, right, we do expect from a cadence standpoint that as the year continues, that you will see, particularly in the second half, an increase in operating expenses which will take place because we do have plans to make investments and there are several areas which we will make investments on, such as investing in the great secular opportunity that Michael was talking about, right? I mean, we've got this opportunity in front of us. We believe it's there in several markets across the globe. We do plan to invest in frontline resources to actually happen to that opportunity and that will be one area. The second area I would tell you is around hardening of infrastructure, right? This is something as a payment network which is really important. It's important that we continue to invest in our infrastructure in order to deliver to our customers what our customers expect from us. So, that'll be another area where we focus from an expense standpoint. And finally, I'll mention that we continue to see good growth from a services standpoint and we'll continue to invest in areas from a services standpoint, from a product development and capabilities perspective. So, several areas. The cadence is, like you said, it was a little lower in |
4,387 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | a product development and capabilities perspective. So, several areas. The cadence is, like you said, it was a little lower in the first quarter. We expect it to ramp up as we go through the remainder of the year. We've given you guidance on operating expenses for the second quarter. So, I think you can back into what we expect in the second half based on what I've given you in full year guidance and what you kind of now have visibility for the first half of the year. On your question on Recorded Future, again, we've shared with you what we think the impact of two acquisitions would be which is Recorded Future and Minna. And Recorded Future being the larger of the two. And just as a reference point, at the last earnings call we had shared with you on these acquisitions that roughly 2.5 percentage points of the growth we are talking about from acquisitions is run rate expenses. That is the expense to run the business. Approximately 1% relates to the amortization of intangibles and the remaining relates to one-time integration costs and other expenses which we have to incur in a one-time nature standpoint. And nothing's changed from what we shared with you three months ago. |
4,388 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll move to our next question from Sanjay Sakhrani at KBW.
Sanjay Sakhrani: Thank you, good morning. Michael, Sachin, this might be a question for both of you. I know you're seeing resilience on the part of the consumer but I'm just curious if you just peel back the onion a little bit. Is there anything that you're seeing that concerns you in terms of the health and the consumer and spending habits, especially with tariffs and such? I know like this quarter seemed to come in a little bit stronger than expected but you're not revising the outlook. Just want to make sure that there's nothing. Is that just prudence or something you're seeing? Thanks. |
4,389 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: Let me start off and then Sachin always has plenty of detail to deep dive in. So overall, I mean, first of all, we have a very unique lens on consumer spending. This is across the world. So we have regional data to look at and I'll give you some highlights around that. The second thing is for us, we obviously look for trends and see what matters to consumers. And some of the fundamental truths that we put out into our 2025 economic outlook that we issued through the Mastercard Economics Institute was that we expect the consumer to remain engaged, that we expect the consumer to appreciate experiences and spend experiences. And the one thing that's to be said about an engaged consumer, it also means it's a consumer that is leveraging all the tools that the digital economy offers the consumer in terms of finding what's the best deal, looking for the best deal. So it's not so much about spending up and down but it's also the choices. I don't think we're connected. So the engaged consumer is using all the tools of the digital economy to make expense decisions and decide between discretionary and non-discretionary spending. So that's overall, none of this has changed. In our data, we don't really see significant upfront, upfronting of spending. So that's not a trend that came through. That was a specific angle of your question. If I look across the board, this hasn't shown in any of the regions. In the US, we see generally stable spending. Europe, a bit more of a challenging environment but also generally spending. In Asia, if you look at another big region there, China came in a little bit ahead of what they said, what they initially had projected on their economic growth. And here we see tremendous spending coming through our data but it's really driven by share gain which is also something always to distinguish. So overall, nothing particularly concerning at this point in time. The headline of our trends has generally remained stable is very much spot on. |
4,390 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Yes, Sanjay, I'll just add a couple of points here. You basically kind of talked about the beat in Q1. So a couple of things which I wanted to share with you. The beat in Q1 was primarily driven by two factors. One was higher levels of FX volatility and lower rebates and incentives than what our expectations were. And so when I kind of think about that and I think about the implications of the full year, I perfectly will expect that rebates and incentives because it's a timing issue as far as I'm concerned will actually occur as the year goes along. We continue to remain very active in the market. We're going to continue to do the deals we need to do as part of that process. And as you and I both know, the FX volatility is super hard to predict. So you had the tailwind from FX volatility in Q1 and that's what we've got. Other point I'll mention to you is you asked about what is the impact in addition to what Michael just mentioned. What we are seeing is inbound into the U.S. and in terms of cross-border travel, you are seeing some level of moderation take place there, no question about it. And this has been particularly true in the latter half of Q1 and going into the first four weeks of April. That being said, what you are seeing is what is not coming into the U.S. is going into other regions. So this is where the beauty of the diversified business model comes into play. So you are seeing actually better trends in terms of cross-border, for example, in Europe, for example, in the Middle East and Africa, Asia Pacific. And so again, that's why when you look at the numbers in the macro, it shows you stability, but there are puts and takes which take place as part of the process. And as I mentioned, right, our concentration to any one currency quarter is less than 3% as it was in 2024. So I feel pretty good about the diversified nature of the business. Time will tell where the world takes us. I mean, obviously there's a level of uncertainty and risk which is out there, which we stand ready to |
4,391 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | where the world takes us. I mean, obviously there's a level of uncertainty and risk which is out there, which we stand ready to actually not only monitor, but act on as appropriate. |
4,392 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: So we will monitor the tariff side of the equation, but we will continue to monitor job creation. We will monitor employment rates and we will monitor wage growth, which are on the other side of the coin. So that's the approach. Stay close and see where it goes and have the right solutions for our customers.
Operator: We'll move next to Adam Frisch at Evercore ISI.
Adam Frisch: Hey guys, good to be back with you. Two questions I had for you this morning. One, the potential impact of a Cap One Discover deal. Trying to quantify the potential, let's just take the worst case scenario to get that off the table. If their debit portfolio were to leave you guys, how should we think about that impact to your financials? And then the second question, and that was the worst case scenario. And then the second question is, how does China factor into being a contributor to your revenue projections in the near term? Is that still relatively small and not a major source or is it growing in importance in your future near term projections? Thank you.
Sachin Mehra : Hey Adam, welcome back. So on your question around Cap One and Discover, look, I mean, like I mentioned in last earnings call, right, the guide we've given you as it relates to our full year numbers contemplate our best estimate of what we think the impact of that transaction will be. I think Capital One has been fairly clear about their desire to migrate the debit portfolio over to the Discover network. And that's very much contemplated in what we're thinking about in terms of our outlook for the year. Again, there's a level of uncertainty associated with the timing. And the reason I say that is because the transaction's been approved, it still needs to go through a period of getting into activity to actually make stuff happen there. So we'll keep you updated if there's any meaningful change relative to our expectations as we built into our portfolio guide on the Capital One Discover transaction. |
4,393 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: On your question, so just one point. So the relationship with Capital One has been a strong one for a number of years. We've grown together in the market. There are areas now in this setup where we'll continue to have a strong relationship. You have both organizations talk about that. At the same time, there might be areas where we compete going forward. But that is not unique. We have many examples. You look in the acquiring space, for example, where we have great strategic partnerships on one hand, and there will be certain aspects of our business where we compete. So we continue to expect a strong relationship with Discover. |
4,394 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Sorry, actually with Capital One. And then on your question, about China, look, I mean, I think we've shared previously what our exposure to China was as it relates to both inbound and outbound from a cross-border revenue standpoint. The lion's share of our revenue exposure to China is around cross-border. We do generate some amount of assessment revenue on our domestic volumes, which are there. So net-net, what I would tell you is the impact on revenues of the joint venture is still pretty small. I mean, it's still in ramp mode. It's still in invest mode, I would say, where we're investing in building out the programs Michael talked about and the acceptance infrastructure, so on and so forth. But then as it relates to the business we've always had as it relates to China, around cross-border and on domestic, it's been fairly small. Again, going back to the diversification team we've been talking about. We continue to do what we need to do in terms of driving that business. Just one data point I'd share with you as it relates to cross-border inbound and outbound from China, because this is something which people can attract. And we follow this closely as well. Cross-border travel volume inbound into China is now north of 100% of pre-COVID levels, slightly north of 100%. And then outbound, the same metric outbound from China is running in the mid-80s, close to approximately 85% of pre-COVID levels. So just in case you're interested in understanding what the recovery path might look like when we're going forward with this.
Michael Miebach: Now finally, to add, we now have the full tool set there. I mentioned tokenization capabilities. Obviously, the force to participate in contactless and online transactions there. Now earlier there was a question about your external environment. We've obviously closely monitored US-China relationships and all of this.
Operator: We'll move next to Trevor Williams at Jefferies. |
4,395 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll move next to Trevor Williams at Jefferies.
Trevor Williams: Great, thanks very much. I just wanted to follow up on the full year guide. Sachin, if you could talk to, directionally at least, what you're building in for the rest of the year across switch volume and cross-border. You've talked about lapping citizens and how that's a dynamic to keep in mind, but if there's any other underlying deceleration assumed relative to the current run rates when we kind of normalize for the holiday timing in March and April, and then just any comment on kind of what you're assuming for FX volatility. Thanks very much. |
4,396 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Sachin Mehra : Sure, Trevor. So a few thoughts for you on that. One, as I mentioned in my prepared remarks, we continue to assume our base case is that there's a strong consumer which continues to persist, right. I mean, that's what the fact and the data show us so far. And while there's a level of uncertainty, which we talked about, but that's what the current data is. So the base case is that the strength in consumer spending continues. In terms of items which are unique to this year as we kind of go through the year, one is the fact which you mentioned, which is the lapping of the wins we had last year, which is going to start to come through as the year progresses. It started in Q1, it'll continue at a more accelerated pace in Q2, and then it'll go on for the quarters to come, just because that's kind of, that's the good news. Because you want portfolios, you've got the revenue associated with that, but it does actually take down growth rate on a year-over-year basis. The other thing which you'll see is the lapping of certain amounts of pricing which was put in place last year. So that'll also start to come through as the year progresses. And the last point I'd make is around, I mentioned earlier about R&I and about how we had lower R&I in the first quarter, and that we expect for that to be something which will play out as the year progresses, because we can view that more as timing than anything else. So that should be very much part of how you're thinking about what we factored into the guide. And the last point I'd mention is around FX volatility. On FX volatility, you will remember that last year in Q4, there were pretty high levels of FX volatility. So there's a tougher comp this year. I have no idea what FX volatility is going to look like. We do our best estimate in terms of what we think will happen, but again, I am proven wrong every day by my team about where that is going to actually show up, both to the upside and the downside. So we do our best estimates around that, we put that into our guide, |
4,397 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | to actually show up, both to the upside and the downside. So we do our best estimates around that, we put that into our guide, and again, our guide's a range, right? So that's why we give you a range. And so you should actually think about it in that manner. |
4,398 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Operator: We'll move to our next question from Darrin Peller at Wolfe Research.
Darrin Peller: Hey guys, thanks. Can we just touch for a minute on pricing? I know you talked about tough comps into the second half on pricing, given some moves you made last year around, I think it was cross-border into organization. But when we think about the opportunities you have now into the second half, maybe just give us a sense of the level. Is it something that you see instituting new price opportunities that could be somewhat similar to what you did over the second half last year as the year progresses, even if it's not timed exactly? And then maybe just more holistically, what areas are you providing the value at that you think you can take more price from that you're most excited about on that front? Maybe in the backdrop of what the competitive dynamics look like these days. Thanks again, guys. |
4,399 | MA | 1 | 2,025 | 2025-05-01 09:00:00 | Mastercard Incorporated | 6,477,196 | Michael Miebach: All right, Darren. So pricing. The first thing to put out there is it's obviously a competitive market. And we generally price to market, more importantly, we price the value that we provide. And I believe we provide value across the whole range of our offerings. That's on the payment solutions, as well as on the value-added services and solutions range of products that we put out there. So we will all continuously look for ways to recoup some of the investments and price for the value due. On the price, on the payment side generally, the expectation should be as payments become more efficient and perform better, that is an indicator of where the value is generated. On the value-added solutions and services, the approach really is to say, let's say on safety and security, what is the reduction in fraud that a customer can expect? And those are some of the indicators that we use to actually, when we sell these products, to talk to our customers, well, here's the value you can expect. And then the same is for the customer engagement and insights tools, where again, we say, you can engage your customer so much better, therefore the ROI on your marketing spend is going to be improved. And that is what we do. So to your question, Darren, it's across the board. We will continue to look for those opportunity as a matter of course, as we run our business. There is no specific spikes or events planned into our outlook on that.
Operator: We'll take our next question from Timothy Chiodo at UBS. |
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