Mastercard Incorporated (NYSE:MA) Q2 2025 Earnings Call July 31, 2025 9:00 AM ET Company Participants Devin Corr - Executive Vice President of Investor Relations Michael Miebach - CEO & Director Sachin Mehra - Chief Financial Officer Conference Call Participants Christopher Nathaniel Svensson - Deutsche Bank AG, Research Division Craig Jared Maurer - Unidentified Company Financial Technology Partners LP - Unidentified Company Darrin David Peller - Wolfe Research, LLC David John Koning - Robert W. Baird & Co ...

Mastercard said more consumer spending in its payment network translated to higher revenue and earnings in the second quarter https://t.co/0ck5vk4z2s ...

Economic Indicators - The Personal Consumption Expenditures (PCE) report for June showed results warmer than expected, with year-over-year PCE reaching +2.6%, which is 10 basis points higher than anticipated [2][5] - Personal Income increased by +0.3%, exceeding expectations by 10 basis points, while Personal Spending fell to +0.3%, down 10 basis points from expectations [3][4] - The overall PCE Index month-over-month was in line with expectations at +0.3%, following an upwardly revised +0.2% the previous month [4] Job Market - Initial Jobless Claims rose slightly to 218K, marking the first increase in seven weeks, but still significantly lower than the 250K seen in early June [7] - Continuing Claims remained stable at 1.946 million, indicating a leveling off after a period of decline [8] - The upcoming Employment Situation report for July is expected to show 100K new jobs, which is a decrease of 47K from the previous month [9] Q2 Earnings Reports - AbbVie reported Q2 earnings of $2.97 per share, surpassing projections of $2.89, with a year-to-date increase of +6.5% [10] - CVS Health exceeded earnings estimates with $1.81 per share, resulting in an earnings beat of +23.13% and a year-to-date increase of +38.8% [10] - Mastercard's earnings of $4.15 per share beat expectations by 10 cents, with a year-to-date increase of +6% [10] - Bristol Myers-Squibb had a notable earnings beat at $1.46 per share, exceeding estimates by +36.45% [11] - International Paper reported a significant earnings drop to $0.20 per share, missing expectations by -47.37% [11] - Sirius XM missed estimates with earnings of 57 cents per share, resulting in a -27.85% earnings surprise [12] Market Outlook - The Chicago Business Barometer (PMI) report is expected after the market opens, with no further scheduled announcements [13] - Anticipation surrounds upcoming earnings reports from major companies such as Apple and Amazon, with expectations of modest gains for Apple and high-single-digit growth for Amazon [14]

Core Insights - Mastercard is transitioning from a traditional payment processor to a data-driven technology platform, focusing on interoperability, digital identity, and agentic AI [3][4][10] - The company's value-added services, including cybersecurity and fraud prevention, saw a revenue growth of 23% in Q2 [4][6] - Mastercard is investing in "multi-rail" capabilities to accommodate various payment types and currencies, positioning itself as an "interoperability layer" [9][10] Financial Performance - Mastercard reported net revenue of $8.1 billion, a 17% increase year over year on a GAAP basis, and 16% growth on a currency-neutral basis [6] - Adjusted net income reached $3.8 billion, up 13%, with adjusted earnings per share of $4.15, an increase of 16% compared to the same period last year [6] - Total gross dollar volume (GDV) grew 9% year over year, reaching $2.6 trillion, with U.S. GDV increasing by 6% and international GDV rising by 10% [7] Strategic Developments - The launch of Mastercard Agent Pay, which utilizes conversational AI for secure payments, marks the company's entry into agentic AI [5][13] - Mastercard's strategic updates include renewing its exclusive co-brand agreement with American Airlines and launching new solutions under the "Mastercard Collection" and "Agent Pay" brands [12] - The company is rearchitecting itself as an overlay network that connects various payment methods while embedding compliance and fraud detection [10][11]

MasterCard (MA) came out with quarterly earnings of $4.15 per share, beating the Zacks Consensus Estimate of $4.05 per share. This compares to earnings of $3.59 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +2.47%. A quarter ago, it was expected that this processor of debit and credit card payments would post earnings of $3.57 per share when it actually produced earnings of $3.73, delivering a surprise of +4.48%.Over the las ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Or Delaware 13-4172551 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) 2000 Purchase Street 10577 (Address of principal executive offices) Purchase, NY (Zip Code) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE A ...

Financial Performance - The company reported a 16% increase in net revenues and a 12% increase in adjusted net income year-over-year on a non-GAAP currency neutral basis [6][33] - Operating expenses rose by 14%, with operating income increasing by 17% [34] - Net income and EPS increased by 12% and 14% respectively, with EPS at $4.15, including a $0.09 contribution from share repurchases [34] Business Line Performance - Payment Network net revenue grew by 13%, driven by domestic and cross-border transaction growth [38] - Value-added services and solutions net revenue increased by 22%, with acquisitions contributing approximately 4 percentage points to this growth [38] - Worldwide gross dollar volume (GDV) increased by 9%, with U.S. GDV up by 6% and international GDV up by 10% [35] Market Performance - Cross-border volume increased by 15% globally, reflecting growth in both travel and non-travel related spending [36] - Card present transactions grew significantly, with contactless transactions now representing 75% of all in-person switch purchase transactions [37] - The company continues to expand acceptance in various markets, including launching tap-to-pay in the Shanghai Metro [13] Company Strategy and Industry Competition - The company is focused on diversifying its business model and enhancing partnerships with leading merchants and fintechs [8][10] - New programs are being launched in various markets, including partnerships with American Airlines and Walmart [9][10] - The company is leveraging its data and product capabilities to differentiate its offerings and capture adjacent revenue opportunities [27][29] Management Commentary on Operating Environment and Future Outlook - Management remains positive about growth outlook, citing healthy consumer spending supported by low unemployment and wage growth [7][45] - The company is tightening its full-year net revenue outlook to the high end of the previously shared range, expecting low teens growth on a currency neutral basis [47] - Ongoing geopolitical and economic uncertainties are acknowledged, but the company maintains a diversified business model to mitigate risks [46] Other Important Information - The company repurchased $2.3 billion worth of stock during the quarter, with an additional $1 billion planned [34] - The effective tax rate is expected to be in the 20% to 21% range for both Q3 and the full year [49] Q&A Session Summary Question: Impact of lapping portfolios on growth metrics - Management confirmed that the lapping impact from portfolios like Citizens and Wells Fargo has become more pronounced and will continue through Q3 and Q4 [55][56] Question: Differentiation in value-added services - The company highlighted its focus on cybersecurity and personalized engagement solutions as key differentiators in its value-added services [62][66] Question: Cross-border volume growth expectations - Management noted that cross-border volumes are well diversified and continue to grow, with travel volumes representing about 60% of total cross-border volumes [95] Question: Client incentives and rebates - Management indicated that rebates and incentives as a percentage of payment network assessments are expected to increase in Q3, driven by a competitive market [101] Question: Update on Recorded Future performance - Management expressed excitement about the integration of Recorded Future, emphasizing its potential in threat intelligence and cybersecurity solutions [84][87] Question: Market share in regions with strong local players - The company is focused on differentiating its product set and building partnerships in markets like Brazil to capture cash transition opportunities [114]

Financial Performance - The company reported a 16% increase in net revenues and a 12% increase in adjusted net income on a non-GAAP currency neutral basis compared to the previous year [5][33] - Operating expenses rose by 14%, with operating income increasing by 17% [34] - Net income and EPS increased by 12% and 14% respectively, with EPS reaching $4.15, including a $0.09 contribution from share repurchases [34] Business Line Performance - Payment Network net revenue grew by 13%, driven by domestic and cross-border transaction growth [38] - Value-added services and solutions net revenue increased by 22%, with acquisitions contributing approximately 4 percentage points to this growth [38] - The company continues to expand its partnerships with major retailers and fintechs, enhancing its service offerings [7][10][11] Market Performance - Worldwide gross dollar volume (GDV) increased by 9% year-over-year, with U.S. GDV up by 6% and international GDV up by 10% [35] - Cross-border volume increased by 15% globally, reflecting growth in both travel and non-travel related spending [36] - Card present transactions grew significantly, with contactless transactions now representing 75% of all in-person switch purchase transactions [37] Company Strategy and Industry Competition - The company is focused on diversifying its business model and enhancing its product offerings to capture new market opportunities [6][22] - The strategy includes leveraging advanced analytics, loyalty programs, and security solutions to differentiate from competitors [7][18] - The company is also expanding its presence in the commercial payments space, targeting small businesses and fleet card solutions [22][73] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about growth, citing strong consumer spending supported by low unemployment and wage growth [6][44] - The company is tightening its full-year net revenue outlook to the high end of the previously shared range, expecting low teens growth on a currency neutral basis [46] - Ongoing geopolitical and economic uncertainties are acknowledged, but the company believes its diversified business model will mitigate risks [44][45] Other Important Information - The company repurchased $2.3 billion worth of stock during the quarter, with an additional $1 billion planned through July 2025 [34] - The effective tax rate is expected to be in the 20% to 21% range for both Q3 and the full year [50] Q&A Session Summary Question: Impact of lapping portfolios on growth metrics - Management confirmed that the lapping of portfolios, including Citizens and Wells Fargo, has had a pronounced impact on year-over-year growth metrics and will continue to do so [53][55] Question: Differentiation in value-added services - The company emphasized its carefully curated portfolio of value-added services, particularly in cybersecurity and consumer engagement, which allows for pricing power [62][66] Question: Cross-border volume growth expectations - Management noted that cross-border volumes are well diversified and continue to grow, with travel volumes representing about 60% of total cross-border volumes [95] Question: Client incentives and rebates - Management indicated that client incentives as a percentage of payment network assessments are expected to increase in the second half of the year, driven by competitive market dynamics [99] Question: Market share in regions with strong local players - The company is focused on differentiating its product set in markets like Brazil and India, emphasizing partnerships and competitive solutions to capture market share [111]

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