MasterCard : Q3 2019 Mastercard Presentation

Mastercard

Incorporated

Third-Quarter 2019 Financial Results Conference Call

October 29, 2019

Business Update

Financial Overview

Economics Update

Business Highlights

©2019 Mastercard

October 29, 2019

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3rd Quarter Selected Financial Performance

($ in millions, except per share data)

							YOY Growth
		3Q 19			3Q 18					Currency
		Non-GAAP			Non-GAAP		As adjusted			Neutral
Net revenue	$	4,467	$	3,898	15%			16%
Adjusted operating expenses		1,812			1,582	15%			16%
Adjusted operating income		2,655			2,316	15%			17%
Adjusted operating margin		59.4%			59.4%		0.0 ppt	0.1 ppt
Adjusted net income	$	2,191	$	1,856	18%			20%
Adjusted diluted EPS	$	2.15	$	1.78	21%			23%
Adjusted effective tax rate		16.8%			19.1%

Note: See Appendix A for Non-GAAP reconciliation.

©2019 Mastercard

October 29, 2019

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3rd Quarter Gross Dollar Volume (GDV)

($ in billions)

Worldwide		United States		Rest of World
14% Growth		12% Growth		16% Growth

$1,800	$1,470	$1,652
$1,600
$1,400		$830			$1,028	$1,158
$1,200
$722
$1,000
					$581
$800			$442	$494	$493
$600
	$822
$400	$748	$229	$249	$535	$577
$200
		$213	$245
$0
3Q18	3Q19	3Q18	3Q19	3Q18	3Q19

Credit

Debit / Prepaid

Notes: 1. Growth rates are shown in local currency. 2. Figures may not sum due to rounding.

©2019 Mastercard

October 29, 2019

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3rd Quarter Switched Transactions and Cards

Switched Transactions

			20% Growth*
billions)	30
		22.9
20	18.8
(in
Transactions	10
0
	3Q18	3Q19

Cards

6% Growth

	4,000
millions)	3,000	2,442	2,589
2,000	509	443
Cards (in
1,000	1,933	2,145
	0	3Q18	3Q19

Mastercard Cards

Maestro Cards

Notes: Figures may not sum due to rounding.

*Growth rates normalized to eliminate the effects of differing switching days between periods, if applicable.

©2019 Mastercard

October 29, 2019

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3rd Quarter Revenue

($ in millions)

3Q18 3Q19

$5,000							$4,467
						$3,898
$4,000
$3,000	$1,564	$1,722	$1,338	$1,517	$1,912	$2,231
$2,000		$819	$1,087
$1,000
$0

-$1,000
-$2,000	$(1,735)$(2,090)
-$3,000

Growth	Domestic	Cross-Border	Transaction	Other	Rebates and	Total Net Revenue
Assessments	Volume Fees	Processing Fees	Revenues	Incentives
As reported	10%	13%	17%	33%	20%	15%
Currency-neutral	12%	16%	18%	34%	22%	16%

Note: Figures may not sum due to rounding.

©2019 Mastercard

October 29, 2019

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3rd Quarter Adjusted Operating Expenses

($ in millions)

		3Q18	3Q19
$2,500
$2,000				1	$1,812
	$1,448			$1,582
$1,500
$1,268
$1,000
$500	$203	$227	$111	$137
$0

Growth	General & Administrative	Advertising & Marketing	Depreciation & Amortization	1
Adjusted Operating Expenses
Non-GAAP	14%	12%	24%	15%
Currency-neutral	16%	14%	26%	16%

Note: Figures may not sum due to rounding.

• See Appendix A for Non-GAAP reconciliation.

©2019 Mastercard

October 29, 2019

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Looking Ahead

Business update through October 21st

Thoughts for 2019

©2019 Mastercard

October 29, 2019

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Appendices

Appendix A

Non-GAAP Reconciliation

($ in millions, except per share data)

								Three Months Ended September 30, 2019
		Operating		Operating			Operating		Other Income	Effective income		Net income		Diluted earnings
		expenses			income			margin			(Expense)		tax rate				per share
								($ in millions, except per share data)
Reported - GAAP	$	1,812		$	2,655	59.4%		$	(121)		16.9%		$	2,108		$	2.07
(Gains) losses on equity investments 1		**			**	**			100		-%		84			0.08
Non-GAAP	$	1,812		$	2,655	59.4%		$	(21)		16.8%		$	2,191		$	2.15
								Three Months Ended September 30, 2018
		Operating		Operating			Operating		Other Income	Effective income		Net income		Diluted earnings
		expenses			income			margin			(Expense)		tax rate				per share
Reported - GAAP	$	1,611		$	2,287	58.7%		$	(23)		16.1%		$	1,899		$	1.82
Litigation provisions 2		(29)			29	0.8%			**		2.3%			(28)		$	(0.03)
Tax act 3		**			**	**			**		0.7%			(15)		$	(0.01)
Non-GAAP	$	1,582		$	2,316	59.4%		$	(23)		19.1%		$	1,856		$	1.78

Note: Figures may not sum due to rounding.

** Not applicable

• Q3'19 net losses of $100 million ($84 million after tax, or $0.08 per diluted share), primarily related to unrealized fair market value adjustments on marketable equity investments.

• Q3'18 pre-tax charges of $29 million ($22 million after tax, or $0.02 per diluted share) related to litigation settlements with U.K. and Pan-European merchants. Additionally, a $50 million ($0.05 per diluted share) discrete tax benefit related to provisions for legal matters in the United States resulting in a net gain of $28 million after tax, or $0.03 per diluted share.

• Q3'18 discrete tax benefit of $15 million ($0.01 per diluted share) related to the remeasurement of the company's net deferred tax assets due to U.S. tax reform.

©2019 Mastercard

October 29, 2019

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Appendix A

Non-GAAP Reconciliation

Three Months Ended September 30, 2019 as compared to the Three Months Ended September 30, 2018

Increase/(Decrease)

Operating

Operating

Operating

Effective income

Diluted

Net revenue

Net income

earnings per

expenses

income

margin

tax rate

share

Reported - GAAP

15%

12%

16 %

0.8 ppt

0.7 ppt

11%

14%

(Gains) losses on equity investments 1

**

**

**

**

- ppt

4%

5%

Litigation provisions 2

**

2%

(1)%

(0.8) ppt

(2.3) ppt

2%

2%

Tax act 3

**

**

**

**

(0.7) ppt

1%

1%

Non-GAAP

15%

15%

15 %

- ppt

(2.3) ppt

18%

21%

Foreign currency 4

2%

2%

2 %

0.1 ppt

0.1 ppt

2%

2%

Non-GAAP - currency-neutral

16%

16%

17 %

0.1 ppt

(2.2) ppt

20%

23%

Note: Figures may not sum due to rounding.

• For 2019 Mastercard updated its non-GAAP methodology to exclude the impact of gains and losses on the company's equity investments. Q3'19 net losses of $100 million ($84 million after tax, or $0.08 per diluted share), primarily related to unrealized fair market value adjustments on marketable equity investments. Prior year periods were not restated, as the impact of the change was de minimis.

• Q3'18 pre-tax charges of $29 million ($22 million after tax, or $0.02 per diluted share) related to litigation settlements with U.K. and Pan-European merchants. Additionally, a $50 million ($0.05 per diluted share) discrete tax benefit related to provisions for legal matters in the United States resulting in a net gain of $28 million after tax, or $0.03 per diluted share.

• Q3'18 discrete tax benefit of $15 million ($0.01 per diluted share) related to the remeasurement of the company's net deferred tax asset due to U.S. tax reform.

• Represents the foreign currency translational and transactional impact.

©2019 Mastercard

October 29, 2019

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Appendix B

Non-GAAP Reconciliation

2019 full-year financial outlook

Forecasted Growth - U.S. GAAP 1

Litigation provisions 2

Foreign currency 3

Acquisitions 4

Non-GAAP Growth, excluding acquisitions

2019 vs. 2018

Increase/(Decrease)

Net RevenueOperating Expenses

High end of		(Mid single-digits)
low double-digits
**	16%
3%	2%
0 - (1)%	(3)%
High end of low-teens		High end of high
	single-digits

** Not applicable.

• U.S. GAAP - 2019 Forecast versus 2018 reported results

• Impact of the 2018 provisions for litigation ($1,128M pre-tax)

• Impact of foreign currency calculated by remeasuring the future period's results using the current period's exchange rates for both the translational and transactional impacts on operating results.

• Acquisitions made in 2019

©2019 Mastercard

October 29, 2019

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Appendix C

Non-GAAP Reconciliation

Fourth quarter 2019 financial outlook

	Q4'19 vs. Q4'18
	Increase/(Decrease)
	Operating Expenses
Forecasted Growth - U.S. GAAP 1	(Low 20's)
Litigation provisions 2	33%
Foreign currency 3	1%
Acquisitions 4	(6)%
Non-GAAP Growth, excluding acquisitions	High single-digits

** Not applicable.

• U.S. GAAP - Q4'19 Forecast versus Q4'18 reported results

• Impact of the Q4'18 provisions for litigation ($756M pre-tax)

• Impact of foreign currency calculated by remeasuring the future period's results using the current period's exchange rates for both the translational and transactional impacts on operating results.

• Acquisitions made in 2019

©2019 Mastercard

October 29, 2019

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