Earnings Release

Mastercard Incorporated Reports Second Quarter 2022 Financial Results

  • Second quarter net income of $2.3 billion, and diluted earnings per share (EPS) of $2.34
  • Second quarter adjusted net income of $2.5 billion, and adjusted diluted EPS of $2.56
  • Second quarter net revenue of $5.5 billion, an increase of 21%, or 27% on a currency-neutral basis
  • Second quarter gross dollar volume up 14% and purchase volume up 18%, on a local currency basis

Purchase, NY - July 28, 2022 - Mastercard Incorporated (NYSE: MA) today announced financial results for the second quarter 2022.

"We had strong revenue and earnings growth again this quarter, as overall consumer spending remained robust and cross-border volumes grew 58% versus year ago" said Michael Miebach, Mastercard CEO. "Increasing inflationary pressures have yet to significantly impact overall consumer spending but we will continue to monitor this closely. We have a well-diversified business model and the demonstrated ability to deliver strong operating margins through up and down cycles."

Quarterly Results

Second Quarter Operating Results

Increase / (Decrease)

$ in billions, except per share data

Q2 2022

Q2 2021

Reported

Currency-

GAAP

neutral

Net revenue

$5.5

$4.5

21%

27%

Operating expenses

$2.5

$2.2

13%

17%

Operating income

$3.0

$2.3

29%

36%

Operating margin

54.9%

51.7%

3.2 ppt

3.8 ppt

Effective income tax rate

18.7%

16.6%

2.1 ppt

2.2 ppt

Net income

$2.3

$2.1

10%

16%

Diluted EPS

$2.34

$2.08

13%

18%

Key Second Quarter Non-GAAP Results 1

Increase / (Decrease)

$ in billions, except per share data

Q2 2022

Q2 2021

As adjusted

Currency-

neutral

Adjusted net revenue

$5.5

$4.5

21%

27%

Adjusted operating expenses

$2.3

$2.1

9%

12%

Adjusted operating margin

57.9%

53.2%

4.7 ppt

5.4 ppt

Adjusted effective income tax rate

18.8%

15.9%

2.9 ppt

3.1 ppt

Adjusted net income

$2.5

$1.9

29%

37%

Adjusted diluted EPS

$2.56

$1.95

31%

40%

  • The Key Second Quarter Non-GAAP Results exclude the impact of gains and losses on the company's equity investments, special items as described on page 11 ("Second Quarter Special Items") and/or currency. See page 11 for the company's non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Q2 2022 Key Business Drivers

(YoY growth)

Gross dollar volume

Cross-border volume

Switched

(local currency basis)

(local currency basis)

transactions

up 14%

up 58%

up 12%

The following information is provided to aid in understanding Mastercard's second quarter 2022 results, versus the year ago period. As a reminder, we suspended our business operations in Russia in March 2022.

  • Net revenue increased 21%. Excluding the impact of Second Quarter Special Items, adjusted net revenue also increased 21%, or 27% on a currency-neutral basis, which includes a 1 percentage point benefit from acquisitions. Primary drivers of the increase were as follows:
    • Gross dollar volume growth of 14%, on a local currency basis, to $2.1 trillion.
    • Cross-bordervolume growth of 58% on a local currency basis.
    • Switched transactions growth of 12%.
    • Other revenues increased 18%, or 23% on a currency-neutral basis, which includes 3 percentage points of growth due to acquisitions. The remaining growth was driven primarily by the company's Cyber & Intelligence and Data & Services solutions.
    • Rebates and incentives (contra-revenue) increased 19%, or 23% on a currency-neutral basis, primarily due to increased volumes and transactions and new and renewed deals.
  • Total operating expenses increased 13%. Excluding the impact of Second Quarter Special Items, adjusted operating expenses increased 9%, or 12% on a currency-neutral basis. This includes a 5 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs to support the continued investment in our strategic initiatives, as well as unfavorable foreign exchange activity.
  • Other income (expense) was unfavorable $357 million, primarily due to net losses in the current period versus net gains in the prior period related to unrealized fair market value adjustments on marketable and nonmarketable equity securities. Adjusted other income (expense) was favorable $2 million versus the year ago period.
  • The effective tax rate for the second quarter of 2022 was 18.7%, versus 16.6% for the comparable period in 2021. The adjusted effective tax rate for the second quarter of 2022 was 18.8%, versus 15.9% for the comparable period in 2021, primarily due to a discrete tax benefit in the prior year related to the remeasurement of the Company's net deferred tax asset in the U.K.
  • As of June 30, 2022, the company's customers had issued 3.0 billion Mastercard and Maestro-branded cards.

Return of Capital to Shareholders

During the second quarter of 2022, Mastercard repurchased 6.9 million shares at a cost of $2.4 billion and paid $477 million in dividends. Quarter-to-date through July 25, the company repurchased 1.4 million shares at a cost of $448 million, which leaves $6.7 billion remaining under the approved share repurchase programs.

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Year-to-date Results

Year-to-date Operating Results

Increase / (Decrease)

$ in billions, except per share data

2022

2021

Reported

Currency-

GAAP

neutral

Net revenue

$10.7

$8.7

23%

27%

Operating expenses

$4.7

$4.1

13%

16%

Operating income

$6.0

$4.5

32%

38%

Operating margin

56.0%

52.3%

3.7 ppt

4.3 ppt

Effective income tax rate

11.9%

16.6%

(4.6) ppt

(4.6) ppt

Net income

$4.9

$3.9

26%

32%

Diluted EPS

$5.02

$3.91

28%

34%

Key Year-to-dateNon-GAAP Results 1

Increase / (Decrease)

$ in billions, except per share data

2022

2021

As adjusted

Currency-

neutral

Adjusted net revenue

$10.6

$8.7

22%

27%

Adjusted operating expenses

$4.5

$4.1

10%

13%

Adjusted operating margin

57.7%

53.0%

4.7 ppt

5.3 ppt

Adjusted effective income tax rate

12.3%

16.4%

(4.1) ppt

(4.0) ppt

Adjusted net income

$5.2

$3.7

41%

49%

Adjusted diluted EPS

$5.32

$3.69

44%

52%

1. The Key Year-to-dateNon-GAAP Results exclude the impact of gains and losses on the company's equity investments, special items as described on page 12 ("Year- to-date Special Items") and/or currency. See page 12 for the company's non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Year-to-date 2022 Key Business Drivers

(YoY growth)

Gross dollar volume

Cross-border volume

Switched

(local currency basis)

(local currency basis)

transactions

up 15%

up 56%

up 16%

The following information is provided to aid in understanding Mastercard's year-to-date 2022 results, versus the year ago period. As a reminder, we suspended our business operations in Russia in March 2022.

  • Net revenue increased 23%. Excluding the impact of Year-to-date Special Items, adjusted net revenue increased 22%, or 27% on a currency-neutral basis, which includes a 2 percentage point benefit from acquisitions. Primary drivers of the increase were as follows:
    • Gross dollar volume growth of 15%, on a local currency basis, to 4.0 trillion.
    • Cross-bordervolume growth of 56% on a local currency basis.
    • Switched transactions growth of 16%.
    • Other revenues increased 18%, or 22% on a currency-neutral basis, which includes 5 percentage points of growth due to acquisitions. The remaining growth was driven primarily by the company's Cyber & Intelligence and Data & Services solutions.
    • Rebates and incentives (contra-revenue) increased 22%, or 25% on a currency-neutral basis, primarily due to increased volume and transactions and new and renewed deals. Rebates and incentives (contra-revenue) include a 1 percentage point reduction from Year-to-date Special Items.

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  • Total operating expenses increased 13%. Excluding the impact of Year-to-date Special Items, adjusted operating expenses increased 10%, or 13% on a currency-neutral basis. This includes a 5 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs to support the continued investment in our strategic initiatives, increased spending on advertising and marketing and unfavorable foreign exchange activity.
  • Other income (expense) was unfavorable $527 million, primarily due to net losses in the current period versus net gains in the prior period related to unrealized fair market value adjustments on marketable and nonmarketable equity securities. Adjusted other income (expense) was favorable $2 million versus the year ago period.
  • The effective tax rate for 2022 was 11.9%, versus 16.6% for the comparable period in 2021. The adjusted effective tax rate for 2022 was 12.3%, versus 16.4% for the comparable period in 2021, primarily due to a discrete tax benefit due to final U.S. tax regulations published in the current year, partially offset by a discrete tax benefit in the prior year related to the remeasurement of the Company's net deferred tax asset in the U.K. The U.S. tax regulations resulted in a valuation allowance release of $333 million associated with the U.S. foreign tax credit carryforward deferred tax asset.

Return of Capital to Shareholders

Year-to-date 2022, Mastercard repurchased 13.7 million shares at a cost of $4.8 billion and paid $956 million in dividends.

Second Quarter 2022 Financial Results Conference Call Details

At 9:00 a.m. ET today, the company will host a conference call to discuss its second quarter 2022 results. The dial-in information for this call is 888-330-2508(Toll-free) and 1-240-789-2735 (Toll dial-in), using passcode 6451878. A replay of the call will be available for 30 days and can be accessed by dialing 800-770-2030(Toll-free) and 1-647-362-9199 (Toll dial-in), using passcode 6451878.

A live audio webcast of this call, along with presentation slides, can also be accessed through the Investor Relations section of the company's website at investor.mastercard.com.

Forward-Looking Statements

This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this press release, the words "believe", "expect", "could", "may", "would", "will", "trend" and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to Mastercard's future prospects, developments and business strategies. We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made. Except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events.

Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:

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  • regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
  • the impact of preferential or protective government actions
  • regulation of privacy, data, security and the digital economy
  • regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti- corruption, account-based payments systems, and issuer and acquirer practice regulation)
  • the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
  • potential or incurred liability and limitations on business related to any litigation or litigation settlements
  • the impact of the global COVID-19 pandemic and measures taken in response
  • the impact of competition in the global payments industry (including disintermediation and pricing pressure)
  • the challenges relating to rapid technological developments and changes
  • the challenges relating to operating a real-timeaccount-based payments system and to working with new customers and end users
  • the impact of information security incidents, account data breaches or service disruptions
  • issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants' continued focus on acceptance costs and unique risks from our work with governments)
  • exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
  • the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls
  • events and resulting actions related to the Russian invasion of Ukraine
  • reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
  • the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture
  • issues related to acquisition integration, strategic investments and entry into new businesses
  • issues related to our Class A common stock and corporate governance structure

For additional information on these and other factors that could cause the company's actual results to differ materially from expected results, please see the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2021 and any subsequent reports on Forms 10-Q and 8-K.

About Mastercard (NYSE: MA)

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.

www.mastercard.com

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Disclaimer

MasterCard Inc. published this content on 28 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2022 12:05:47 UTC.