Mastercard Incorporated

Thank you. Mr. Devan Kaur, Head of Investor Relations, you may begin your conference.

Thank you, Audra. Good morning, everyone, and thank you for joining us for our first quarter 2024 earnings call. With me today are Michael Meebak, 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 accompanied this call in the investor relations section of our website, MasterCard.com. Additionally, the release was furnished to 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 Meebach.

Thank you, Devin. Good morning, everyone. Our momentum continued this quarter as we once again delivered strong revenue and earnings growth. Quarter one 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 a 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. 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 two of every three in-person switch purchase transactions, up from one in three 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, NewBank, SumUp, and CloudWalk. 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 when 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 monetization of associated services to our customers. In quarter one, tokenized transactions grew over 50% year over year, with more room to go as only approximately one in four transactions on the MasterCard network are tokenized today. Further opportunity lies in the verticals traditionally under-penetrated by CART. Merchants are embracing solutions to simplify checkout, reduce missed payments, and drive engagement. We're focused on segments such as housing and healthcare 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 healthcare, We're partnering with several providers to grow acceptance in key markets, like Germany. And we are playing in the gaming community, all 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 two-thirds 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. Starting in the Americas, in the first 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 in Webster, We are well underway. To further strengthen our leadership position with retail co-brands in the U.S., MasterCard will be the exclusive network for the city-issued Dillard's co-brand. We have also extended our longstanding 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 longstanding partnership with Crédit Agricole. 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 to produce positive results for our customers and for MasterCard Now, you asked before, why are we winning?