Mastercard Incorporated

Good morning. My name is Elodie and I will be your conference operator today. At this time, I would like to welcome everyone to the MasterCard Incorporated Q3 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Please only press star one once to queue up for a question as pressing star one multiple times may affect your position in the queue. If you would like to withdraw your question, press star one again. Thank you. Mr. Devin Corr, Head of Investor Relations, you may now begin your conference.

Thank you, Elodie. Good morning, everyone, and thank you for joining us for our third quarter 2026 earnings call. With me today are Michael Miebach, our Chief Executive Officer, and Ling Hai, our Chief Financial Officer. Following comments from Michael and Ling Hai, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then that the queue will be open for your 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 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 the 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.

Thank you, Devin. Good morning everyone and thank you for joining us. Three quarters into the year our performance continues to demonstrate the strength and consistency of our business. Net revenue growth was up 14% and net income up 18% in the third quarter on a year-over-year non-GAAP currency neutral basis. While there continues to be economic and geopolitical uncertainty, consumers continue to spend, businesses continue to invest, and commerce continues to expand. The economy, our overall business, and our network have a resilient backdrop. At its core, our network helps people and businesses transact and participate in the economy, and our advantage here is clear. A diversified business, a trusted global network, and the ability to help our customers grow. We're building on that advantage by expanding the reach and utility of our network. We now have more than 200 million acceptance locations and 300 million more digital access points around the world. That is unmatched. On a year-over-year basis, in the first half of 2026, merchant acceptance is up 20% and growing. This includes initiatives like our Pay Local program, which expands acceptance by embedding cards into local wallets, and Tap on Phone, a smart acceptance solution. However, we're not only expanding how merchants accept payments, we're also finding valuable ways to get more MasterCard credentials to more people. that spans the full consumer spectrum from premium offerings for affluent consumers and business owners to products that give people their first access to the financial system. There are huge numbers of financially underserved people around the world. Our new essential debit product builds on our longstanding work to help open the door to broader financial opportunities and economic resilience. We've signed 15 essential debit programs this year across seven markets. These programs give our partners tools to address up to 70 million unbanked adults in those markets. This means more people have a new payment option, our cards, that offer protections and broad acceptance not offered by local payment options. We're seeing early traction across a range of partners. These credentials are now issued within Airtel's scaled mobile wallet ecosystem launching next quarter in Nigeria and by Financope, which supports a large network of cooperative institutions in Ecuador. This year we have already won 100 new affluent credit and debit programs and launched more than 25 world legend programs. MasterCard affluent portfolios have higher engagement and higher cross-border spend. In fact, our affluent spend is growing two times faster than overall credit. This quarter, UBS launched a super premium invitation-only MasterCard credit product in Switzerland's highly competitive affluent market. It includes our concierge service and frequent traveler benefits. Core to our programs is making a real connection with people and offering a product that appeals to their needs. That focus on meeting new people where they are led to our new partnership and co-brand program with Beast Industries. This program spans consumer and small business creator cards. With more than 1 billion followers across social media, MrBeast is one of the most influential creators in the world. But that work is not just about clicks. It's capturing the cultural power of digital communities and driving economic and social opportunity. Together, we will connect creators and their communities in new ways, bringing MasterCard's scale and capabilities to the next generation as their financial lives evolve. What does all of this tell us? MasterCard products are in demand, and that demand continues to grow. More cards and more acceptance points drive more transactions and data, strengthening the power of our network and the value we deliver. Across over 200 countries and territories, every market and region is unique. And we're winning, leveraging our global capabilities and that local expertise. Let's look at a few wins from this quarter. In the Nordics, we renewed our partnerships with Handelsbanken and Swedbank, following a previously signed exclusive agreement with SEB. These wins include services like fraud detection and loyalty, strengthening our position in one of the most advanced digital payment markets. At the same time, we renewed DSGV and Dezetbank, two of Germany's largest banking organizations. Let's put that in context. These renewals deepen our relationships with two of the leading credit issuers in Europe's largest economy, They position us to capture the substantial secular opportunity in Germany. In China, our teams on the grounds are very busy building and solidifying our position in the local market. The strong foundation for long-term growth is rooted in the growing acceptance and signing issuer deals to make MasterCard the preferred brand. This includes new programs with China's top 15 issuers. This quarter, we added to that with the new World Hilton co-brand, Bank of Communications, and a consumer debit deal with Bank of China, who alone serves hundreds of millions of retail customers. Two fantastic deals to capture domestic and cross-border spend and deliver value-add services and solutions in the market. In the United States, we secured a major win with Pinnacle Financial Partners. The newly combined bank's entire issuing portfolio will move onto our network starting in 2027. This includes consumer credit, debit, small business, and commercial cards. And finally, moving to India. With a large domestic scheme, this is one of the world's most competitive markets. This quarter, we signed an important small business deal with HDFC Bank. It's India's largest private sector bank with nearly 10,000 branches, over 100 million customers. This deal includes value-add services and solutions and is expected to add 3 million cards to the MasterCard network. Beyond small business, we see a sizable opportunity across commercial payments, including invoice payments. Our work in invoice payments helps transform dated, cumbersome accounts payable processes into automated digital workflows with virtual cards. We focus on bringing more virtual cards to market and embed them directly into tools businesses already use. Tungsten Automation is adding MasterCard's virtual card technology into its automated accounts payable offerings. A leader in intelligent document processing, Tungsten serves more than 25,000 customers. This will enable their enterprise customers to generate virtual cards seamlessly and with that accelerate supplier payments, reducing cost, friction, and risk. That is tangible value. And we've seen those results play out. For example, a large US retailer consolidated more than $100 million in supplier payments using MasterCard virtual cards through our partner, Coupa. This one decision reduced the number of suppliers that needed to be onboarded saving an estimated $35 million in onboarding costs. That's valuable savings for just one of their many clients and Coupa is one of many partners working with us on improving B2B supplier payments. There's similar value in the travel vertical where today we partner with eight out of the 10 largest players to capture the secular opportunities. After that, our expanded relationship with Checkout.com and the UAE and you have another channel to bring MasterCard virtual cards to travel businesses at scale. The aggregate of our travel-related wins from just this quarter is expected to generate more than $20 billion in incremental spend on our network over the lives of the agreements. These wins reflect our differentiated capabilities that address specific customer needs, but also create opportunities to deliver more value through value-added services and solutions. Now, many of our services directly support growth in our payment network. Our analytics Marketing, loyalty, and consulting services helps clients acquire, engage, and retain customers while building healthier portfolios and driving more payment activity. For example, through our strategic partnership with Qatar National Bank Group, we're deploying these capabilities across Q&B's presence in more than 28 countries to strengthen customer relationships and drive growth. and American Airlines as one of the industry's largest airline credit card programs. We are supporting customer acquisition for its refreshed premium offering, the Citi A Advantage Executive World Legend MasterCard. These capabilities, powered by our data, can deliver meaningful results. Across MasterCard marketing services campaigns on a global basis, our clients see an average incremental spend growth of 8 percentage points over the measurement period. As commerce becomes more digital and AI changes elements of payments, our security solutions are becoming more relevant. As a reminder, security solutions include fraud, identity, and cybersecurity. Our portfolio is carefully designed to help our partners protect the ecosystem, and we see demand across the board. This quarter, we added our extended fraud and identity wins with Standard Bank, Monzo, and Starling Bank. Starling, for example, extended its use of Fraud Rule Manager Helping it respond faster to emerging attacks, reduce false declines, and protect the customer experience at scale. Within cybersecurity, we continue to scale one-to-one platform sales, but even more so new network products like our newly launched Digital Risk Protection. This capability helps organizations identify vulnerabilities in their own digital environments. After only a few months in market, it now serves nearly 800 enterprise customers. Additionally, our enhanced third-party risk offering brings together risk recon or recorded future capabilities in one solution. It helps identify, prioritize, and respond to risk before they become business disruptions. But AI is not only changing the demand for our security solutions, it's also changing how commerce happens. The foundation I described earlier, broad participation, global acceptance, and trusted capabilities positions us to help shape the next evolution of commerce. That includes agentic commerce, where a buyer uses AI agents to discover, select, and purchase a product or service. There are two forms, machine to machine and traditional e-commerce. Combined, they create significant opportunity for MasterCard from more transactions to new B2B carded payments as businesses utilize agents. And eventually, an entirely new addressable market of microtransactions, all the while creating more opportunity for our services from fraud to longer term potential in insights and loyalty. Consumers are already beginning to use agents to discover and purchase products. We expect that trend to build as holiday shopping ramps up and to continue well beyond the season. It is still early days and the numbers are not yet significant in the grand scheme, but as the AI agentic assistance have emerged, agentic transactions are ramping up at impressive weekly growth rates. We're now seeing the early stages of consumer adoption. For this type of agentic commerce to function at scale, we need four things. Trust in the payment, the agent, the ecosystem, and ubiquitous reach. Mastercard has built capabilities for each of these four. For trust in the payment, tokenization is embedded in agent pay and backed by the franchise rules everyone expects today. For trust in the agent, agent pay ensures agents are verified and authorized by the buyer and that the merchant and issuer are aware. For trust in the ecosystem, we bring transparency and continuity through the payment flow. Verifiable intent captures the buyer intent. And our recently launched agentic trust intelligence solution helps banks and merchants evaluate transactions initiated by any AI agent. And that allows these transactions to occur wherever MasterCard is accepted. That is the unparalleled and growing reach I talked about earlier. At the same time, we are helping merchants ready themselves and be more discoverable to agents with our new Agent Connect solution. Many partners are putting all of this into practice. For example, Shopify, through Shop Pay, is using Agent Pay and our network tokens to make agentic payments more secure and seamless by preserving the integrity of the consumer's credential end-to-end. Shop Pay is already available on multiple agentic platforms with more to follow. And with OpenAI this quarter, we signed a broad strategic partnership that includes the use of agent pay and goes well beyond. Our agreement establishes collaboration across payments, joint services growth, and AI transformation. And we cannot forget the other technology that is part of virtually every conversation, digital assets and stablecoins. Our customers and partners are continually thinking about how they might use the technology in their offerings to be useful, Digital assets need to work with existing financial and commercial services. That means enabling customers to connect digital asset capabilities with the accounts, payment systems, and money movement experiences already in use. That is why we acquired BVNK. Through BVNK, we are expanding the infrastructure that connects stablecoins with traditional payment and money movement experiences. Financial institutions and fintechs today struggle to offer both fiat and stablecoin accounts. creating the risk of customer deposits moving to competing stablecoin accounts. Our first combined MasterCard BVNK product is the MasterCard Global Money Platform. It enables financial institutions and fintechs to offer accounts where customers can hold, convert, send, and receive across fiat currencies and stablecoins. MasterCard Move is also integrated, bringing its 17 billion endpoints to the platform. This enables businesses to pay out stablecoin balances directly into recipients' local bank accounts. Nuvei and Marketa will be among the first customers to integrate the platform with more partners to be announced soon. And all of this is complementary to our existing stablecoin offerings such as CryptoCobrands and Stablecoin Settlement. So, stepping back, the quarter demonstrates the breadth and consistency of our strategy. We're expanding the reach and utility of our network, solidifying differentiation. We continue to win important relationships and deepen those relationships with differentiated services, growing payments and protecting the ecosystem. And we're extending our trusted capabilities into agentic commerce and digital assets. We're executing and delivering today while investing in solidifying our position for the future. And with that, I will turn it over for the very first time to Ling Hai.