Q1 2023 Mastercard Incorporated Earnings Call
Good morning, My name is Andre and I will be your conference operator today.
At this time I would like to welcome everyone to the Mastercard, Inc. Q1, 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
I'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. Please.
Please only press star one wants to queue up for a question is pressing star one multiple times may affect your position in the queue if.
If you would like to withdraw your question Press Star one again.
Mr. Warren Nisha head of Investor Relations you May begin your conference.
Thank you Andre good morning, everyone and thank you for joining us for our first quarter 2023 earnings call.
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 accompany this call in the Investor Relations section of our website Mastercard Dot com.
The release was furnished with the SEC earlier this morning are.
Our comments today regarding our financial results will be on a non-GAAP currency neutral basis, unless otherwise noted.
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.
I will turn the call over to Michael.
Thank you Lauren good morning, everybody.
Another quarter, let's jump right in the headline is that in quarter. One consumer spending has remained remarkably resilient and that despite continued economic uncertainty.
Kicked off the year with strong revenue and earnings growth quarter. One adjusted net revenues were up 15% and adjusted operating income was up 17% both versus a year ago, there's always on a non-GAAP currency neutral basis, excluding special items.
Focusing on the macro for a moment, let's take stock.
Positive and negative factors, we have been monitoring first the labor market in aggregate remained strong by savings remain above historical levels and consumers continue to access credit, which all are key drivers of consumer spending.
Second central banks continue to combat elevated inflation levels with higher interest rates.
Although we are seeing signs of inflation cooling additional stresses on the banking sector Havent matched it will continue to monitor how banks respond to these evolving conditions.
And finally economic growth around the globe continues to vary by country and sector.
The reopening of China as a positive catalyst however, the impact of monetary and fiscal tightening in many countries will likely be with us for some time.
So overall, many moving pieces, but even so consumer spending levels have remained resilience while the mix of spending has continued to rebalance towards experiences.
Looking at our switch volume trends domestic volume growth has remained relatively stable with some recent moderation in the U S. In part due to lower tax refunds.
The board of traveling quarter, one reached 148% of 2019 levels with all regions above 2019 levels. This includes notable improvement in Asia.
Cross border card not present ex travel continues to hold up well.
They will continue to watch the environment closely and as we have demonstrated in the past we are prepared to adjust investment levels appropriately while maintaining focus on our key strategic priorities and as a reminder, these three priorities are expanding and payments extending our services and embracing new networks.
Now I've been on the road, how much of the quarter meeting with customers partners government leaders and of course, our teams. These conversations reinforce the energy we have for a collaborative approach and show the importance that many place on digital payments and driving much of today's economic activity.
And it's with that in mind and I'll share. Some examples of how we are progressing against our three strategic priorities first we are expanding in payments by winning deals across a diverse set of customers innovating in and growing acceptance and expanding solutions to address new payment flows.
We see a partnership deepening with a diverse set of co brand partners financial institutions and fast growing syntax around the world.
This quarter, we had a significant win with Costco wholesale in Taiwan, the largest co brand portfolio in the market the deal as a competitive flips that insurers exclusive co brand issuance and exclusive acceptance of Master card co brand card stores effective in August this year.
We also announced our exclusive partnership with Wells Fargo and choice hotels to launch their new credit card program in the United States.
In the Middle East, we inked a renewal with National Bank of Egypt, the largest issuer in the country.
On the Fintech front, we renewed our deal with and 26, one of the largest neo banks in Europe for Mastercard to BD exclusive provider for issuing and processing services.
And in Latin America, we expanded our relationship with Waller one of the fastest growing <unk> in the region to be the exclusive network prepaid debit and credit.
So we are continuing on our trajectory delivering another solid quarter of new and renewed wins, an important element of our growth algorithm.
The all new wins, we are driving growth in payments through the development of innovative solutions like our installment offerings.
And Australia is scaling our solutions with some of the largest banks in the market, including Commonwealth Bank of Australia National Australia Bank and Westpac.
Providing the way to pay is central to what we do so too was making sure people and businesses can use those payment tools, when and where they want.
Along those lines, we are continuing to drive growth in acceptance expanding connectivity in trust across all forms of payments.
Our acceptance footprint has now surpassed 100 million locations effectively doubling over the past five years.
And that's just the start our innovative contact less cloud commerce and click to pay solutions gets more merchants the ability to accept electronic payments with simple technology connectivity.
To us that's an opportunity to bring more physical and digital transactions onto our network.
Over 100 markets have now reached at least 50% contactless penetration doubled that number three years ago.
Contactless drives higher consumer engagement and helps accelerate the secular shift to digital payments by accessing lower ticket size purchases that have historically been cash based.
In quarter, one <unk> capability was selected as part of a mobile payments launched in South Korea and evening, a significant number of private label cards for contactless and thereby giving us the opportunity to deliver services on those transactions.
We continue to see momentum in tap unfold with programs across more than 70 markets globally, we continue to scale, including with stripe announced in quarter. One that they have enabled tap to pay on Android in multiple markets.
In addition to helping our partners spring tap on phone to market. Our cloud Commerce acceptance technology is now live in Europe , our cloud commerce capabilities make it easier and tyco businesses of all sizes to accept payments in virtually any device.
And click to pay is now live in nearly 30 markets globally, including key markets, such as Australia, Brazil, U K and U S. We are partnering with payment service providers like Nexium, Italy, so far.
To expand our presence.
This is all complemented by our work with partners to grow acceptance by integrating the payment experience where their customers are used.
Do you see that in the social commerce space with Whatsapp in Brazil, and enabling consumers to make purchases directly from small businesses right within attach.
Oh that'd be remain focused on expanding our set of new payment capabilities to capture a prioritized set of new payment flows I'll highlight a couple of areas, we are targeting starting with commercial.
We had a strong roles in the space with volumes across our commercial credit and debit products in quarter, one up 21% versus the prior year on.
On a local currency basis, we see substantial opportunity to grow in commercial, particularly with our virtual card and small business solutions with virtual cards study are the market leader one of our initiatives is to integrate our solutions with meeting need to be technology platforms. This quarter, we signed a partnership agreement with <unk> to enhance that.
Our pay solution Embeds virtual cards to address accounts payable flows.
On the small business front today, only a small fraction of payments are captured on court.
Enhancing the value propositions from programs like easy savings, which office automatic merchant funded rebates to nearly 14 million enrolled cardholders in over 80 countries.
And we are growing by establishing new issuance deals through partners like <unk> in the United States. The Master card will be the preferred brand of small business and commercial progress.
Now beyond commercial disbursement and remittance flows represent a significant opportunity for growth through geographic expansion, new distribution partners and.
And an expanding set of use cases.
In terms of new markets. Our gaming use cases is now live in Canada, and Peru, and we have added cross boarder origination to the UAE megastar by connecting with MFS Africa, leading digital payment company, we have enabled mobile payouts across 10 markets in Africa.
We are working with distribution partners like checkout dot com to increase reach to even more customers in Asia and the United States.
We're enabling our cross border services solutions to small and mid sized banks through cross border services Express with this simple to use digital first solution.
Anticipating financial institutions can offer their customers the ability to send money or pay vendors across the globe quickly and securely.
In terms of expanding use cases, we have enabled cash in N. P. O S in Europe , and the U K facilitating underbanked customers to safely load cash into their accounts from a nonbank location.
You can also help drive follow on card spend.
As you can see we continue to make broad based progress in addressing a prioritized set of new payment flows.
Turning now to services, we love services, where we are focused on growth and resiliency through scaling our existing solutions and adding new capabilities.
As merchants as consumers shift to digital our comprehensive set of cyber security solutions becomes even more critical for instance risks recon helps in enterprise identify their own cyber security vulnerabilities as well as for the ecosystem partners with.
With our acquisition of Baffin Bay networks. This quarter, we now have a solution to help these customers Act on this information specifically Fnb's AI enabled cloud based threat protection helps us uptime of tax related to malware ransomware and Ddos attacks.
The acquisition also complements our other cyber offerings, including our assimilation and assessment tools as well as our cyber security consulting practice.
You all are familiar with our comprehensive set of data analytics marketing and loyalty assets. These are about helping our partners make smarter decisions to drive better outcomes. For example, I called out one of the world's fastest growing online travel platforms in Asia.
Is leveraging our economic insights to inform their strategic planning to.
<unk> the largest electronics retailer in Europe .
Utilizing our test and learn capabilities to support the assessment and optimization of new business initiatives. We also continue to make progress signing deals with retail and commerce partners like <unk> more towards Europe , and Puma to utilize our recently acquired personalization platform dynamic yield.
Okay.
We continue to look for ways to combine all of these assets to deliver valuable end to end solutions, we just announced elements a suite of applications, which brings insights from Mastercard data analytics to enrich dynamic yields personalization experience.
Our third key priority area is embracing new networks, where we are making progress in the areas of open banking and digital identity.
In open banking, we continued to work with a broad set of banks and Fintech. We're interested in its potential across a wide range of use cases.
In addition to the pay by Bank solutions with J P. Morgan that we announced last quarter. We are working with payment risks and identification company Jai <unk> member of the London Exchange Fuchs to embed a secured account verification solutions also central Bank will use our open banking technology for account opening and top ups in Europe .
Further we are developing capabilities on top of all open banking platform, we have advanced analytics partner with Fintech innovators like <unk> Nast, and Nick MA and Jen equity to expand access to capital with better data, making lending decisions.
This is another great example of how our technology supports small business moving next to digital identity.
To see strong adoption of our intelligent identity solutions powered by machine learning this quarter, we secured a key partnership with southwest to embed, our intelligent identity solutions from content to reduce fraud and friction and digital interactions.
Still early stages with open banking and digital identity, but we are making progress scaling our technology to new markets and use cases with notable partners. So with that I'll wrap it up and in summary, we delivered another strong quarter of revenue and earnings growth, reflecting a resilient consumer and the continued recovery of cross border travel.
We will continue to watch the environment closely and are prepared to act as circumstances dictate.
We see significant opportunity ahead, having now surpassed 100 million acceptance locations worldwide.
Our focused strategy diversified and resilient business model and strong relationships around the globe positioning us well through economic cycles.
Over to you.
Thanks, Michael.
Turning to page three which shows our financial performance for the quarter on a currency neutral basis, excluding special items.
And the impact of gains and losses on our equity investments net revenue was up 15%, reflecting resilient consumer spending and the continued recovery of cross border travel operating expenses increased 12%, including a two ppt increase from acquisitions.
Operating income was up 17%, which includes a one ppt decrease related to acquisitions.
Net income was up 2%, which includes a one ppt decrease to do acquisitions EPS was up 4% year over year to $2 80, which includes a <unk> <unk> contribution from share repurchases of note the respective growth rates, our net income and EPS were negatively impacted by a low tax rate.
In 2022, as a result of sizable discrete tax benefits last year.
During the quarter, we repurchased $2 9 billion worth of stock and an additional $602 million through April 22023.
So now, let's turn to page four where you can see the operational metrics for the first quarter.
Worldwide gross dollar volume or <unk> increased by 15% year over year on a local currency basis.
On the same basis, if you exclude Russia from the prior period <unk> increased by 16%.
In the U S GDP increased by 9% with credit growing 15%, reflecting in part the recovery, though spending on travel.
Debit increased 3%.
The impact of the roll off of previously discuss customer agreement debit increased approximately 6%.
Outside of the U S volume increased 18% with credit growth of 17% and debit accrual dropped 19%.
Cross border volume was up 35% globally for the quarter on a local currency basis, reflecting continued improvement in travel related cross border spending.
Turning to page five switched transactions grew 12% year over year in Q1.
Excluding Russia from the prior year switched transactions grew 20% year over year in Q1.
Both card present, and Gardner president growth rates remain strong.
Card present Gould was aided in part by increases in contactless penetration as contactless now represents over 58% of all in Boston switched purchase transactions.
In addition card growth was 9%.
There are about $3 2 billion Mastercard and maestro branded cards issued.
Turning to slide six for a look into our net revenues for the first quarter, which were above our expectations.
As a reminder, we recently revised our disaggregated revenue disclosure net revenues are now broken down into two new categories payment network and value added services and solutions.
Now getting into the numbers described on a currency neutral basis.
Payment network net revenue increased 10%, which would've been one ppt higher if we excluded the Russia related special item, which benefited Q1 2022.
The growth in beam and that work was primarily driven by domestic and cross border transaction and volume growth and also includes growth in rebates and incentives.
Value added services and solutions net revenue increased 21%, including a one ppt benefit from acquisitions.
The growth was primarily driven by the <unk>.
Strong growth of our cyber and intelligence solutions, driven by underlying driver growth higher demand for our broad solutions as well as the scaling of our identity and authentication solutions and we saw a healthy demand for our data analytics consulting and marketing services as well as our loyalty solutions.
Now, let's turn to page seven starting with key metrics related to payment networks again described on a currency neutral basis, unless otherwise noted.
Looking quickly at each key metric domestic assessments were up 9% while worldwide GDP grew 15%.
The difference is primarily driven by mix and the underreporting of volumes from sanction customers in Russia last year, which accounted for approximately two ppt of the variance.
Cross border assessments increased 39%, while cross border volumes increased 35%. The bulk ppt difference is primarily due to favorable mix as higher yielding ex intra Europe cross border volumes grew faster than intra Europe cross border volumes this quarter.
Transaction processing assessments were up 14% when switched transactions grew 12%. The two ppt difference is primarily due to FX related revenues.
Although network assessments related to licensing implementation and other franchise fees were $212 million this quarter. It's.
It is important to note that these other notebook assessments may fluctuate from Peter computer.
Moving now to page eight you can see that on a non-GAAP garnsey neutral basis, excluding special items total adjusted operating expenses increased 12%, including a two ppt impact from acquisitions.
<unk> acquisitions. The remaining increase was primarily due to increased spending on personnel to support the continued execution of our strategic initiatives.
Operating expenses were higher than expected in part due to personnel costs to support higher than expected revenue as well as unfavorable foreign exchange related expenses due to the remeasurement of monetary assets and liabilities.
Turning to page nine let's discuss the operating metrics for the first three weeks of April .
As a general comment our metrics are holding up well in April as expected the year over year growth rates are being impacted by two opposing factors.
One more difficult comps as we began lapping the effects of omicron and to the lapping of the drag created by the suspension of our operations in Russia in March of last year.
To aid in your understanding of the underlying spending trends and eliminate some of the noise induced by the lapping effects. We've also included the metrics index 2019 levels on the slide.
Let's discuss each of the metrics and dawn.
Starting with switched volumes through the first three weeks of April we grew 17% year over your down one ppt versus Q1. This reflects more difficult comps and some modest slowing in the U S due to lower tax refunds.
This started in March and continued into April this was partially offset by a three ppt benefit from the lapping of Russia.
Switch transactions grew 18% year over year through the first three weeks of April up six ppt versus Q1. This includes an eight ppt benefit from the lapping of the suspension of operations in Russia. As a reminder, Russia had a relatively low average ticket size, which results in a larger relative impact to this metric.
In terms of cross border volumes grew 29% on a year over year basis down six ppt from Q1. This reflects the continued recovery in cross border travel as well as the positive impact of lapping the suspension of our Russian operations, but it's more than offset by a tougher year ago call as travel surged after the passage of omicron.
Last year.
Cross border volume is indexing at 171% of 2019 levels in April .
From 168% in Q1.
To further assist your understanding of the trends in the business ex Russia, where we suspended operations in March 2020 tool. We have included an appendix to show all data points from the schedule. If you exclude an activity from Russian issued cards from current and prior periods.
Turning to page 10, I wanted to share our thoughts on the remainder of the year, let me start by saying that our business fundamentals remained strong and our diversified business model and our momentum with our customers position us well for the opportunities ahead.
Consumer spending overall remains healthy, albeit with some recent moderation in domestic spending in the U S. In part due to lower tax refunds this year.
At the same time as Michael noted the recovery in cross border travel continues with inbound travel to all regions now well above 2019 levels.
Within Asia in Q1, China outbound cross border travel increased to approximately 65% of Q1 2019 levels, while inbound reached 45% on the same basis.
As a reminder.
China made up 2% about bone and 1% of inbound cross border travel in 2019, we.
We remain well positioned to capitalize on this growth with our travel oriented portfolio and related service offerings.
While we are monitoring a number of macro and geopolitical factors our base case scenario assumes consumer spending remains resilient.
Cross border travel continues to recover.
While the euro our outlook has improved modestly reflecting a stronger than expected performance in Q1.
We expect net revenue growth for the full year of 2023 to be at a low teens rate on a currency neutral basis, excluding acquisitions and special items.
This growth rate would be higher by approximately one and a half PPG. If you exclude Russia related revenues from 2022.
Foreign exchange is expected to be a tailwind up one ppt for Europe , and we expect minimal impact from acquisitions.
Our expectations for operating expense for the year are unchanged with growth expected to be at the high end of a high single digit rate on a currency neutral basis, excluding acquisitions and special items acquisitions are forecasted to add about one ppt to this growth while foreign exchange is expected to have a minimal impact for the year.
Again, we are prepared to proactively adjust our operating expenses, if we see meaningful changes to topline growth.
With respect to the second quarter.
Year over year net revenue was expected to grow at the high end of a low double digit rate again on a currency neutral basis, excluding acquisitions and special items.
Coming off of a strong Q1 sequentially reflects a tougher year ago comp lower anticipated FX volatility, partially offset by lapping the suspension of operations in Russia.
Foreign exchange and acquisitions are not expected to have much of an impact for the quarter.
From an operating expense standpoint, we expect Q2 growth to be at the high end of a low double digit rate versus a year ago on a currency neutral basis, excluding acquisitions and special items. This.
This includes costs of approximately two ppt associated with the wind down of our efforts related to the <unk> 27 projects given their decision to withdraw their license application in the Nordics.
Acquisitions are forecast to add approximately zero to one ppt to this growth while foreign exchange is expected to be a tailwind of approximately zero to one ppt.
Other items to keep in mind first on the other income and expense line, we forecast an expense of approximately $100 million for Q2, given the prevailing interest rates and debt levels, which includes a sequential increase due to our recent debt issuance.
This excludes gains and losses on our equity investments, which are excluded from our non-GAAP metrics second we expect the non-GAAP tax rate of between 18, five and 19% for.
For both Q2 and the full year based on the current geographic mix of our business.
Before I turn the call back over to Warren to begin the Q&A session I wanted to express my deep gratitude to Warren for their thought leadership dedication and friendship. He has demonstrated over his last six plus years at Mastercard.
Previously announced Warren will be handing over the head of IR role to debit core effective may one and will be with us through year end in an advisory capacity. Thank you Warren and over to you for the Q&A session. Thank you Sachin I have to say, it's been a distinct pleasure.
With that let's turn it over to questions Andre we're ready to go.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Please only press star one wants to queue up for question is pressing star one multiple times may affect your position in the queue.
We will take our first question from Lisa Ellis at Moffett Nathanson.
Hey, good morning, Thanks for taking my question and where you will be missed of course I just thought of.
Question about that now coming in July of course vocal link has been involved in the clearinghouses RTP network can you just kind of give your perspective on how you expect the rollout of fed now to affect mastercard's business in the U S coffee quickly or potential pressure.
Thank you.
Good morning, Lisa Thanks for your question.
I think if im missing.
Uh huh.
On fed now important development of course, we've been watching closely as you know for years, we've been evolving involved in real time payments.
So it's been a learning over the years that it's really critical that theres a proposition for merchants, that's a proposition for consumers for really for these systems to grow on.
On the merchant side criticality is reach and for the consumers. It's gotta be a proposition that's an easy experience.
And it's got consumer protection in it. So those are all aspects that the card systems have demonstrated over years and we'll have to see where these <unk> systems go with that fundamentally we appreciate competition. It makes us a better company as we try to make our proposition even better now.
On heading out very specifically here.
Technical go live is different from being available for consumers and merchants as I've just discussed and we have to see where that goes and what the features will be what is the user experience what are any kind of protections that would be in there for cost for consumers and so forth.
We will continue to seek ways to partner with <unk> systems and the same applies here in the United States.
The flows that this might target, which are currently flows on an account to account John you will recall the announcement that we've made in the last quarter with chase on pay by account.
So those are alternative solutions that would be in the market to capture some of these new flows so opportunity threats, we'll have to see how it plays out I think we're well positioned.
Yeah.
Thank you.
We'll go next to Tien Tsin Huang at J P. Morgan.
Okay.
Hey, Thanks, Yeah, and my thanks to warrant as well I forgot the may 1st crept up on Us I.
I won't ask a macro question Michael I think you asked for more questions last quarter. So I ask you one on generative AI, if that's all right.
You guys have hi, yeah. So I know you have a data analytics and consulting business within your.
V. A S and so just curious how are you thinking about generally I am a chat GPT gets a lot of attention. So your thoughts on impact on V. A S. Maybe on the broader business as well.
Alright. Thank.
Thank you Tien tsin.
This is a.
Certainly a topic you've got a lot of attention, particularly since the latest model of a chat GBT was out there foreign gets attached attention every day, there's a whole set of headlines.
For us we've been using AI for.
For the better part of the last decade, so it's embedded in our whole range of our products.
Just now I talked in my prepared remarks about Baffin Bay networks would you will all be surprised it's actually not in Canada, but in Sweden The company.
They using AI enabled.
Protection solutions, so youll find it embedded in a whole range of our products.
Including generating its AI. So we have used generate of AI technology, particularly in.
Creating datasets that allow us to compare.
And find threats in the cyber security space.
You will find them.
I know personalization products, so there's a whole range of things that.
Set us a path to use this as a foundational technology and internally you can see.
Increasingly so that generate if AI might be a good solution for us when it comes to customer service propositions and so forth. So we're actively engaged on that.
Fundamentally, though I think we all have to be aware that the application of AI needs to be done in a principled way, we approach data privacy and improved simple way we approach the crypto space in a principled way and the same thing applies CSO trustworthy AI is clearly the focus we've encouraged our employees.
To experiment with the technology, but we set very clear guardrails don't do it in production.
It's something that we cannot afford to ignore we will not we will lean in but make sure that we are a trusted party when it comes to scaling it up.
Yes.
We will go next to Darrin Peller at Wolfe Research.
Hey, Thanks, guys. You know maybe you could just give a quick update on business activity.
Obviously incentives and rebates, it's not reported the same way, but I know we.
We have a pick up in the year and so going back 15, and 16 2015 to 16, when you had a big incentives or rebates year.
<unk> tended to be followed by an acceleration in volume and revenue growth in the years. After so maybe just give us a sense of.
Whats driving the increase this year, what's what kind of activity levels Youre seeing now and if we can expect a similar follow through of that years ago.
Alright.
Let me start on that we see.
Encouraging activity.
In fact, it was tough to make choices here, what not to tell you in the end of 15 minute overview that I gave you so solid.
Solid activity in deal wins, and you recall some of the bigger deals that we have announced in 2012 22021 and 2022.
Behind some of the share gains that we're seeing particularly if you look at the Europe numbers, so that is having.
Having some impact on how <unk> plays out, but I'll defer to sanction to say a little bit more but overall the activity is very healthy.
Yeah Darrin good morning.
I think Michael said right I mean, we compete every day in the market. We are being successful in what we're doing in terms of winning new business and retaining existing business. That's very much the mantra of the playbook.
It is a company that's very important part of the growth algorithm in which we have laid out for ourselves to drive growth for us because at the end of the day, we believe very firmly that being in the floor is important because you'll get the benefit of PC you get the benefit of a secular shift, but you also get to deliver additional services by being in the flow and so it really.
What we're trying to do is we're trying to win profitable market share and at the same time driving accretion in our overall net revenue yield which is really about taking it together and the composite because payment services and our new read books are very tightly.
Integrated together they one relies on the other and we have to look at this from an overall net revenue yield basis. So that's what that's really what's going on.
Specific question about rebates and incentives look I mean, we've always kind of shared with you rebates and incentives will be sharing with you what the rebates and incentives on a payment network or even now the reality is.
As and when deals come up we will compete for them, we'll do that in a smart manner for Q2, I can tell you that rebates and incentives.
As a percentage of Google payment notebook assessments.
It will be roughly similar to what we had in Q1, so that based on everything we can see from a line of sight standpoint in terms of deals and activity and so on and so forth.
What I can share with you at this point in time.
Okay.
We will go next to <unk> Kumar of UBS.
Good morning, Congratulations Brian and Devin.
Ill talk about Europe , we saw 31% volume gains in the quarter. That's outstanding can you talk a little bit about some of the market dynamics, you're seeing in that what he's done and whether aircraft is more reflective of market share gains or just strength in the overall check to electronic payment.
Brian I think I almost partially answered to your question just now so deal activity is strong but here into the second half of your question there.
Now through the last three years, you saw some European market. Some large European markets that have been historically less digitized and more cash focus to really catch up the stats I gave earlier on contactless penetration that includes a good number of European markets jumping ahead into ranking so strong secular shift.
The opportunity you're starting to see some of the payment service providers driving more accepted into more parts of the economy and that's also reflected in some of the acceptance growth that we talked about 100 million a good chunk of that is coming from Europe . So it's a mix of the share wins that we have seen very specifically and in the UK.
Hey, Ann.
The secular shift so we feel very well positioned in Europe .
And we'll move next to Bryan Keane of Deutsche Bank.
Hi, Good morning, just wanted to ask about cross border volume I know it was up at 29% for the month of April or through April 21, just thinking about how that might grow throughout the year is that the right number to think about for our models and just thinking about the age.
Recovery, what's left there, obviously, we talked about China, and just thinking about that business.
As we progressed through the year.
Sure Brian .
Okay, Here's what I would tell you I'd say the things to keep in mind, when you're putting a model together and this will be no surprise to you is we did see a.
Opening up of economies last year coming out of Covid and as we mentioned in Q1, we were in the face of omicron, you're starting to see that recovery kind of take place ophthalmic gone past that that's what you should expect is there are going to be lapping related.
Issues, which will be a headwind to year over year growth rate at all.
<unk> in.
Cross border as well now offsetting that to some extent would be the recovery from Asia Pacific, which is something we saw it happened towards the tail end of last year coming into this year. So there are puts and takes I'm not going to give you a specific forecast as to what that growth rate should look like from our model assumption standpoint, but but I think there are these important puts and takes when you've got.
We're going to keep into consideration as you think about cross border. The most important thing I think is that the value prop we deliver to our cross border proposition is still fundamentally very solid. This is really important as you remember over the last two or three years. It was being questioned as to whether cross border was something which was gonna have been challenged over the logo.
The reality is it is gone, but it is coming back strong we have positioned ourselves really well through the pandemic period can be winning good portfolios to be able to ride the wave backup and youre seeing the results of that come through with some really strong cross border performance in Q1, with 35% year over year growth and so the reality is that cross border.
Our position remains good.
As a matter of reference if you look at.
Cross border volumes for Q1 at 168% of 2019.
And you can do this math as well the reality is that reflects approximately a 14% compound annual growth rate over the window from the theater prior to the pandemic. The way we are in Q1 and so.
Pretty much gotten caught up for lost time as part of that process. If you go back to what the historical rates of cross border work. So I kind of wanted to share that with you in terms of how we see cross border going forward.
Well move next to Sanjay suck Ronny at K B W.
Thanks, Good morning.
I guess I know you're not changing your views on the macro for the rest of the year, but you know you're monitoring the situation, maybe you could give us a little bit more color. If we parse underneath the covers what gives you the confidence things are stable despite the slowing.
In April March and April and then sort of a forward look on spending trends in cross border.
Okay.
Yeah, Hey, Sanjay look I mean at the end of the day, what we see is what you would see from a consumer trend standpoint, and you know we have our best estimates as to what we kind of think that looks like on a go forward basis.
But then there are others, which is do we have the technology do you have the capabilities and can you seamlessly deliver this geo customers. So that there isn't a big implementation challenges all of which when you think about on that hopefully allow us to do that in a very efficient manner, which is what's been helping us drive the kind of growth you've seen on your question on the financials I will tell you that I mean.
[music].