Q2 2025 Mastercard Inc Earnings Call

Julie Ann: Good morning. My name is Julie Ann, and I will be your conference operator today. At this time, I would like to welcome everyone to the MasterCard Incorporated Q2 2025 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, please press star one. Thank you. Mr. Devin Corr, head of investor relations, you may begin your conference.

Good morning. My name is Julianne and I'll be your conference operator today.

All lines have been placed on mute to prevent any background noise. After the speakers are marked. 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 1 on your telephone keypad,

Please only press star 1, once to queue up for a question. As pressing star 1 multiple times, may affect your position in the queue.

Devin Corr: Thank you, Julie Ann. Good morning, everyone, and thank you for joining us for our second quarter 2025 earnings call. With me today are Michael Miebach, 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 accompany 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.

If you would like to withdraw your question, please. Press star 1. Thank you, Mr. Devin Corr, head of investor relations, you may begin your conference.

Thank you, Julianne good morning, everyone and thank you for joining us. For our second quarter 2025 earnings call with me today are Michael miwak, our chief executive officer and Sasha our Chief Financial Officer.

Following comments from Mike lachin, 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.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

Devin Corr: Finally, as set forth in more detail in 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 discussed in further detail in our recent SEC filings, including our most recent 10K. 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 Miebach.

Both the release and the slide deck include reconciliation of non-gaap measures to Gap reported amounts.

Finally, as set forth in more detail on earnings release, I'd 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 discussed in further detail, in our recent SEC filings, including our most recent 10K, a replay of this call will be posted on our website for 30 days.

Michael Miebach: Thank you, Devin. Good morning, everyone. The headline this morning is we delivered another strong quarter with our financial results exceeding our expectations. Second quarter net revenues were up 16% and adjusted net income up 12% versus a year ago on a non-GAAP currency neutral basis. This is all underpinned by a winning strategy, diversified business model, and a relentless focus on executing against the priorities that fuel our growth algorithm. I will share several compelling examples on that today, but before I do, I will provide a few observations on the macro environment. Consumer spending remains healthy, supported by low unemployment and wage growth that continues to outpace inflation. This is true across both affluent as well as mass market consumers.

With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach.

Thank you Devin. Good morning, everyone.

The headline this morning is we delivered another strong quarter with our financial results. Exceeding our expectations second quarter, net revenues were up 16% and adjusted net income up 12% versus a year ago on a non-gaap currency neutral basis.

this is all underpinned by a winning strategy, Diversified business model in a Relentless focus on executing against the priorities that fuel our growth algorithm

I will share several compelling examples on that today, but before I do, I will provide a few observations on the macro environment.

Consumer spending remains healthy supported by low unemployment and wage growth that continues to outpace inflation.

Michael Miebach: While macro uncertainty remains due to government actions and geopolitical tensions, overall we remain positive about our growth outlook as the fundamentals that support consumer spending have been strong. With that as a backdrop, let's get into the details of the quarter. We continue to deliver a steady drumbeat of significant wins with leading merchants and retailers. I'm thrilled that we have extended our exclusive partnership with American Airlines, one of the world's largest credit co-brand portfolios. Our services continue to set us apart. American will leverage our advanced analytics, loyalty, personalization, and security solutions to optimize their card proposition and enhance their industry-leading travel rewards program. We're also partnering with OnePay, a leading consumer fintech platform in synchrony, to launch a new credit card with Walmart that will be available to consumers across the US.

This is true across both affluent as well as mass Market consumers.

While macro uncertainty remains due to government actions and geopolitical tensions, overall, we remain positive about our growth outlook, as the fundamentals that support consumer spending have been strong.

But that is a backdrop. Let's get into the details of the quarter.

We continue to deliver a steady drum beat of significant wins with leading merchants and retailers.

I'm thrilled that we have extended our exclusive partnership with American Airlines, one of the world's largest credit co-brand portfolios.

Security Solutions to optimize the car proposition and enhance their industry-leading travel rewards program.

Michael Miebach: And we're expanding our relationship with Uber, extending our exclusive Uber Pro card portfolios in the US and Canada. We will also launch new programs in additional markets, including the UK, as part of our global partnership. As you look around the world, it's clear that leading merchants see tremendous value in partnering with MasterCard. We're also winning with fintechs, buy now, pay later providers, and marketplaces. With PayPal, we extended our card issuing partnership in the United States. We also signed new credit and debit issuing agreements in the UK and Germany. And we are excited for PayPal's recently launched contactless mobile wallet in Germany. I just love doing things in Germany. In the buy now, pay later space, we signed an exclusive prepaid and credit card issuing deal with Afterpay in Australia. In Argentina, we renewed our consumer prepaid deal with e-commerce and fintech platform MercadoLibre.

We're also partnering as 1 pay. A leading consumer fintech platform in synchrony to launch a new credit card with Walmart that will be available to Consumers across the US.

And we're expanding our relationship with Uber extending, our exclusive Uber Pro card portfolios in the US and Canada.

We will also launch new programs in additional markets including the UK as part of our Global partnership.

As you look around the world, it's clear that leading Merchants see tremendous value in partnering with MasterCard.

We're also winning with fintechs. Buy now pay later providers and marketplaces.

With PayPal the extended our card issuing partnership in the United States.

We also sign new credit and debit issuing agreements in the UK and Germany and we are excited for PayPal's recently. Launched contactless Mobile Wallet in Germany.

I just love doing things in Germany in the buy now pay later space. We signed an exclusive prepaid and credit card, issuing deal with afterpay in Australia.

Michael Miebach: We're also partnering with them to launch new credit card programs in that market. And we renewed our partnership with Sicoop, one of the largest credit unions in Brazil across credit, debit, and commercial. In addition to winning deals, we're capitalizing on the significant volume and transaction opportunity in consumer payments by expanding acceptance, transforming the checkout experience, opening new verticals, leveraging alternative distribution channels, and launching innovative new capabilities. I'll give you a few examples for each of these five dimensions, starting with acceptance. We continue to leverage our contactless technology to drive open loop acceptance in the transit space. Our momentum here continues. In the second quarter, over 60 new public transport operators hopped on board to accept cards from Ventura County, California, to Taichung Metro in Taiwan. We're also opening transit acceptance in China.

In Argentina, we renewed our consumer prepaid deal with e-commerce and fintech platform marado Lieber.

We're also partnering with them to launch new credit card, programs in that market.

And we renewed our partnership with secop 1 of the largest credit unions in Brazil across credit debit and Commercial.

In addition to winning deals, where capitalizing on the significant volume and transaction opportunity in consumer payments by expanding acceptance transforming. The checkout experience opening new verticals, leveraging alternative distribution channels and launching Innovative new capabilities.

I give you a few examples for each of these 5 dimensions.

Starting with acceptance.

To continue to leverage our contactless technology to drive open loop Acceptance in the transit. Space. Our momentum here, continues the second quarter over 60 new public transport operators hopped on board to accept cards.

Michael Miebach: This quarter, we launched TAP to Pay in the Shanghai Metro, which followed a successful launch in the Beijing Metro last year. In a QR-based ecosystem, this represents an important evolution toward a multi-form factor market that includes NFC technology. We're also transforming the online checkout experience by driving adoption of capabilities like tokenization, click-to-pay, and payment passkeys. We have significant momentum towards our 2030 vision to transform online checkout into a single-click experience. In Europe, over 50% of e-commerce transactions are now tokenized. And for click-to-pay, Commonwealth Bank of Australia and Westpac are automatically enrolling cardholders over the coming months, bringing mass market adoption in Australia. Issuers around the world are committed to removing manual entry by also making click-to-pay a core card benefit, including NatWest, Standard Bank, Bank Vostok in Ukraine, and others.

From Ventura County, California to Taichung Metro in Taiwan. We're also opening Transit Acceptance in China. This quarter, we launched tap to pay in the Shanghai Metro which follows our successful launch in a Beijing Metro last year.

In the QR based ecosystem. This represents an important Evolution toward a multi-form factor market. That includes NFC technology.

We're also transforming the online checkout experience by driving, adoption of capabilities, like tokenization, click to pay and payment pass keys.

Your significant momentum towards our 2030 Vision to transform online checkout into a single click experience.

In Europe over, 50% of e-commerce transactions are now tokenized.

And for click to pay Commonwealth Bank of Australia and westpak are automatically. Enrolling card holders, over the coming months, bringing Mass market adoption in Australia.

Michael Miebach: And on the acceptance side, the number of click-to-pay transacting merchants was up 4x in the first half of 2025 versus a year ago. We're also focused on driving acceptance in new verticals that have not historically been well penetrated by card. Insurance payments are a great example. Significant flows, strong consumer demand, and a vertical that has undergone a digital transformation in recent years. However, card penetration is far lower relative to other carded categories. We are attacking this opportunity through new agreements with partners like Adyen, Checkout.com, Stripe, Transcard, and Worldpay. These partners will focus on enabling consumers to pay their insurance premiums. They will support claims disbursements to policyholders, and they will facilitate B2B payments from insurers to vendors providing services for these claims. Next, we're tapping into alternative distribution channels. For example, we're enabling stored value wallets around the globe.

Issuers around the world are committed to removing manual entry by also, making click to pay a core card benefit including netwest Standard Bank. Bank was talking in Ukraine and others.

And on the acceptance side, the number of click to pay transacting Merchants was up, 4X in the first half of 2025 versus a year ago.

We're also focused on driving Acceptance in new verticals that have not historically been well penetrated by cut.

Insurance payments are a great example significant flows, strong consumer demand and a vertical that has undergone a digital transformation in recent years. However, Cloud penetration is far lower relative to other credit categories.

We are attacking this opportunity through new agreements with Partners like audien, checkout.com, stripe, transcard, and World pay. These Partners will focus on enabling consumers to pay their insurance premiums. They will support claims disbursements to policy holders and they will facilitate B2B payments from insurers to vendors, providing services for these clients.

Michael Miebach: Our partnership with Alipay in Hong Kong and GCash will enable 36 local e-wallets to extend their use for cross-border through the international Alipay Plus wallet gateway. And MasterCard credentials automatically added to the wallets, allowing any stored value to be spent via a simple tap anywhere MasterCard is accepted around the globe. This is, again, a huge vote of confidence for NFC. Let's look at other areas where we're creating and deploying smart and engaging consumer experiences that drive brand preference and incremental spend. First up, we're providing offerings that meet the unique needs of each individual cardholder. In Canada, we partnered with CIBC to launch the CIBC Adapta MasterCard, which automatically applies additional rewards against your top three spending categories each month. It also includes our innovative Touch Card functionality, which allows cardholders, including the visually impaired, to easily distinguish the card from others in their wallet.

Next we're tapping into alternative distribution channels. For example, we are enabling stored value wallets around the globe. Our partnership with Ali, pay in Hong Kong and gcash will enable 36. Local e-wallets to extend their use for cross border through the international Ali pay plus wallet, Gateway.

A MasterCard credentials automatically added to the wallets, allowing any stored value to be spent via simple tap anywhere. MasterCard is accepted around the globe.

This is again a huge world of confidence for NFC.

Let's look at other areas where we're creating and deploying smart and engaging consumer experience that drive brand preference and incremental spend.

First off.

We're providing offerings that meet the unique needs of each individual card. Holder in Canada, with partner, with CIBC to launch the CIBC adapter. MasterCard, which automatically applies additional rewards against your top 3 spending categories each month.

Michael Miebach: Next, affluent cardholders. On average, they spend over two times more per card and up to three times more on cross-border. We're elevating our affluent value proposition with the MasterCard Collection, a comprehensive set of premium benefits created to drive top-of-wallet behavior. That's paired with the expansion of our World product suite in the newly created World Legend MasterCard. Our most prestigious consumer card is now available to banks globally. This first launch is this month with the Citi Strada Elite card. Finally, we're providing greater flexibility for consumers. We've deployed the MasterCard One credential as a network-level capability worldwide. It enables issuers to offer a single digitally connected credential to give consumers flexibility as to how they want to pay: debit, credit, prepaid, installments, or stablecoin all through their banking app.

Cloud functionality which allows card holders including the visually impaired to easily distinguish the card from others in their wallet.

Next aeon card holders.

On average, they spend over 2 times more per card and up to 3 times more on cross border.

We're elevating our, uh, elevating our affluent value, proposition with the MasterCard collection, a comprehensive set of Premium benefits created to drive top of wallet Behavior, as paired with the expansion of a world product Suite, in the newly created World Legend. MasterCard, our most prestigious consumer card is now available to Banks globally. This first launched this month with the city strata Elite card

And finally, we're providing greater flexibility for consumers. We've deployed. The MasterCard 1, credential, as a network level capability, worldwide.

Enables issuers to offer a single digitally connected, credential to give consumers flexibility as to how they want to pay debit credit prepaid installments.

Or stablecoin all through their banking app.

Michael Miebach: And as Raj and Yaran explained in detail in our recent call on the gent e-commerce and stablecoins, we're leaning into open up and drive new opportunities for our network in these spaces. If you didn't have a chance to join, I encourage you to listen to the replay. Today, I reinforce a few key points. First, the gent e-commerce. We see this as an exciting opportunity across consumer and commercial flows to shop with merchants easily and securely. We are scaling agent pay globally, leveraging our capabilities to extend the trust of the MasterCard brand. It enables us to support a new way for consumers to transact. It gives us yet another capability that sets us apart from domestic and alternative payment systems. And it provides a way for us to drive switching and sell more services. And as to stablecoins, we see it as another currency.

And as Raj and Yuron explained in detail in our recent call on Genty Commerce and stable coins.

We're leaning into open up and drive new opportunities for our Network. In these spaces. If you didn't have a chance to join, I encourage you to listen to the replay.

Today, I reinforce a few key points. First the genti Commerce.

You see this as an exciting opportunity across consumer and Commercial flows to shop with Merchants easily and securely.

We are scaling agent pay globally, leveraging our capabilities to extend the trust of the MasterCard brand. It enables us to support a new way for consumers to transact. It gives us yet another capability. It sets us apart from domestic and alternative payment systems.

And it provides a way for us to drive switching, and sell more services.

Michael Miebach: We also see it as an additive to the network with opportunities for us to provide the on- and off-ramps from fiat to stablecoin, to partner with device and wallets, to bring interoperability, bring relevant services, bring global reach, and trust to the specific use cases. With new technologies, we always embrace innovation. We offer choice and extend the network to new partners, and we're doing the same thing here. We will bring our reach, ubiquity, and trust to a gent e-commerce and stablecoins, and we'll provide an environment for our partners to innovate upon. That is the MasterCard way. Now turning to commercial payments, we're driving growth by launching differentiated capabilities, scaling our industry-leading virtual card solutions, and expanding small business card distribution through new and expanded partnerships.

And as to stable coins, we see it as another currency. We also see it as additive to the network with opportunities for us to provide the on and off ramps, from Fiat to stable coin to partner with their eyes and wallets to bring into operability, bring relevant Services, bring Global reach, and Trust to the specific use cases.

With new technologies, we always Embrace Innovation. We offer choice and extended Network to new partners, and we're doing the same thing here.

We will bring our reach ubiquity and Trust to a genetic Commerce and stable coins and we'll provide an environment for our partners to innovate upon. That is the MasterCard way.

Michael Miebach: In terms of new capabilities, the Small Business Navigator provides US entrepreneurs access to cybersecurity solutions, insights and analytics, and partner tools to support more efficient and effective operations. Through the platform, Fiserv's Clover is partnering with us to offer SMEs discounted point-of-sale capabilities. And Square is providing tailored educational programs to help small business thrive. In the fleet space, several leading US issuers, including CorpRate, are deploying our new capability to integrate fleet cards into digital wallets. For the first time, fleet managers can now instantly issue and manage digital cards, while drivers will be prompted to provide key data like odometer readings when they tap to pay at the pump. When it comes to invoice payments, we continue to scale our proprietary virtual card technology by making it easier for issuers and technology platforms to integrate our capabilities.

Now turning to commercial payments, we're driving growth by launching differentiated capabilities, scaling our industry-leading virtual card solutions, and expanding small business card distribution through new and expanded partnerships.

In terms of new capabilities, the small business Navigator provides us entrepreneurs access to cyber Security Solutions insights and analytics and partner tools to support more efficient and effective operations.

Through the platform. Fiser Clover is partnering with us to offer smes discounted point of sale capabilities.

And square is providing tailored educational programs to help small business thrive.

In the Fleet space. Several leading us issuers including corporate. Uh deploying our new capability to integrate Fleet Cards into digital wallets

For the first time Fleet managers can now instantly issue and manage digital cards. While drivers will be prompted to provide key data like odometer readings when they tap to pay at the pump.

Michael Miebach: We are now live with eight leading B2B platforms, including Coupa, Cvent, GEP, HRS, Nivan, Oracle Fusion Cloud ERP, and SAP Talia, with several more in implementation. On the supplier side, our receivables manager platform is now available globally. It's being deployed through partners like Eleven, Run Payments, and EasyPay to streamline virtual card acceptance and payment reconciliation. We're also driving small business and card distribution through a series of new and expanded issuer and marketplace partnerships. We've enhanced our exclusive relationship with Payoneer through a suite of services designed to accelerate growth of their small business customers across Europe. We are partnering with e-commerce marketplaces like BoxCommerce, who will distribute prepaid business cards to their merchants so that they can make and receive payments on cards across several countries in Africa.

When it comes to invoice payments. We continue to scale our proprietary virtual card technology by making it easier for issuers and Technology platforms to integrate our capabilities. We are now live with 8, leading B2B platforms, including Koopa cvent gep. HRS Navan Oracle Fusion, Cloud Erp and sap Talia. Several more in implementation,

On a supplier side, our receivables manager platform is now available globally.

It's being deployed through partners like Elephant, Run Payments, and Easy Pay to streamline virtual card acceptance and payment reconciliation.

We're also driving small business and card distribution through a series of new and expanded issuer and Marketplace Partnerships. You can enhance our exclusive relationship with Pioneer through a suite of services designed to accelerate growth of their small business customers across Europe.

Michael Miebach: Shifting to disbursements, we continue to see strong growth in our MasterCard move capabilities, with year-over-year transaction growth of over 35% in quarter two. We're focused on penetrating a wide range of new and existing use cases. For example, in the disbursement space, we've partnered with Jack Henry to distribute MasterCard Move to thousands of community banks through their rapid transfer solution. We've expanded our relationship with Neway, who will leverage MasterCard Move to enable Canadian businesses to facilitate near-instant payouts to MasterCard debit and prepaid cards. And staying in Canada, BMO Canada is expanding the use of our cross-border services in about 20 additional corridors. Moving to our third strategic pillar, value-add services and solutions, we continue to leverage the power of our data and product capabilities to differentiate payments and capture adjacent revenue opportunities.

The partnering with e-commerce marketplaces like box, Commerce, who will distribute prepaid business cards to their Merchants so that they can make and receive payments on cards across several countries in Africa.

Community Banks to their rapid transfer solution.

We've expanded our relationship with new way, who will leverage MasterCard, move to enable Canadian businesses to facilitate near instant payouts to MasterCard debit and prepaid cards.

And staying in Canada, be more Canada. Is expanding the use of our cross-border services in about 20 additional corridors.

Michael Miebach: We do this by penetrating existing customers, diversifying into new customer types, targeting new buying centers, leveraging B2B partners for distribution, and deploying new services. Our years of experience and full suite of products help us build fit-for-purpose solutions for clients. We're seeing this in practice with several large customers. For example, we've partnered with Garanti BBVA to support multiple strategic initiatives, including revamping their digital wallet, optimizing collections, and boosting credit card sales across digital channels. And we've partnered with Deutsche Bank to use our open banking capabilities to grow account-to-account payments across Europe. These services deliver significant value in their own right, but they are even more powerful because of the linkage to payments that fuels our virtuous cycle. We also continue to capture payment-adjacent opportunities and win business with customers beyond issuers and acquirers.

Moving to our third strategic pillar value, add services and solutions, we continue to Leverage The Power of our data and product capabilities to differentiate payments and capture adjacent Revenue opportunities.

We do this by penetrating existing, customers diversifying into new customer types, targeting new, buying centers leveraging, B2B partners for distribution and deploying new services.

Our use of experience and full Suite of products. Helps us build fit for purpose solutions. For clients. We're seeing this in practice with several large customers. For example, we've partnered with garanti to support multiple strategic initiatives, including revamping, their digital wallet, optimizing Collections, and boosting credit card sales across digital channels,

And we've partnered with Deutsche Bank to use our open banking capabilities to grow a counter account payments across Europe.

these Services deliver significant value in their own right, but they are even more powerful because of the linkage to payments that fuels our virtual cycle,

Michael Miebach: We're leveraging our test and learn capabilities with partners as diverse as Lufthansa and ad tech company Blease to help them conduct scalable, sophisticated testing in areas such as media measurement, operations, and marketing. A range of capabilities also enables us to expand into new buying centers with existing customers. For example, the credit risk team at Stone, one of the largest acquirers in Brazil, plans to leverage our small business credit analytics product to enhance the accuracy of its credit offerings to SME clients. We're also leveraging B2B channel partners to distribute our services at scale. Solidgate, a payment processing platform in EMEA used by merchants in over 150 countries, will use identity insights for transactions to help reduce fraud and increase acceptance. Finally, we continue to develop new services.

we also continue to capture payment adjacent opportunities, and win business with customers Beyond issuers and acquirers

We're leveraging our test and learn capabilities with Partners as diverse as luanza and adtech Company believes to help them conduct scalable sophisticated testing.

In areas such as media, measurement operations and marketing.

A range of capabilities. Also enables us to expand into new buying centers with existing customers. For example the credit risk team at Stone 1 of the largest acquirers in Brazil. Plans, to leverage our small business credit analytics product to enhance the accuracy of its credit. Offerings to SME clients.

We're also leveraging B2B Channel Partners to distribute our services at scale. Solid gate, a payment processing platform and emia used by Merchants over 150. Countries will use identity insights for transactions to help reduce fraud and increase acceptance.

Michael Miebach: We just announced MasterCard Account to Account Protect, which will combine our cutting-edge fraud prevention technology with a new dispute resolution framework to safeguard consumers when making account-to-account payments. Deploying services like this across account-to-account rails is a major step forward, as it helps us grow our addressable market while also further protecting our customers and the ecosystem. We're starting with customers in the UK, including NatWest, Santander, and Monzo to bring this global account-to-account overlay to other markets later this year. We remain enthusiastic about our future growth potential for services. Our breadth of data, network of partners, unique product capabilities, strong customer relationships, and our incredible talent will help us to continue to differentiate and provide us with substantial runway for growth. So with that, that was a lot. I will wrap it up. In summary, we delivered another very strong quarter despite an uncertain backdrop.

Finally we continue to develop new Services. We just announced Mastercard account to account protect which will combine our Cutting Edge fraud, prevention technology with a new dispute. Dispute, resolution framework to safeguard consumers when making a counter account, payments deploying services like this across a counter account. Rails is a major step forward as it helps us grow our addressable Market. While also further

Are protecting our customers and the ecosystem.

We're starting with customers in the UK including that West Sante and monzo to bring this to Global account account overlay to to other markets later this year.

Urine enthusiastic about our future growth potential for services.

A breadth of Data Network of Partners unique product capabilities, strong customer relationships, and our incredible Talent will help us to continue to differentiate and provide us with substantial runway for growth.

Michael Miebach: There is significant opportunity ahead. The fundamentals of our business are strong. Our proven growth algorithm and differentiated solutions position us to deliver and win, as we have demonstrated time and time again. Sachin, over to you.

So, with that, that was a lot. I will wrap it up in summary, we delivered another very strong quarter despite an uncertain backdrop. There is significant opportunity ahead. The fundamentals of our business are strong, our proven growth algorithm and differentiated Solutions position us to deliver in win as we have demonstrated time and time again.

Sachin Mehra: Thanks, Michael. Turning to page three, which shows our financial performance for the second quarter on a currency neutral basis, excluding where applicable, special items, and the impact of gains and losses on our equity investments. Net revenue was up 16%, reflecting continued growth in our payment network and value-added services and solutions. Acquisitions contributed one PPT to this growth. This growth was ahead of expectations, primarily driven by higher-than-expected revenue from FX volatility. Operating expenses increased 14%, including a four PPT increase from acquisitions. And operating income was up 17%, which includes a one PPT headwind from acquisitions. Net income and EPS increased 12% and 14% respectively, driven primarily by the strong operating income growth, partially offset by a higher effective tax rate due to the impact of the global minimum tax rules, which came into effect at the start of this year.

Such an over to you.

Thanks, Michael turning to page 3 which shows our financial performance for the second quarter on a currency. Neutral basis, excluding where applicable special items and the impact of gains and losses on our Equity Investments.

Net revenue was up 16% reflecting good new growth in our payment Network and value added services and solutions.

Acquisitions contributed 1 PPT to this growth.

Growth was ahead of expectations, primarily driven by higher than expected, revenue from FX volatility.

Operating expenses increased 14% including a full PPT increase from Acquisitions and operating income was up 17% which includes a 1 PPT headwind from acquisitions.

Sachin Mehra: EPS was $4.15, which includes a 9% contribution from share repurchases. During the quarter, we repurchased 2.3 billion worth of stock and an additional $1 billion through July 28, 2025. Now turning to page four, let's first look at some of our key volume drivers for the second quarter on a local currency basis. Worldwide gross dollar volume, or GDV, increased by 9% year over year. In the US, GDV increased by 6%, with credit growth of 6% and debit growth of 7%. This growth was impacted by the lapping of the citizens' debit portfolio migration to MasterCard, which commenced in Q1 2024. Outside of the US, volume increased 10%, with credit growth of 9% and debit growth of 11%. Overall, cross-border volume increased 15% globally for the quarter, reflecting continued growth in both travel and non-travel related cross-border spending.

Net income and EPS increased 12% and 14% respectively driven, primarily by the strong operating income growth partially offset by a higher effective tax rate due to the impact of the global minimum tax rules, which came into effect at the start of this year.

EPS was $4.15, which includes a 9th and contribution from Sheree purchases during the quarter. We repurchased 2.3 billion worth of stock and an additional 1 billion dollars through July 28th 2025.

For the second quarter on a local currency basis.

Worldwide. Gross dollar volume or gdv increased by 9% year-over-year.

In the US GDP increased by 6% with credit growth of 6% and debit growth of 7%.

This growth was impacted by the lapping of the citizens debit portfolio, migration to MasterCard, which commenced in q1 2024.

Outside of the US volume increased 10% with credit growth of 9% and debit growth of 11%.

Sachin Mehra: Turning to page five, switch transactions grew 10% year over year in Q2. Both card present and card not present growth rates remain strong. Card present growth was aided in part by an increase in contactless penetration, as contactless now represents 75% of all in-person switch purchase transactions. In addition, card growth was 6%. Globally, there are 3.6 billion MasterCard and Maestro branded cards issued. Turning now to slide six for a look into our net revenue growth rates for the second quarter discussed on a currency neutral basis. Payment network net revenue increased 13%, primarily driven by domestic and cross-border transaction and volume growth. It also includes growth in rebates and incentives. Value-added services and solutions net revenue increased 22%. Acquisitions contributed approximately four PPT to this growth.

Overall crossborder volume increased, 15% globally for the quarter reflecting continued growth in both travel and non-travel related cross water spending.

Turning to page 5 switch transactions, grew, 10% year-over-year in, Q2 both, God, present and card, not present growth rates. Remain strong.

card present growth was aided in part by an increase in contactless, penetration as contactless now, represents 75% of all in-person switched, purchase transactions,

In addition, card growth was 6% globally. There are 3.6 billion MasterCard and Maestro. Branded cards issued,

Turning out flight 6. For a look into our net revenue, growth rates for the second quarter discussed on the currency neutral basis.

Payment network, net revenue increased 13%.

Primarily driven by domestic and cross-border transaction and volume growth, it also includes growth from rebates and incentives.

Sachin Mehra: The remaining growth was primarily driven by demand for our consumer acquisition and engagement services, growth in our underlying drivers, the scaling of our security and digital and authentication solutions, and pricing. Now let's turn to page seven to discuss key metrics related to the payment network. Again, all growth rates are described on a currency neutral basis unless otherwise noted. Looking quickly at each key metric, domestic assessments were up 9%, while worldwide GDV grew 9%. Cross-border assessments increased 15%, with cross-border volumes also increasing 15%. Pricing in international markets was primarily offset by mix, as lower yielding intra-Europe cross-border volumes grew faster than higher yielding ex-intra-Europe cross-border volumes this quarter. Transaction processing assessments were up 18%, while switch transactions grew 10%. The eight PPT difference is primarily due to revenue related to FX volatility and favorable mix. Other network assessments were $260 million this quarter.

Value added services and solutions net revenue. Increased 22% Acquisitions contributed, approximately 4 PPT to this growth. The remaining growth was primarily driven by demand for our consumer acquisition and engagement Services. Growth in our underlying drivers, the scaling of our security and digital and authentication Solutions and pricing.

Now, let's turn to page 7 to discuss. Key metrics related to the payment Network again. All growth rates are described on our currency neutral basis. Unless otherwise noted

Looking quickly at each key metric, domestic assessments were up 9% while worldwide. Gdv grew, 9%, cross, waterer assessments, increased 15% with cross border volumes also increasing 15%.

pricing in international markets was primarily offset by mix as lower yielding intra Europe cross water volumes, grew faster than higher yielding X in Prior of cross, water volumes this quarter,

For transaction processing, assessments were up 18% while switch transactions, grew 10%.

the 8 PPT difference is primarily due to revenue related to FX volatility and favorable mix

Sachin Mehra: Moving on to page eight, you can see that on a non-GAAP currency neutral basis, excluding special items, total adjusted operating expenses increased 14%, which includes a four PPT impact from acquisitions. Excluding acquisitions, the growth of total adjusted operating expenses was primarily driven by increased spending to support various strategic initiatives, including hardening of our technology infrastructure, diversifying our geographic footprint to further capture the secular trend, enhancing our products, and delivering our services. Turning to page nine, let me comment on the operating metric trends. Overall, we continue to see healthy consumer and business spending, and metrics were generally in line with our expectations. Starting with Q2, I will discuss the operating metrics on a sequential basis, adjusting for the leap year and the timing of Easter and other holidays.

Other network assessments were $260 million this quarter.

Moving on to page 8, you can see that on a non-gaap currency neutral basis, excluding special items, total adjusted operating expenses increased to 14% which includes a 4 PPT impact from acquisitions.

Excluding Acquisitions the growth of total adjusted operating expenses was primarily driven by increased pending to support various strategic initiatives, including hardening of our technology infrastructure diversifying. Our Geographic footprint to further capture the secular Trend, enhancing our products and delivering our services.

Turning to page 9, let me comment on the operating metrics.

Overall, we continue to see healthy consumer and business spending and metrics were generally in line with our expectations.

Sachin Mehra: Switched volume growth was impacted by a number of smaller factors, including tougher comps, primarily due to the lapping of portfolios one in 2024, the timing of Social Security payments and the mix of calendar days, and lower gas prices. Switched transaction growth remained relatively stable. As it relates to cross-border, underlying growth remains strong. Let's double-click on cross-border travel growth. As mentioned in our last earnings call, we saw some moderation in select Middle East and Africa markets, primarily due to tougher comps, enforcement of MasterCard rules, and a ratcheting up of geopolitical conflict late in the quarter. We also saw some lapping of portfolios one in 2024. Cross-border card not present ex-travel growth remained strong. Now looking at the first four weeks of July, switch volume, switch transaction, and cross-border card not present ex-travel growth remained stable.

Starting with Q2 I will discuss the operating metrics on a sequential basis, adjusting for the leap year and the timing of Easter and other holidays.

switch volume growth was impacted by a number of smaller factors, including tougher comps primarily due to the lapping of portfolios 1 in 2024

The timing of Social Security payments, and the mix of calendar days and lower gas prices.

Switch transaction. Growth remained relatively stable,

As it relates to cross border underlying growth remains strong. Let's double click on cross border travel grow as mentioned in our last earnings call, we saw some moderation in select Middle East and Africa, markets primarily due to tougher comps enforcement of MasterCard rules and a ratcheting up of geopolitical conflict late. In the quarter, we also saw some lapping of portfolios 1 in 2024

Cross-border card-not-present travel growth remained strong.

Sachin Mehra: For cross-border travel growth, the sequential decrease is primarily driven by the timing of Easter, as well as the continuation of the impacts I mentioned earlier. With all of that being said, our overall cross-border volumes continue to grow well in the mid-teens range. This is supported by strong underlying consumer spending and a diversified portfolio across geographies and travel and non-travel spend. Turning now to page 10, I wanted to share our thoughts for the remainder of the year. The headline is that our business remains strong and consumer spending remains healthy. The macroeconomic environment has been supportive, with low unemployment rates and, for the most part, wage growth continuing to outpace the rate of inflation. That said, ongoing geopolitical and economic uncertainty remains. With global policy shifts ongoing, we remain agile, monitoring developments, and we stand ready to adjust as needed.

Now, looking at the first 4 weeks of July switch, volume switch transaction and cross border card, not present, X travel growth remains stable.

Biographies and travel and non-travel spend.

Turning now to page 10 I want to share our thoughts with the remainder of the year. The headline is that our business remains strong and consumer spending remains healthy.

The macroeconomic environment has been supported with low unemployment rates and for the most part wage growth continuing to outpace the rate of inflation that said ongoing geopolitical and economic uncertainty remains.

Sachin Mehra: In this period of heightened uncertainty, what remains clear is that we have a well-diversified business across geographies, products and services, and discretionary and non-discretionary spend categories. And we remain laser-focused on the execution of our strategy, as Michael said, while maintaining a disciplined capital planning approach. Now turning to our expectations for the full year 2025, our base case for the remainder of the year assumes continued healthy consumer and business spending. Given the strong first half results, we are tightening the full year net revenue outlook range to the high end of the range we shared with you at the time of our Q1 earnings. We now expect net revenues to grow at the low teens range on a currency neutral basis, excluding acquisitions.

With global policy shifts ongoing. We remain agile, monitoring developments and we stand ready to adjust as needed.

In this period of heightened uncertainty, what remains clear is that we have a well Diversified business across geographies products and services and discretionary and non-discretionary spend categories.

And we remain laser focused on the execution of our strategy is Michael said while maintaining a disciplined Capital planning approach.

now, turning to our expectations for the full year 2025

Our base case for the remainder of the Year assumes continued healthy consumer and business spending.

Sachin Mehra: Acquisitions are expected to add one to 1.5 PPT to this growth for the year, while we now estimate a tailwind of one to two PPT from foreign exchange. From an operating expense standpoint, we continue to expect growth to be at the low end of a low double-digits range versus a year ago on a currency neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to increase the OPEX growth rate for the year by four to five PPT, while we expect a headwind of zero to one PPT from foreign exchange. Now turning to the third quarter, year over year, net revenue growth is expected to be at the high end of a low double-digits range on a currency neutral basis, excluding acquisitions.

Given the strong first-half results, we are tightening the full year net revenue outlook range to the high end of the range we shared with you at the time of our Q1 earnings. We now expect net revenues to grow in the low-teens range on a currency-neutral basis. Excluding acquisitions, acquisitions are expected to add 1 to 1.5 percentage points to this growth for the year.

While we now estimate a Tailwind of 1 to 2 PPT from foreign exchange.

From an operating expense standpoint. We continue to expect growth to be at the low end of a low double digits range versus a year ago on a currency neutral basis. Excluding Acquisitions and special items.

Acquisitions are forecasted to increase the Opex growth rate for the Year by 4 to 5 PPT.

While we expect a headwind of 0 to 1, PPT from foreign exchange.

Sachin Mehra: Acquisitions are forecasted to add one to 1.5 PPT to this growth rate, and we expect a tailwind of one to two PPT from foreign exchange for the quarter. From an operating expense standpoint, we expect Q3 growth to be at the low end of a low double-digits range versus a year ago, again on a currency neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to add approximately five PPT to this OPEX growth, while we expect a headwind of zero to one PPT from foreign exchange for the quarter. Other items to keep in mind, on other income and expenses in Q3, we expect an expense of approximately $130 million, given the prevailing interest rates and debt levels. This excludes gains and losses on our equity investments, which are excluded from our non-GAAP metrics.

Now, turning to the third quarter year-over-year, net revenue growth is expected to be at the high end of a low double-digit range on a currency-neutral basis, excluding acquisitions.

Acquisitions are forecasted to add 1 to 1.5 PPT to this growth rate. And we expect the Tailwind of 1 to 2, PPT, from foreign exchange for the quarter.

From an operating expense standpoint. We expect Q3 growth to be at the low end of a low double digits range versus a year ago again on a currency. Neutral basis, excluding Acquisitions and special items.

Acquisitions are forecasted to add approximately 5 PBT to this Opex growth. While we expect a headwind of 0 to 1, PPT from foreign exchange for the quarter.

Other items to keep in mind on other income and expenses in. Q3 we expect an expense of approximately $130 million, given the prevailing interest rates, and debt levels.

Sachin Mehra: Finally, we expect our non-GAAP tax rate to be in the 20 to 21% range for both Q3 and the full year, based on the current geographic mix of our business. And with that, I will turn the call back over to Devin.

This excludes gains and losses on our Equity Investments, which are excluded from our non-gaap metrics.

Devin Corr: Thank you, Sachin. Thank you, Michael. Julie Ann, you may now open the call for questions.

Julie Ann: 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 once to queue up for a question, as pressing star one multiple times may affect your position in the queue. Our first question comes from Sanjay Saqarani from KBW. Please go ahead. Your line is open.

Finally, we expect our non-GAAP tax rate to be in the 20% to 21% range for both Q3 and the full year, based on the current geographic mix of our business. And with that, I will turn the call back over to Devon. Thank you, Sachin. Thank you, Michael. Julianne, you may now open the call for questions.

Thank you at this time. I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad,

please only press star 1, once to queue up for a question. As pressing star 1 multiple times, you may affect your position in the queue.

Sanjay Sakhrani: Thank you. Good morning. Sachin, you mentioned the lapping of portfolios, obviously as citizens in the first quarter. I guess, like, as we move through Q2, was there a more prominent impact? And I guess as we look toward the back part of this year, are there further lapping of other deals? And then just on Capital One and Discover, I know they kind of talked about the transition happening next year now. So I assume, like, is that just not in your numbers for the remainder of this year in terms of a migration of the debit portfolio? Thanks.

Our first question comes from Sanjay Sakari from KBW. Please go ahead. Your line is open.

Sachin Mehra: Thanks, Sanjay. So let me take both your questions there. So as it relates to lapping, just a quick reminder, it's more than just the citizens' portfolio, right? I mean, we won the citizens' portfolio last year. We won the Wells Fargo Small Business Credit portfolio last year. And these are the two big ones in the US, but there were several other wins which we had across the globe as well. But specifically to your question, as it relates to the impact of lapping to the year-over-year growth metrics, just as a reminder, the Wells Fargo portfolio converted in Q2 of last year. The citizens' portfolio started conversion in Q1 and then ramped up in Q2 of last year. So what you should expect is that the lapping impact has gotten more pronounced in Q2 and then will continue through Q3 and Q4.

Thank you. Good morning. Um, such an you mentioned, the lapping of portfolios. Uh obviously as Citizens in the first quarter, I guess. Like as we move through Q2, was there a more prominent impact? And I guess as we look towards the back, part of this year, are there further lapping of other deals and then just on Capital 1 and discover. I know they kind of talked about the transition happening next year now. So I assume like is that just not in your numbers, uh, for the remainder of this year, in terms of the migration of the debit portfolio. Thanks.

Sachin Mehra: So there is going to be continued lapping, not only in an account of those portfolios, but other portfolios as well. So that's kind of to your first question. On your second question on Capital One, look, I mean, at the end of the day, as I mentioned in prior earnings calls, we've taken our best estimate into consideration as it relates to the migration of the debit portfolio with Capital One. And we continue to, our current guidance to you still assumes our best estimates around that. Obviously, the transaction is now complete. Conversions have actually started. They're still ramping up. So it'll still take some time before the conversions actually come into play. I also want to just remind you sequentially how this works, right? And so the new cards are issued. The new cards go into the hands of, you know, consumers.

Sachin Mehra: At the same time, the old cards are still there. The MasterCard branded cards are still, you know, alive and well. And so we take our best estimates as to how volumes will roll off. Overall, I would tell you, we expect that the ramp-up in terms of the volume declines will increase as the year progresses. We expect this year the net revenue impact to be minimal to our overall company's net revenues. The vast majority of the impact we expect to feel will be next year.

Is as well. So that's kind of to your first question on your second question on Capital 1. Um, look, I mean, at the end of the day, as I mentioned, in Prior earnings calls, we we've taken our best estimate into consideration, as it relates to, the migration of the debit portfolio of capital 1 and we continue to our current guidance to you, still assumes, our best estimates around that. Obviously, the transaction is now complete. Uh, conversions have actually started. There's still ramping up. So it still takes some time before the conversions actually come into play. Um I also want to just remind you sequentially how this this works, right? And so the new cards are issued the new cars go into the hands of you know consumers at the same time, the old cards are still there, the MasterCard branded cards are still, you know, alive and and well and so we take our best estimates as to how volumes will roll off. Um, overall I would tell you, we expect that the ramp up in terms of the volume, declines will increase as the year progresses. Uh, we expect this year, the net revenue impact

To be minimal to our overall company's, net revenues.

Sanjay Sakhrani: And at the same time, we continue to expect a strong partnership on the credit side and the services side. So it's not only about rolling off. It's also about continuing to build our business with Capital One.

Vast majority of the impact, we expect to feel will be next year.

Sachin Mehra: Thank you.

And it says, 10 at the same time, we continue to expect to uh, a strong partnership on the credit side and the services side. So it's not only about rolling off. It's also about continue to build our business with Kaplan.

Julie Ann: Our next question comes from Darren Teller from Wolf Research. Please go ahead. Your line is open.

Thank you.

Darrin Peller: Guys, thanks. You know, when we look at some of these wins, I just want to dive in a little deeper onto the value-added services that you're calling out as the most differentiating. Obviously, your competitors also call out value-added services. So when considering what you think stands out, and then sort of as an add-on to that, the pricing dynamic, we've seen really good pricing for value that you've shown in your numbers now, and it seems to be somewhat, I think it went in effect a lot of them in July and October last year. Just touch on the areas you're finding the most pricing power, and if we can expect more of the same over the next 12 months.

Our next question comes from Darren teller. From Wolfe research, please go ahead. Your line is open.

Michael Miebach: All right. So let me kick this off with an answer on the first part here on the vast portfolio. So when I look across the portfolio, I think the first thing to say, it's a very carefully curated portfolio. This isn't a set of single pearls on a string. So this is really before, during, after transaction, how we can bring value around the payment transaction, and then even beyond that, when you think about topics like cybersecurity. So carefully curated, first point to know. When you think about it over the arc of time, we have been particularly focused over the past decade or so on security solutions. So that's certainly a standout from a differentiation perspective. We've also been incredibly focused on leveraging our data to drive better engagement solutions for our customers.

Guys. Thanks you know when we look at some of these wins I just want to dive in a little deeper onto the value added services that you're calling out as the most differentiating, obviously your competitors. Also call out value added services. So when considering what you think stands out, and then I'm sort of as an add-on to that the pricing Dynamic, we've seen really good, pricing for Value that you've shown in your numbers now and seems to be somewhat. I think it might affect a lot of them in July and October last year, just touch on the, the areas, you're finding the most pricing power. And if we can expect more of the same over the next 12 months,

All right, so let me, uh, kick this off with the answer on the first part here on, uh, the uh, vast portfolio.

So when I, when I look at the portfolio, um I think the first thing to say it's a very carefully curated portfolio. This isn't a set of single pearls on a string. So this is really before during after transaction how we can bring value around, uh the payment transaction and then even beyond that when you think about topics like cyber security. So carefully curated first, spoke to point to know. Um, when you think about it over the Arc of time, uh, we have been particularly focused over the past decade, or so on Security Solutions. So that certainly a standout from a

Michael Miebach: So if you think in a more digital world, your cyber risks will go up. That's why cybersecurity is the focus of what we're doing. And in a more digital world, consumer engagement gets harder and harder, and you need better technology and better differentiation to drive through the clutter. So if I take some specifics out of both of these portfolios, you know, first of all, on the cybersecurity side, you know, the stakes are getting higher and higher. The fraudsters are using latest technology, using artificial intelligence, generative AI to power their solutions to break through on the fraud side, on the cybersecurity side, and we're doing exactly the same. So I mentioned this in previous calls. Decision Intelligence Pro is leveraging data out of all sources of the internet, putting it through a generative AI engine for us to predict fraud.

Michael Miebach: So instead of preventing fraud, we're going to predict fraud, which is the latest stage of this kind of game. And this is clear identifiable value for our customers that are very happy to pay for. And here we are right at the second point of your question on pricing for value. On the customer engagement side, it's very similar. Our personalization engine through our dynamic yield acquisition continues to be providing outstanding value to our customers to really drive that personalized solution. Let's say you're a retail bank and you want to drive new account growth. You need a personalized solution, right channel, right context to do that. That's what personalization through dynamic yield does for us and for our customers in a way better than anybody else out there.

Differentiation perspective. Uh, We've also been incredibly focused on leveraging, our data to drive, uh, better engagement solutions for our customers. So if you think in a more Digital World, um, your cyber risks will go up. That's why cyber security is at the the focus of what we're doing and in a more Digital World consumer engagement gets harder and harder, and you need better technology and better differentiation to drive through, uh, the Clutter. So, if I take some specifics out of both of these portfolios, uh, you know, first of all, on the cyber security side, um, you know, the stakes are getting higher and higher. Um, the fraudsters are using latest technology using artificial intelligence uh, generative AI um, to power their solutions to break through on the fraud side, on the cyber security side and we're doing exactly the same. So um, I mentioned this in previous calls decision. Intelligence Pro is leveraging uh data out of uh all sources of the internet, putting it through um a generative AI engine for us to predicting fraud.

Instead of preventing fraud, we're going to predicting fraud which is the latest stage of this kind of game. And this is clear identifiable value for our customers that are very happy, uh, to to pay for. And here we are. Right, at the second point of your question, on pricing for Value. Uh, the customer engagement side is very similar. Our personalized uh, personalization engines through our Dynamic yield acquisition continues to be, uh, providing outstanding value to our customers to really drive that personalized solution.

Michael Miebach: You find us in the top quadrant of the Gartner Magic, what is that called, quadrant thing, whatever, the top quadrant. So they are really good at that. So a couple of examples. So in the world, with some uncertainty from a macroeconomic perspective, the desire for our customers to make sure that they got full focus on the fraud line in their P&L, to drive their top line with better acquisitions, that allows us to say, here is an outcome that you can see, that you will see in your P&L, and that gives us power to price for that because we're pricing for that exact value. So that's what I would say. It's a very differentiated proposition across the industry. We've been at it for a decade, and we're going to continue to push that forward.

They got full focus on the fraud line uh, in their p&l to drive their top line, with better Acquisitions. Uh that allows us to say, here is a here is an outcome that you can see that you will see in your pnl. Um and that gives us power to price for that because we're pricing for that exact value. So that's what I would say. Uh, it's a very differentiated proposition across the uh, across the industry. We've been at it for a decade and uh, we're going to continue to push that forward.

Julie Ann: Our next question comes from Harsita Rawat from Bernstein. Please go ahead. Your line is open.

Harshita Rawat: Hey, good morning. Michael, I wanted to ask about commercial POS, which you've cited as a $16 trillion opportunity and cards only having about less than 10% market share. You have a very good business in the US, and I know you talked about this in your prepared remarks a little bit, but maybe expand upon how you're taking this business international and the momentum you may be seeing there. Seems like this is quite a kind of medium-term to near-term opportunity for you. Thank you.

Our next question. All right. Next question comes from Harsha. Robot from Bernstein, please go ahead. Your line is open.

Michael Miebach: Right. You know, I couldn't agree more, Harsita. Medium, you know, short-term, medium-term opportunity very much out there in the commercial POS space. There's still so much cash out there. There's so many checks out there, and there's been so many almost virgin markets where issuers, you know, where companies just haven't focused on this. So that is not new news. This is why we put out the market sizing as we did at our investor day. So this is significant. The way to go to market on that is really to build those issuer relationships. We have the product construct today. It's not about building new product in this space. So we have that. It's really finding the partners out there, finding the marketplaces that focus on small business to drive that business. If you take another lens at this, it's not just about small business.

Hey, good morning, Michael. I want to ask about commercial bows, which you've sized as a 16 trillion dollar opportunity, and God's only having about less than 10% market share. You have a very good business in the US. And, and I know you talked about this in a prepared remarks for a little bit, but maybe expand upon how you're taking this business International and the momentum you may be seeing their please like this is quite a kind of medium-term to Newton opportunity for you. Thank you. Alright.

You know, I, I couldn't agree more Harsha, the medium, uh, you know, short to medium-term opportunity. Uh, very much out there in in this, in the commercial posos space. There's still so much cash out there. There's so many checks out there and there's been so many almost virgin markets where issuers uh, you know where where companies just haven't focused on this.

Michael Miebach: I mentioned in my comments earlier, there is the fleet card business, which we're the leader in this business. That's, again, it's a leading product. And we're differentiating on that. We're pushing that around the world as well as other, you know, in other regions, this starts to come in focus. So the whole wave of digitization, the pressure on profitability, the rebalancing of supply chains, companies are looking for solutions that make running their business easier, and this is where this comes in. You know, for example, it's very much about being paid faster as a small business. That's what cards does for them. And that is a very helpful thing. So overall, it's a pretty clear go-to-market. It's not rocket science, but we are differentiated on some of our solutions, fleet card and so forth, and we've been at it a long time.

So, that is not new news. This is why we put out the market sizing, as we did at our investor day. So this, this is significant the way to go to market on. That is really to you build those issue or relationships. Uh, we have the product construct today. It's not about building new products in this space, so we have that, it's really finding the partners out there. Finding the marketplaces that focus on small business to, to drive that to drive that business. If you take another lens, that this is not just about small business. I mentioned, uh, my comments, uh uh, in my comments earlier, there is a fleet card business which where the leader in this business, that's again, it's a leading product and we're differentiating on that and pushing that around the world as well as other, you know. In other regions this starts to come in Focus. So the whole wave of digitization, the pressure pressure on profitability, the rebalancing of Supply chains companies are looking for solutions that make running their business easier and this is where this comes in. Um you know, for example um it's very much about being

Michael Miebach: We have now staffed this all up around the world with SME-focused specialized teams and product teams around the world. We're taking this very seriously, which is why we've put out very ambitious growth targets to penetrate that SAM that we shared at the investor day with you.

Paid faster as a small business, that's what cards does for them. Um, and that is a very helpful thing. So overall, it's a pretty clear go to market, it's not rocket science, but we are differentiated on some of our Solutions fleet card and so forth. And we've been added at a long time. We have now staffed, this all up around the world with SME, focused, special, specialized teams, and product teams around the world. We taking this very seriously which is why we put on out a very ambitious uh growth targets to you know pain.

That Sam that we shared at the investor day with you.

Julie Ann: Our next question comes from Tingjin Huang from JPMorgan. Please go ahead. Your line is open.

Okay.

Our next question comes from tingen hang from JP Morgan. Please go ahead, your line is open

Sanjay Sakhrani: Hi, nice results here. Just on the upside in the quarter on revenue, it sounds like it came from FX volatility and strength in value-added services. Just wanted to confirm that and understand what's performing better than expected, given pretty steady spend trends. And then quickly from Michael, if you don't mind, just are you any update on performance of recorded future? Any surprises there half a year in? Thanks.

Michael Miebach: Yeah, Tingjin, I'll take the first part of your question. You nailed it. The upside in Q2 was primarily driven by FX volatility. We had, you know, solid performance across the business. I don't want to make this only about FX volatility. Right at the end of the day, right, our payment network net revenues just performed. Our drivers continue to perform. There's strong consumer and business spending taking place. Our value-added services and solutions continue to perform. So all of that kind of is the bedrock, which allows for the strong performance overall. But the delta, which you're talking about in terms of potential upside, came through primarily from higher FX volatility. Now, I will say on FX volatility, that was in the early part of the quarter. That was mostly in April, a little bit in May in terms of the higher levels.

Hi nice results here just on the upside in the quarter on Revenue. It sounds like it came from FX volatility and strengthen and value added Services, just wanted to confirm that and understand what's performing better than expected. Given pretty steady spend Trends and I quickly for Michael, if you don't mind, just are you any updates on performance of record future? Any surprises there, half of your in thanks.

Michael Miebach: It has come back to what would be the historical levels of FX volatility. So God alone knows where that's going to go for the rest of the year, but that's really what's driving that.

Sanjay Sakhrani: And on recorded future, you know, if I can just remind everybody, thank you for the question, Tingjin. So world's largest threat intelligence company, 1,900 customers, 75 countries. So very significant. You see a lot of, you know, Fortune 100 companies in there as well as G20 governments. So it's an excellent mix. Based out of Boston, we love them. You know, pre our acquisition, we already started, we had a partnership with them on a couple of products. We launched a few things there. Now we are in post-acquisition stage. So we've hit the ground running. It is still very early days, obviously. But we're already putting out more products with them. Malware intelligence is one that I called out in the last quarter around this.

Its engine, I'll take the first part of your question. I you, you nailed it. It's uh, the the upside in Q2 was primarily driven by FX volatility, uh, we had, you know, solid performance across the business. I I don't want to make this only about FX volatility right at the end of the day, right? Our payment network, net revenues, just performed our drivers. Continue to perform the strong consumer and business spending taking place, our value added services and solutions, continue to perform. So all of that kind of is the Bedrock which allows for the strong performance overall. But the Delta which you're talking about in terms of potential upside came through primarily from higher FX volatility. Now I will say on FX volatility that was in the early part of the quarter that was mostly in April a little bit in May in terms of the higher levels it has come back to what would be the historical levels of FX volatility. So God Alone knows where that's going to go for the rest of the year. But that's really. What's driving that

And unrecorded future. Um, you know, if I can just remind everybody, thank you for the question to engine. Uh, so world's largest threat intelligence company 1900, customers 75, uh, countries so very significant. You see a lot of, uh, you know, uh, Fortune 100 countries, uh, companies in there as well as G20 governments. So it's a, it's an excellent mix based out of Boston, we love them. Um, you know,

Sanjay Sakhrani: And you know, the beauty here is they have a lot of data, which they get from all sources of the internet, as I mentioned earlier. At the same time, we have a lot of data. The combination of that is the magic sauce here. The effectiveness of us to help our customers predict, to understand targeted threats. You know, if you are a company and you're trying to defend against cybersecurity and you're doing this in a very broad fashion that is very expensive, what recorded future, what MasterCard is now helping our customer with is identifying where the threat vectors actually are. So you can be much more targeted in your response. That is, first of all, more effective from reducing cybersecurity risk. At the same time, it's more effective from a cost perspective. So that's a really winning proposition. We're excited about that.

Acquisition. We already started. We had a partnership with them, on a couple of products. Uh we launched a few things. There now, we are in post acquisition stage so we've had hit the ground running. It is still very early days obviously. But we're already putting out uh, more products with them malware intelligence is 1 that I called out in the last quarter, um around. Uh this you know the beauty here is they have a lot of data which they get from all sources of the internet. As I mentioned earlier, at the same time, we have a lot of data, the combination of that is the magic sauce here. The effectiveness of us to help our customers predict, um uh to understand targeted threats.

Sanjay Sakhrani: The teams are putting these, you know, are very busy on the product side to put this out. At the same time, there's obvious synergies of MasterCard's reach with our clients to take these differentiated products and take them to the market. At the same time, we have a whole set of security solutions that we can sell and we want to sell and we will sell into the 1,900 customers and the new customers that they will gain. So this is a very natural extension of our multi-layered security solution strategy to go into threat intelligence, which is now the state of the art.

You know, if you are a company and you're trying to defend against cyber security and you're doing this in a very broad fashion fashion, that is very expensive. What recorded future, what MasterCard is now helping our customer with this, identifying where the threat vectors actually are so you can be much more targeted in your response. That is first of all, more effective from reducing cyber security risks at the same time, it's more effective from a cost perspective. So that's a really winning proposition. Uh, we're excited about that. The teams are putting these, uh, you know, our very busy on the product side to put this out. At the same time, there's obvious synergies of massacres. We reach with our clients to take these differentiated products and take them to the market. At the same time, we have a whole set of Security Solutions that we can sell and we want to sell and we will sell into the 1900 customers and the new customers

That they will gain. So, uh, this is a very natural extension of our multi-layered, uh, security solution strategy to go into threat intelligence, which is now, uh, the state of the art.

Darrin Peller: Thank you.

Julie Ann: Our next question comes from Trevor Williams from Jefferies. Please go ahead. Your line is open.

Thank you.

Sanjay Sakhrani: Great. Thank you. On cross-border volume, Sachin, I heard the callouts on the Middle East and the portfolio lappings. But outside of Q4 last year, cross-border has been consistently slowing. I mean, you're at, I think, 12% ex-intra-Europe growth in July. With the mix you have today between travel and e-commerce, I'm just curious kind of what you guys view as the right normal level of growth for each of those two buckets and then for the overall. So I'm just trying to get at kind of if we assume a stable macro, what you guys think the floor should be for cross-border volume growth. Thanks.

Our next question comes from Trevor Williams from Jeffrey. Is, please go ahead. Your line is open.

Michael Miebach: Yeah, Trevor. So look, I mean, we do not put out long-term guidance as it relates to cross-border. But what I will share with you is the following, which is let's just step back and think about our cross-border portfolio and think about the fact that it is not concentrated to any single corridor. Last earnings call I kind of shared with all of you that there's no single cross-border corridor pair which represented greater than 3% of cross-border volume in 2024. So there's a high degree of diversification which we've got. So we're not necessarily susceptible to big swings in any one jurisdiction. But it's important to note that this diversification is by design as opposed to happenstance, point number one. Number two, the base proposition of cross-border is something which is very valued by consumers even today, and consumers as well as businesses.

Great. Thank you on cross border volume such and I I heard the call outs on the Middle East and the portfolio lapping, but outside of Q4 last year, cross border has been consistently slowing. I mean, you're at, I think 12% Accenture, Europe, growth in July with the mix. You have today between travel and e-commerce. I'm just curious, kind of what you guys view as the right normal level of growth for each of those 2 buckets and then for the overall. So, I'm just trying to get at kind of if we assume a stable macro what you guys think the floor should be for cross border. Volume growth. Thanks.

Yeah driver. So look, I mean we do not put out long-term guidance as it relates to cross border but what I what I will share with you is the following which is, let's just step back and think about our cross water portfolio and think about the fact that it is not concentrated to any single Corridor last um earnings call. I kind of shared with all of you that there's no single cross border Corridor pair which represents represented greater than 3% of cross border volume in 2024. So there's a high degree of diversification which we've got. So we're not necessarily susceptible to Big swings in any 1 jurisdictions to note that this

Michael Miebach: And so that continues to grow pretty well. Number three, there's great diversification which is there between travel and non-travel. And you can see that because at the end of the day, just by having that diversification, you're still seeing pretty good overall cross-border volume growth, notwithstanding the fact that travel has actually been impacted a little bit by the factors which I kind of talked about. And just as a few data points for you, our cross-border travel volumes represent roughly 60% of total cross-border volumes. Our cross-border non-travel, what we call cross-border card not present ex-travel, is about 40%. So it's pretty good and well diversified. And you can see the card not present ex-travel cross-border is growing at roughly about 20% there. So my overall kind of message to you is high level of diversification, strong value prop, and the business continues to perform well.

Diversification is by Design, as opposed to happen. Stance Point number 1. Number 2, the base proposition of crossborder is something, which is very valued by consumers even today and consumers, as well as businesses. And so that continues to grow pretty well number 3, there's great diversification which is there between travel and non-travel. And you can see that because at the end of the day um, is by having that diversification you're still seeing Pretty good overall cross border, volume growth. Notwithstanding the fact that travel has actually been impacted a little bit by by the factors which I cannot talk about. And just as a few data points for you uh our cross border. Travel volumes represent, roughly 60% of total cross border volumes. Our cross border. Non-travel. What we call cross border card. Not as an X travel is about 40%, so it's pretty good. Well Diversified and you can see the, the card not present. Next travel cross border is growing at roughly about 20% there. So my, My overall kind of message to you is high level of diversification.

Michael Miebach: And you know what? The reality is I can't really tell you as to where this is, but it has been growing at a rate faster than our overall growth rates for GDP. You've seen that come through. And that's really where I feel like, you know, we are best positioned to continue to capitalize. Our company remains very focused, not only to win the right portfolios, but to drive the best optimization of our existing portfolios. And that's what we'll continue to do.

Strong value prop, and the business continues to perform well. And you know what, the reality is. I can't really tell you as to where this is, but it has been growing at a rate faster than our overall growth rates for gdv, you've seen that come through, um, and that's really where I feel like, you know, we are best positioned to continue to capitalize our company. Remains very focused, not only to win the right portfolios but to our drive, the best optimization of our existing portfolios and that's what we'll continue to do.

Julie Ann: Our next question comes from Dave Koenig from Baird. Please go ahead. Your line is open.

Sanjay Sakhrani: Yeah. Hey, guys. Thank you. Maybe on client incentives, one thing we just noticed, for many years, client incentives grew faster than revenue. But the last three quarters, they've actually been growing the same or even a little slower in some cases. I'm wondering, is this a new trend, or maybe how should we think about this and what's happening?

Our next question comes from Dave, calling from Beard. Please go ahead. Your line is open.

Sachin Mehra: Sure. So Dave, here's what I'd say. I would say that as part of our last call, I had mentioned that we expected the cadence of our rebates and incentives as a percentage of our payment network assessments to start to pick up in the second half of the year. And so if I would tell you sequentially, I would tell you that in Q3, we expect rebates and incentives as a percentage of our payment network assessments to be sequentially higher compared to Q2. The point really is the market is still a very competitive market. We continue to be very active in that market. We have a very strong pipeline of deals. Nothing has changed as far as I'm concerned in terms of how we're approaching the market and what we're doing in terms of trying to win the right portfolios.

Yeah, hey guys, thank you and maybe on on client incentives, 1 1 thing, we just noticed for many years client incentives, grew faster than than Revenue, but the last 3 quarters they've actually been growing the same or even a little slower in some cases. I, I'm wondering. Is this a new trend? Or maybe how, how should we think about this? And what's what's happening?

Sachin Mehra: And I'll emphasize this is not about winning every portfolio. This is about winning the right portfolios. A little bit of what you're also seeing in the CONTRA ratio, the rebates and incentives ratio we're talking about in the second quarter is being driven by the fact that the denominator, which is our payment network assessments, has been impacted or has been helped by higher FX volatility levels. So when you take those ratios into consideration, you've got to factor that in as you think about what this looks like on a going forward basis.

That, uh, we expected the the Cadence of our rebates and incentives as a percentage of our payment Network, assessments to start to pick up in the second half of the year. And, uh, so if I would tell you sequentially, I I would tell you that in Q3, we expect rebates and incentives as a percentage of our, uh, payment Network assessments to be sequentially higher compared to Q2. Um, the point really is the market is still a very competitive market. We continue to be very active in that market. We have a very strong pipeline of deals. Nothing is changed. As far as I'm concerned in terms of how we're approaching the market and what we're doing in in terms of trying to win the right portfolios and I'll emphasize this is not about winning every portfolio. This is about winning the right portfolios, a little bit of what you're also seeing in, um, the the contrary ratio of the rebates and incentives ratio. We're talking about in in the second quarter is being driven by the fact that the denominator, which is our payment Network, assessments has been impacted or has been helped by higher FX volatility levels. So when you take those ratios and

Sanjay Sakhrani: Yeah. Thank you.

Into consideration. You got to factor that in as you think about what this looks like on a going forward basis.

Sachin Mehra: Sure.

Julie Ann: Our next question comes from Will Nance from Goldman Sachs. Please go ahead. Your line is open.

Yeah, thank you. Sure.

Sanjay Sakhrani: Hey, guys. Good morning. I appreciate you taking the question. I wanted to ask about some of the consumer data fees that some of the large banks are talking about applying. I guess specifically, how are you thinking about the impact of those fees on Cenicity? And then big picture, you know, as a consumer who relies on a lot of these services that use Cenicity and other vendors to aggregate the data, you know, how am I and other consumers better off from the banks kind of charging you and other data providers for access to their data? Thanks.

Our next question comes from, Will nonce from Goldman Sachs, please go ahead. Your line is open.

Hey guys, good morning. Appreciate you taking the question. Uh, I wanted to ask about some of the consumer data fees, that, uh, some of the large banks are are talking about applying, I guess. Specifically, how are you thinking about the impact of those fees on finicity and then big picture, you know, as a consumer, who relies on a lot of these services that use finicity and other vendors to aggregate the data, you know.

Michael Miebach: Right. Well, this is a great question. Important topic. You've heard us talk about open finance for years, even before the acquisition of Cenicity. So this whole idea that a consumer can use their data footprint to avail better services in the finance space, and you know, if you go from open finance to open data in any other space, I think it's a good notion and that generally resonates and will not go away. You see this, you know, you see it in Europe. We're very active in the open banking, open finance space in Australia and here in the US. So this more recent conversation, I mean, we've all seen the coverage on this. You know, we don't really have full visibility here on what is being specifically considered by a number of banks.

How am I and other consumers better off from the banks kind of charging you and other data providers for access to their data. Thanks.

All right. Well, this is a great question. Um, important topic. You've heard us talk about open finance, uh, for the years.

Um, even before the acquisition of finicity. Uh, so this whole idea that uh consumer can use

Their data footprint to uh Avail better Services uh in in the finance space. And you know if you go from open finance to open data in any other space I think it's a good notion that that generally resonates and will not go away. You see this uh you know you see it in Europe where very active and in the open banking open finance space use in Australia. And here in the US

So, this more recent conversation, I mean we've all seen. Uh, we've seen the coverage on this. Um

Michael Miebach: I can tell you, you know, Chase and other banks are fantastic partners of ours, so that's for sure true. So we'll have to see where this goes. Our fundamental belief that, you know, consumer consented data and their ability to share that is very important, and that will be a winning proposition over time. Various economic considerations out there that, you know, are being discussed in the coverage, that will have to be figured out, but it's not something that we have been engaged in at this point. So we'll see. We have to work it through. Fundamentally, an important space, and you should be able to do exactly what you just said, Will.

Sanjay Sakhrani: Got it. Appreciate you taking the question, Michael.

No, we don't really have full visibility here on, uh, what is, uh, being, uh, specifically considered by a number of banks. I can tell you, um, you know, Jay's and other banks are fantastic partners of ours, so that's for sure. Um, so we'll have to see where this goes. Our fundamental belief is that direct, you know, consumer-consented data and their ability to share that is very important, and that will be a winning proposition over time. There are various economic considerations out there that, you know, are being discussed in the coverage that will have to be figured out, but it's not something that we have been engaged in at this point. Um, so we'll see; we have to work it through. Um, fundamentally, it's an important space, and you should be able to do exactly what you just said.

Julie Ann: Our next question comes from Reina Kumar from Oppenheimer. Please go ahead. Your line is open.

appreciate you taking the question, Michael.

Sanjay Sakhrani: Good morning. Thanks for taking my question. Just based off of some of my recent channel checks, it looks like that Pix in Brazil is being used by almost everyone there. Can you give us an update on your progress in gaining market share in regions that have strong A to A players like Pix in Brazil and UPI in India, and what strategies and products are you employing to capture the cash transition in these countries? Thank you.

Our next question comes from Rhea Kumar from Oppenheimer. Please go ahead. Your line is open.

Michael Miebach: Right, Reina. Yeah, great question. And certainly a topic that we have been focused on. I gave you some examples in the prepared mark, what sets us apart in winning against, you know, domestic schemes and so forth. So we continue to try to differentiate our product set. You asked specifically about Brazil and countries like that, so maybe that is a good opportunity to just illustrate what I just said a little more in the context of Brazil. So here is a system that has been put out very much with one focus in mind, which was to address some financial inclusion aspects and has been very successful at that.

Good morning. Thanks for taking my question. Um, this space office of my recent Channel checks, it looks like that picks in Brazil is being used. Um, by almost everyone there, can you give us an update on your progress and gaining market, share and readings that have strong a TOA players, like picks and Brazil and UPI in India and what strategies and products are you employing to capture uh the uh cash transition in these countries. Thank you.

Michael Miebach: At the same time, we have strong partnerships in the Brazilian markets with banks, with fintechs across the board, and we've been driving our business to put better solutions into the hands of consumers, and that is always a focus on all consumers. So consumers that graduate into the Brazilian digital economy through Pix, you know, you could see them over time graduating into our product set that we provide on the card side, et cetera. Now, what we've also been doing is you have to be very laser-focused on how you compete. And one thing that we just, as an industry and as a company, wanted to do a better job on is make sure that we have the latest state-of-the-art solution for online transactions in the market.

Michael Miebach: So the debit platform in Brazil, we have completely revamped and put out a new set of solutions out there that now, you know, Pix is also enabling consumers with their solution. And we wanted to make sure that we have a competitive product, which we now have in the hands of the banks in Brazil. So that continues. Pix is innovating on various other things, buy now, pay later, and so forth, and so are we. There's an excellent solution out there in the market already on installment payments. So that is very competitive as far as we can tell. There's recurring payment solutions that Pix is considering, and that's great, and we're seeing the benefit in that, and we have for a long time.

I'm graduating and to allow the products that we provide on the card side, Etc. Now, what we've also been doing is you have to be very laser focused on how you compete and 1 thing, that we just as an industry had and as a company wanted to do a better job on is, make sure that we have the latest state of the art solution for online transactions in the market. So, uh, the debit platform in Brazil, we we have completely revamped and put out a new set of solutions out there that now to, you know, with your pixel, you know, enabling consumers with their solution and we want to make sure that we have a competitive product, which we now have in the hands of the banks, uh, in uh, in Brazil. So that continues, uh, picks is innovating on various other things by now for later and so forth. And so are we there's an excellent solution out there in the market already on, you know, on installment payments. Um, so that is very competitive as far as we can tell.

Michael Miebach: And there's a very strong proposition, particularly on credit cards that are on file in the market, which allows us to win and continue to drive this business. The business continues to see very healthy growth rates for us in Brazil. You know, so from that perspective, I think it's just, you know, our general approach, provide choice, partner wherever we can, compete effectively in the market. So that's the game. And it's a similar game in India on UPI. We always look to partner wherever we can and otherwise have a good solution out there for our partners. So I see tremendous opportunity in the overall growth. This is a very effective digital economy in Brazil that continues to grow at strong rates, and we're a big player there.

Um, there's a recording—a recurring Payment Solutions that, uh, you know, picks us considering, um, and that's great. And we're seeing the benefit in that, and we have for a long time. And there's a very strong proposition, particularly on credit cards that are on file in the market, which allows us to win and continue to drive this business. The business continues to see very healthy growth rates for us in Brazil. Um, you know, um, so from that perspective, I think it's just, you know, our general approach: provide choice, partner wherever we can, compete effectively in the market. Uh, so that's the game. And it's a similar game in India on UPI; we always look to partner wherever we can.

Otherwise, we have a good solution out there for our partners. So, um, I see tremendous opportunity in the overall growth. This is a very effective digital economy in Brazil that continues to grow at strong rates, and we're a big player there.

Julie Ann: Our next question comes from Craig Moore from ST Partners. Please go ahead. Your line is open.

Darrin Peller: Yeah, hi. Good morning. Thanks for taking the questions. Question, quick one on Pillar 2. You know, the administration's been talking about reaching deals with certain countries to eliminate the Pillar 2 issues for US companies. Any thoughts on that would be helpful. And you know, if we can go back to your digital identity and OFF solutions, you know, it's our view that financial services, due to the high regulatory requirements in this space, will be leaders in this category. Can you talk about what segments you're seeing the most growth or most demand from? You know, we hear a lot about crypto companies requiring digital OFF solutions and others. So if digital identity solutions, so if you can comment a little there, that would be great.

Our next question comes from Craig Moore from Ft Partners, please go ahead. Your line is open

Yeah. Hi. Good morning. Thanks for taking the questions. Um, quick one on Pillar 2. Um, you know, the administration's been talking about...

Reaching deals with certain countries to eliminate the pillar 2 issues for us companies. Any thoughts on? That would be helpful. Um, and you know if we can go back to your digital identity and off Solutions, you know, it's our view that Financial Services due to the high regulatory requirements.

Uh, in the space will be leaders in in this category. Can you talk about?

Michael Miebach: Yeah, Craig, why don't I take your question on Pillar 2 first? So look, I mean, we've seen the same news you're seeing as it relates to some dialogue around potentially having an exception for US-based multinationals from the impact of Pillar 2. The reality is there's a lot of work still to be done between where we are today to that being realized. And let me just spend two minutes on this, right? At the end of the day, the way it works is if there are going to be any changes in terms of having any exceptions for US-based companies from Pillar 2, that's got to happen not only in the nature of the OECD countries agreeing upon it, but every individual country which has enacted legislation already to implement Pillar 2 has to now reverse the impact of that legislation.

What segments, you're seeing the most growth or most demand from, you know, we hear a lot about uh, crypto companies. Requiring digital off off Solutions and others. So uh, if uh, did you want identity Solutions? So if you can comment a little there, that would be great.

Michael Miebach: So this is really, really important because the reality is there's work between when the announcement's made, when there's clarity given as to how it's going to be implemented to the actual implementation of that. So I guess the best way to describe this is there's been local legislation, let's say, passed in Singapore, which would say that we as a company now pay a 15% tax rate in Singapore, right? Earlier, we had an incentivized tax rate out there. We now pay starting 2025 a 15% tax rate there. There has to be a change in legislation locally to take place to reflect what you just alluded to in the nature of this exception for US multinational countries. That being said, it's not only about Singapore.

Yeah. Craig, why don't I take your question on Pillar 2 first? So, look, I mean, we've seen the same news you're seeing as it relates to some dialogue around potentially having an exception for U.S.-based multinationals from the impact of Pillar 2. The reality is, there's a lot of work still to be done between where we are today and that being realized. And let me just spend 2 minutes on this. Right at the end of the day, the way it works is if there are going to be any changes in terms of having any exceptions for U.S.-based companies from Pillar 2, that's got to happen not only in the nature of the OECD countries agreeing upon it, but every individual country which has enacted legislation already to implement Pillar 2 has to now reverse the impact of that legislation. So this is really, really important because the reality is there's work between when the announcement is made, when there's clarity given as to how it's going to be implemented, and the actual implementation of that. So, I guess the best way to describe it is...

Michael Miebach: It's also about other countries who have actually put in this legislation who have to change it because there was a component of Pillar 2, which is called UTPR, which basically entitled other countries in the chain to collect taxes to the extent that they were not topped up to 15% as a result of a particular jurisdiction. So for example, if Singapore changes legislation and took, you know, took the tax rate down again, that doesn't mean we'll get the benefit of the lower tax rate. It's because all the other countries are now entitled to true up the gap between what Singapore's rate is and the 15% rate is. So all of those countries have to reverse that legislation before we start to see the impact of that come through. Complicated topic. Happy to talk in more detail if you'd like afterwards.

This is there's been local legislation, let's say passed in Singapore which would say that we as a company. Now pay uh 15% tax rate in Singapore, right earlier. We had an incentivized tax rate out there. We now pay starting 2025 and a 15% tax rate there. There has to be a change in legislation locally to take place to to reflect what you just alluded to in the nature of this exception uh for us multinational countries. That being said, it's not only about Singapore. It's also about other countries.

Sanjay Sakhrani: Good. And on.ID.

if you'd like afterwards,

Speaker 1: You know, this is, if you think about a tech stack and, you know, elements of the tech stack for the digital economy. So we look at this and say we're powering the digital economy, we're powering digital commerce. And digital identity is a fundamental element of what needs to happen in that kind of world. So who's behind the transaction? Who is at the other end of the transaction? And that is not just about payments, exactly to your question. This is about onboarding on anything. It could be a merchant onboarding a consumer. Today, this thing, I'm going to send you an email and you confirm that, that is not identifying your consumer. All things can go wrong on that. So digital identity, proper digital identity, is really critical. Now, the game of digital identity is getting harder and harder with technology.

Go ahead and on on, um, ID. Yeah, this is if you think about a tech stack and and you know,

Speaker 1: I was talking earlier about cybersecurity risk and so forth. So the stakes are increasing and you got to get better at it. The good thing is we've been at this for a long time. And this is initially around MasterCard payments and transactions, but we have very specific examples out there. For example, you heard us talk about in the open banking space, how we're taking a digital identity solution, coupling that with open banking connectivity to make it clear that data can actually be exchanged in a very safe fashion. I gave you one of my favorite use cases in this, and this is MLB, Major League Baseball. So if you want to vote for the All-Star game, what is happening is that our identity solutions behind it, this is actually you voting and not your brother and your cousin and so forth.

Elements of the text stack for the digital uh, economy. So, we look at this and say, we're powering the digital economy. We powering digital Commerce and digital identity is a fundamental element of what needs to happen in that kind of world. So, who's behind the transaction? Who is at the other end of the transaction? And that is not just about payments. Exactly. To your question, this is about on boarding on anything. You could be a, it could be a merchant on boarding a consumer today. This thing I'm going to send you an email and you confirm that that is not identifying your consumer. You know, all things can go wrong on that. So digital identity, proper digital identity is really critical. Um, now, um, the game of digital identity is getting harder and harder with technology. I was talking earlier about cyber security risk and so forth. So the stakes are increasing and you got to get better at it. The good thing is we we've been at this for a long time. Um and this is initially around uh Massacre payments and transactions. But we have very specific examples out there. Uh for example you uh heard us talk about in the open banking space, are we?

Taking a digital identity solution, coupling that, uh, with uh, um, open banking connectivity to make it clear that data can actually be uh safe Exchange in a very safe fashion. I gave you 1 of my favorite use cases in this and this is um, MLB Major League Baseball.

Speaker 1: So there's a whole wide range of use cases that go way away from our core business into a whole new set of new cases. So it's really an enabler of the overall digital economy. And you see us, you know, if you draw a concentric circle around the transaction, the payment transaction being in the center, we try to play further and further out to be truly powering the digital economy.

So, if you want to vote for the All-Star Game, what is happening is that our identity Solutions behind it? This is actually you voting and not your brother, and your cousin, and so forth. So, uh, there's a whole wide range of use cases that go way away from our Core Business, uh, into a whole new set of new cases. So, it's really an enabler of the overall digital economy. And you see us, you know, if you draw concentric circles around the transaction, the payment transaction being in the center, we try to play further and further out uh to be truly powering the digital economy.

Speaker 2: Our next question comes from Nate Svensson from Deutsche Bank. Please go ahead, your line is open.

Julie Ann: Hi, good morning. Thanks for the question. I wanted to ask on the US consumer here. So on the month-to-date trends, the step up in volume growth in the US stood out to us, relatively stable versus Q2, but a step up from 4% in June to 8% in July. I was hoping you could dig a little more into the trends you're seeing there. Could be a days mix thing, online promotional activity, but wondering if there's anything else under the hood you're seeing that might explain the acceleration. And then I know you called out stability in mass market versus affluent consumers, but any verticals or areas of spend where trends have evolved here?

Speaker 1: OK, sure, Nate. So when I take your question, so the impact on that 4% you're seeing in June is being driven by the mix of calendar days as well as the timing of Social Security payments, which is something just between, which actually varies between June and July. That being said, I will say what we're seeing in the first four weeks of July is strength in the US consumer. I mean, there's no hiding from that, right? The reality is, and again, four weeks don't make the quarter. That's, I mean, that's one thing which, you know, we've just got to keep an eye on. But right now, if I strip out the impact of this timing stuff, there's still underlying strength in the US consumer that we're seeing come through. So I think you want to keep that in mind, and we'll track it closely.

Speaker 1: We do our best estimates in terms of the guide we provided you to capture what we're seeing in the nature of the latest trends. And that's what I would say as it relates to the US consumer. On your second question on mass versus affluent, look, overall what we're seeing is good spending across both mass and affluent. I mean, really, at the end of the day, we're not seeing, you know, and again, I will be the first to preface that the data we have is our derived data. It's based on our product categories and our product codes, right? That's how we figure out what we think is mass and what is affluent. We obviously are not directly in touch with the consumer. That's our customers who are in touch with the consumer.

Speaker 1: But based on the data that we see, we're seeing pretty steady trends across both mass and affluent.

In the first 4 weeks of July is strengthen the US consumer? I mean, there's no hiding from that, right? The reality is, and again, 4 weeks don't make the quarter. That's I mean that's 1 thing which, you know, we've just got to keep an eye on it. But right now is if I strip out the impact of this timing stuff, there's still underlying strength in the US consumer that we're seeing come through. So I I think you want to keep that in mind. Uh and we'll we'll track it closely. We do our best estimates. In terms of the guide, we provided you to capture what what we're seeing in the nature of the latest trends. And that's, that's what I would say. As it relates to the US consumer on your second question on mass versus affluent. Um, look overall, what we're seeing is good spending across both mass. And that 1, I mean, really at the end of the day we're not seeing you know. And again, I I will be the first to preface that the data we have is our derived data. It's based on our product categories and our product codes, right? That's how we figure out what we think is mass. And what what does affluent we obviously are not directly in touch with the consumer. That's our customers who are in touch with the consumer.

Julie Ann: I'll just add a point, a tangential point here, is these kind of questions we get all the time from our customers and from governments around the world. And we've built a really nice engagement practice through our advisors' business and through the MasterCard Economics Institute to really, these prevalent top-of-mind questions and what's the consumer doing here, what is this sector doing there, and so forth, have been a really particularly important differentiator for us as we engage at the highest level on a strategic dialogue with customers, governments, et cetera.

So based on the data that we see, we're seeing pretty steady Trends, across both mass and affluent.

I just add a point on tangential Point here, is these kind of questions? We get all the time from our customers from governments around the world. And we filled a really nice engagement practice through our advisors business and throughout the MasterCard, economics Institute to really these prevalent top of Mind questions. And what's the consumer doing here? What is this sector doing there and so forth? It's been a really particularly important differentiator for us is we engage at a highest level and the Strategic dialogue with customers governments Etc.

Speaker 2: Our next question comes from Fahad Khoonwar from Redburn Atlantic. Please go ahead, your line is open.

Devin Corr: Hi, both, and thanks for the color on the call. I've had a question on pricing, actually. First, specifically on that, I know you called out deepening customer penetration and you called out securities and customer engagement. But how much has pricing been a factor in this quarter versus kind of that deepening share of wallet? And how much more is there for pricing going forward? And I guess if I widen that question a little bit, we think about pricing in your other businesses, CMS or your consumer payments business. Do you still see pricing potential as you head into 2026, or is it remaining, or does it stay quite competitive? Thank you.

Our next question comes from Fahad kunwar, from Redbarn Atlantic. Please go ahead. Your line is open.

Hi both.

Speaker 1: Sure, Fahad. So look, I mean, at the end of the day, the way I would actually answer your question is the following. We will have the ability to price for the value we deliver. So long as we continue to deliver the value we're delivering, we'll have the ability to price. And that's what we've done historically, and that's what we'll do on a going forward basis. I would say that, you know, again, I don't necessarily think about this on a quarter-over-quarter basis. I think about this as what is the long-term trajectory of our product proposition rollouts and what's the ability for us to price. Sometimes you roll out products earlier, you might actually, you know, layer in the pricing at a later point in time. In other instances, you'll roll out the product and you'll put in the requisite pricing at the same point in time.

Being customer penetration and you you called out security is, um, and customer engagement. But um, how much has pricing been a factor in this quarter versus kind of that people in share of wallet and how much more to go is it required from going forward and I guess if I if I widen that question a little bit we think about pricing in your other businesses um CMS or your consumer payments business. Um do you still see price from potential as you head into 2026 or is it remaining? What does it stay quite competitive? Thank you.

Speaker 1: So all of this is all very strongly tied back to what is the value we're delivering. So to your question about whether we see the potential on a going forward basis, the answer is, yeah, so long as we continue to do our jobs, which is to continue to deliver value in the market.

Devin Corr: Thanks, Joe. I think we have time for one more question.

Sure, Pat. So look, I mean at the end of the day, the way I would actually answer your question is the following, we will have the ability to price for the value, we deliver so long as we continue to deliver the value. We're delivering, we'll be have have the ability to price and that's what we've done historically and that's what we'll do on going forward basis. I would say that, you know, again the I I I don't necessarily think about this in a quarter of a quarter basis. I think about this as what is the long-term trajectory of our product proposition rollouts and what's the ability for us to price? Sometimes you roll our products earlier, you might actually, you know, layer in the pricing at a data point in time rather instances you roll roll out the product and you'll you'll put put in the requisite pricing at the same point in time. So all of this is all very strongly tied back to. What is the value? We're delivering so to your question about whether we see the potential of going forward basis is the answer is. Yeah as long as we continue to do our jobs, which is to continue to deliver value in the market.

Speaker 2: Our last question will come from Ken Sukovsky from Autonomous Research. Please go ahead, your line is open.

Thank you. I think we have time for 1 more question.

Our last question will come from.

Julie Ann: Hey, good morning. Thanks for taking the question. Maybe just a follow-up on that pricing question. I mean, you took some price, I think, in various parts of the business. I think it was starting in 3Q of '24, you know, particularly around, you know, tokenization, I think some of the other lines. You know, should we expect to start lapping some of those pricing initiatives in the second half? Maybe you could just remind us how you're thinking about that. Thank you.

Speaker 1: Yeah, Ken, I would tell you, first of all, you know, when you say we took price, we like to think about the fact that we delivered value in the third quarter of last year, which allowed us to actually price for the value we delivered. And to your question around lapping, I would say, yeah, and sure, I mean, you would see the lapping effect of that particular value delivery, which took place, for which we priced, happen in the second half of this year. But again, think about this in the nature of what is the cadence of value we can continue to provide, which will help us to actually, you know, bring in more value and more price for us to be able to actually continue to grow ourselves.

Hey, good morning. Thanks for taking the question. Maybe just a follow up on that pricing question. I mean, you, you took some price I think in in various parts of the business. Um, I think it was starting in 3Q of 24, you know, particularly around, you know, tokenization. I think some of the other lines, um, you know, should we expect, uh, to start lapping some of those pricing initiatives in the second half. Maybe you can just, um, remind us how you're thinking about that. Thank you.

Yeah. Can I, I would tell you first of all, you know, when you say we took price, we like to think about the fact that we delivered value. Uh, in the third quarter of last year, which allowed us to actually price for the value we delivered. And to your question around lapping, I would say. Yeah, sure. I mean, you would see the lapping effect of that particular value delivery, which took place for, which we priced happened in the second half of this year. But again, think about this in the nature of what is the Cadence of value we can continue to

Speaker 1: So the reality is, look, you've got to think about this in the context of, you know, when companies put out new products, when companies put out differentiated products, they have the ability to charge for the value delivered. And I'd say that's what we continue to do on a going forward basis as well.

Julie Ann: Right, you know, this is very true. So it's not about taking price, but providing value. And I think the key aspect is who we provide value to. We provide value to our existing customers. But you heard, you know, when we talk about our go-to-market in services, when we talk about our go-to-market for a whole set of payment solutions, it's about new customers, it's about new buying centers, it's about new markets. So our ability, where we take and create value, is there's a whole sea of opportunity out there. So for us, we continue to do that. That's how we build the business. So if you were asking your question, thinking about, is just one wallet? That's not. So our share of wallet is the world, is the whole global wallet, and we're going to drive value everywhere across the board.

Provide, which will help us to actually, you know, bring in more value and more price for for us to be able to actually continue to grow ourselves. So, the reality is look, you you got to think about this in the context of, you know, when companies put out new products, when companies put out differentiated products, they have the ability to charge for the values of liver. And I'd say that's what we continue to do on a going forward basis as well. Right? You know, this this is very true, uh so it's not about taking

Speaker 1: Makes sense. Thank you, Ken.

Price but uh providing value and I think the key aspect is who we provide value to, we provide value to our existing customers. But you heard, you know, when we talk about our go to market and services, when we talk our go to market for a whole set of Payment Solutions, it's about new customers about new buying centers. It's about new markets. So our ability where we take and create value is there's a whole sea of opportunity out there, so for us, we continue to do that, that's how we build the business. So if you were asking your question thinking about is just 1 wallet. That's not so our share of wallet is the world is the whole Global wallet and we're going to drive value everywhere across the board.

Julie Ann: All right, let's close out the call. So thank you very much again for all those questions. It was a pity to form, obviously, my opportunity to thank the 35,000 people here at MasterCard for driving this value all across and leave you all with wishing you guys enjoy the rest of your summer. Thank you very much. Speak to you next quarter.

Makes sense. Thank you, sir.

Speaker 2: This concludes today's conference call. You may now disconnect.

All right. Um, let's close out the call. So thank you very much again for all those questions. Uh, the painting in support obviously, uh, my opportunity to thank the 35,000 people here at MasterCard for a driving. This value all across uh and leave. You always wishing you guys enjoying the rest of your summer. Thank you very much speak to you next quarter.

this concludes today's conference call, you may now disconnect