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    MA
    Earnings call· Mar 2025(Q1 FY25)

    Mastercard Q1 FY25 earnings call MA

    May 1, 2025 Source

    Executive summary

    Mastercard Q1 FY25 — Strong Revenue Growth Driven by Payments Network and Value-Added Services

    Mastercard delivered a strong first quarter, driven by robust performance in its payment network and value-added services, with net revenues up 17%. The company continues to execute on secular payment opportunities, leveraging digital transformation in areas like Agentic AI and crypto. While monitoring macroeconomic uncertainties and geopolitical tensions, Mastercard emphasizes its diversified business model and expense management flexibility to sustain long-term growth.

    Highlights

    5

    • Net revenues increased 17% on a non-GAAP currency-neutral basis.

    • Adjusted net income grew 13% year-over-year.

    • EPS increased 16% to $3.73, including an $0.08 contribution from share repurchases.

    • Worldwide gross dollar volume (GDV) increased 9% year-over-year on a local currency basis.

    • Cross-border volume increased 15% globally, reflecting continued growth in travel and non-travel spending.

    Concerns

    3

    • Higher effective tax rate due to global minimum tax rules partially offset net income growth.

    • Operating expenses were lower than expected in Q1 due to cadence, with ramp-up expected later in the year.

    • Some moderation in cross-border travel observed in select Middle East and Africa markets and inbound U.S. travel.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2025 Net Revenue Growth (currency-neutral, ex-acquisitions)
    high end of a low double digits to low teens range
    high materiality
    High
    Full-year 2025 Net Revenue Growth (Acquisitions Impact)
    1 to 1.5 ppt
    medium materiality
    High
    Full-year 2025 Operating Expense Growth (currency-neutral, ex-acquisitions & special items)
    low end of a low double-digits range
    high materiality
    High
    Full-year 2025 Operating Expense Growth (Acquisitions Impact)
    approximately 5 ppt
    medium materiality
    High
    Full-year 2025 Non-GAAP Tax Rate
    20% to 20.5%
    medium materiality
    High
    Q2 2025 Net Revenue Growth (currency-neutral, ex-acquisitions)
    low teens range
    high materiality
    High
    Q2 2025 Net Revenue Growth (Acquisitions Impact)
    1 to 1.5 ppt
    medium materiality
    High
    Q2 2025 Operating Expense Growth (currency-neutral, ex-acquisitions & special items)
    low end of a low double digits range
    high materiality
    High
    Q2 2025 Operating Expense Growth (Acquisitions Impact)
    4 to 5 ppt
    medium materiality
    High
    Q2 2025 Other Income and Expenses
    expense of approximately $135 million
    low materiality
    High

    Operational metrics

    27
    Net Revenue
    17%YoY
    Q1 FY25

    Reflecting continued growth in payment network and value-added services.

    Adjusted Net Income
    13%YoY
    Q1 FY25

    Partially offset by higher effective tax rate.

    Operating Income
    19%YoY
    Q1 FY25

    Driven by strong revenue growth.

    Diluted EPS
    $3.7316% YoY
    Q1 FY25

    Driven by strong operating income growth, partially offset by higher effective tax rate.

    Share Repurchases
    $2.5B
    Q1 FY25

    Contributed $0.08 to EPS.

    Worldwide Gross Dollar Volume (GDV)
    9%YoY
    Q1 FY25

    Impacted by leap year in Q1 2024 (reduced Q1 2025 growth by over 1 ppt).

    U.S. Gross Dollar Volume (GDV)
    7%YoY
    Q1 FY25

    Impacted by the lapping of Citizens Debit portfolio migration to Mastercard in Q1 2024.

    Non-U.S. Gross Dollar Volume (GDV)
    10%YoY
    Q1 FY25
    Cross-border Volume
    15%YoY
    Q1 FY25

    In line with expectations, reflecting continued growth in travel and non-travel related spending. Impacted by leap year in Q1 2024 (reduced Q1 2025 growth by over 1 ppt).

    Cross-border Volume
    16%YoY
    YTD April 28

    Continued healthy growth.

    Switched Transactions
    9%YoY
    Q1 FY25

    Both card-present and card-not-present growth rates remain strong. Impacted by leap year in Q1 2024 (reduced Q1 2025 growth by over 1 ppt).

    Contactless Penetration
    73%
    Q1 FY25

    Aided card-present growth.

    Tokenized Transactions
    35%
    Q1 FY25

    Core to digital commerce and Agentic AI strategy.

    Cards in Force
    3.5B6% YoY
    Q1 FY25
    Payment Network Net Revenue
    16%YoY
    Q1 FY25

    Primarily driven by domestic and cross-border transaction and volume growth, including growth in rebates and incentives.

    Value-Added Services and Solutions Net Revenue
    18%YoY
    Q1 FY25

    Driven by scaling of security and digital executions, demand for consumer acquisition/engagement services, and underlying drivers/pricing.

    Value-Added Services and Solutions Revenue (Recurring Nature)
    85%
    last year

    Providing a stable baseline for growth.

    Domestic Assessments Growth
    12%YoY
    Q1 FY25
    Cross-border Assessments Growth
    18%YoY
    Q1 FY25
    Transaction Processing Assessments Growth
    17%YoY
    Q1 FY25
    Other Network Assessments
    $231M
    Q1 FY25

    Primarily relates to licensing, implementation, and other franchise fees; may fluctuate.

    Total Adjusted Operating Expenses
    14%YoY
    Q1 FY25

    Primarily driven by increased spending to support strategic initiatives. Lower than expected due to cadence of expenses.

    Mastercard Move Transaction Growth
    35%YoY
    Q1 FY25

    Strong demand for capabilities.

    AI-powered Fraud Detection Improvement
    40%vs Q1 last year
    Q1 FY25

    Enhanced decision intelligence detecting more fraud.

    AI-enabled Products in Value-Added Services
    1 in 3
    2024

    AI deeply ingrained in the business, leveraging data for performance.

    Cross-border Travel Volume Inbound China
    north of 100%vs pre-COVID levels
    current

    Recovery path for China.

    Cross-border Travel Volume Outbound China
    mid-80s, approximately 85%vs pre-COVID levels
    current

    Recovery path for China.

    Industry KPIs

    7
    MetricValueDetails
    Capital returns$2.5BUSD
    Cross border volume15%%
    Payments volume gdv9%%
    Client incentives rebateslower than expectations
    Cards in force credentials3.5Bcards
    Value added services revenue18%%
    Switched processed transactions9%%

    Product announcements

    5
    ProductTypeDetails
    Mastercard Agent Paylaunch
    Business Builderlaunch
    Mid-Market Acceleratorlaunch
    B2B Rate Managerlaunch
    Malware Intelligencelaunch

    Deals & partnerships

    26
    Microsoft, OpenAICollaboration on Mastercard Agent Pay to facilitate safe, frictionless, and programmable transactions across AI platforms and deliver smarter, more secure, and more personalized Agentic payments.

    Working together to scale and build trust in Agentic commerce.

    Kraken, OKX, BleapNew card issuance partners to allow consumers to spend cryptocurrencies, including stablecoins, at Mastercard acceptance locations.

    Part of Mastercard's end-to-end approach to advance crypto payments.

    NuveiCollaboration to enable the option for their merchants to settle payments in stablecoins.

    Fintech acquirer.

    CIMB NiagaLong-term partnership for Indonesia's second-largest private bank to transition their international branded consumer card portfolio to Mastercard.long-term

    Covers international branded consumer card portfolio.

    Grupo PromericaExpanding partnership across 8 countries in Latin America for incremental card issuance and utilization of Mastercard's consulting and data analytic capabilities.

    Leading regional financial group.

    MTN Mobile MoneyPartnership in Uganda to give subscribers the option to pay using card credentials without a physical card or bank account.

    Focus on unlocking cash and new consumers.

    Al Etihad PaymentsPartnership in UAE to launch co-badged debit and prepaid cards with the domestic scheme, Jaywan.

    Co-badged cards with Jaywan scheme.

    Wyndham RewardsLaunch of a new debit co-brand card.

    Travel vertical success.

    Spirit AirlinesRenewal of credit co-brand partnership and additional agreement to launch a new debit program.

    Travel vertical success.

    b1BANKAmong the first issuers to offer Mastercard's Business Builder program.

    Commercial point-of-sale solution.

    CitizensWorking to bring Mid-Market Accelerator to market in the United States.

    Commercial point-of-sale solution with plans to scale globally.

    CorpayNew partnership to enhance current corporate cross-border payment solutions with currency risk management and integrated large ticket capabilities. Also extended agreement for Corpay to exclusively offer Mastercard virtual card programs.

    Focus on invoice payment opportunity.

    HRS, CventStreamlining onboarding process for issuers to deliver embedded virtual card technology into their partner platforms.

    Platforms used by corporates for travel and event management.

    Odoo, StripeERP software company Odoo, in collaboration with Stripe, will exclusively issue Mastercard corporate cards integrated into Odoo's expand module.

    Available for users in more than 20 countries.

    SamsungPartnering to power their new wallet P2P offering, facilitating domestic transfers by tapping phones.

    Use case for Mastercard Move in person-to-person space.

    MoneyGram, InstaPay Technologies, CurfexAdding partners to support near real-time person-to-person cross-border remittances via Mastercard Move.

    Use case for Mastercard Move in person-to-person space.

    Checkout.comUsing Mastercard Move to help enable disbursement and payment use cases for the gig economy, insurance, and healthcare merchants.

    Use case for Mastercard Move in disbursements.

    WorldpayUsing Mastercard Move with multiple U.K. merchants to deliver faster refunds.

    Use case for Mastercard Move in purchase return payments.

    GalileoWill enable Ethoca alerts for most of their card portfolios and integrate Mastercard's open banking-powered capabilities onto their platform.

    Leveraging one-to-many distribution with global technology partners.

    VikingCloudGlobal cybersecurity company will distribute Mastercard's risk scoring and cybersecurity remediation capabilities to small business clients.

    Leveraging one-to-many distribution with global technology partners.

    FeedzaiExtending their use of Mastercard's consumer fraud risk solution, already live in the U.K. with 14 major banks.

    Financial crime prevention company.

    Tangerine BankUsing Mastercard's account opening identity solutions in Canada.

    Helps balance positive frictionless consumer onboarding with identity verification.

    ExperianMastercard's identity attributes and open banking solutions have helped Experian enhance their digital checking account offerings within Experian Smart Money.

    Focus on consumer onboarding.

    Sam's ClubMastercard helps power Sam's Club's loyalty rewards program.

    Focus on ongoing customer engagement and loyalty.

    First Abu Dhabi BankWorking to develop an AI-powered concierge integrated into the bank's Mastercard Offers platform.

    Focus on ongoing customer engagement and loyalty.

    Intesa SanpaoloUsing Mastercard's consulting expertise and analytics insights to optimize their program performance.

    Focus on business and market insight services for portfolio optimization.

    Risks & headwinds

    5
    Weakened Consumer and Business Sentimentso far this year

    primarily due to concerns surrounding the impact from tariffs and geopolitical tensions

    Mitigation: Well-diversified business (geographic, product, spend categories); closely manage expenses and have levers to pull; focused on executing short, medium, and long-term objectives.

    Moderation in Cross-border Travel Growthlatter half of Q1 and going into the first 4 weeks of April

    some moderation in select markets in the Middle East and Africa as they come off recent periods of extremely high growth; inbound into the U.S. and in terms of cross-border travel, you are seeing some level of moderation take place there

    Mitigation: Diversified business model means what is not coming into the U.S. is going into other regions (Europe, Middle East and Africa, Asia Pacific); no cross-border corridor pair represented more than 3% of total cross-border volume in 2024.

    Higher Effective Tax RateQ1 FY25 and ongoing

    due to the impact of the global minimum tax rules commencing in the current period

    Mitigation: Expect non-GAAP tax rate to be 20% to 20.5% for Q2 and full year based on current geographic mix.

    Timing of Rebates and IncentivesQ1 FY25, expected to normalize later in FY25

    lower rebates and incentives than what our expectations were in Q1, expected to actually occur as it -- as the year goes along

    Mitigation: Viewed as a timing issue; company remains active in the market and will continue to do necessary deals.

    Lapping of Prior Year Wins and PricingQ2 FY25 and beyond

    lapping of the wins we had last year, which are going to start to come through as the year progresses... more accelerated pace in Q2; lapping of certain amounts of pricing, which was put in place last year

    Mitigation: Factored into full-year guidance; diversified business and continued investment in growth opportunities.

    What to watch in Q2 FY25

    5

    Operating Expense Cadence

    Q2 FY25 and H2 FY25
    CurrentLower than expected in Q1 FY25 due to timing
    TargetRamp-up in Q2 and H2 FY25 as planned investments occur

    Why it matters

    Understanding the pace of investment and its impact on profitability and future growth drivers.

    operating expense in the first quarter came in slightly lower than what we had originally anticipated, primarily due to the cadence point, which you were mentioning out here, which is specifically as it relates to there are several areas in which we were expecting to actually incur expense in the first quarter.

    Q&A highlights

    6

    Analyst asked for more color on cross-border business mix (travel vs. e-commerce, U.S. inbound) and if the 3% corridor concentration statistic implies diversification.

    Sachin reiterated the diversification, noting no single corridor pair is more than 3% of total cross-border volume. He referenced previous disclosures that card-not-present and card-present cross-border were roughly 50/50, with 1/3 of card-not-present being travel-related, and that this mix generally doesn't change significantly. He also noted strong sustained growth in card-not-present ex-travel.

    “One of the reasons why we wanted to kind of share that statistic, which I did, which was around the fact that no cross-border corridor pair is greater than 3% of total cross-border volume, in 2024 was essentially to share with you that we have a very diversified portfolio.”

    asked by Harshita Rawat · answered by Sachin Mehra

    2 min read6 chapters

    Detailed Narrative

    01

    Resilient Business Model in Uncertain Environment

    Mastercard highlighted its diversified business model, both geographically and by product, as well as across discretionary and non-discretionary spend categories, providing resilience in an uncertain economic environment. Management noted solid consumer spending fundamentals, including low unemployment and wage growth outpacing inflation, despite concerns over tariffs and geopolitical tensions. The company is prepared to adjust expenses if needed.

    02

    Advancing Digital Commerce with AI and Crypto

    Mastercard is at the forefront of digital transformation, with 73% of in-person switched transactions now contactless and 35% tokenized. New initiatives like Agentic AI (Mastercard Agent Pay with Microsoft and OpenAI) and continued crypto payment advancements (stablecoin settlement with Nuvei, card issuance partnerships with Kraken, OKX, Bleap) aim to redefine commerce and expand into new markets like China with local tokenization.

    03

    Expanding Commercial New Payment Flows

    The company launched two new commercial point-of-sale solutions, Business Builder and Mid-Market Accelerator (with Citizens), to address varied business needs. Partnerships with Corpay enhance cross-border payment solutions and expand Mastercard Move's distribution. Virtual card technology is being scaled through B2B Rate Manager and integrations with platforms like Odoo (via Stripe), driving over 35% YoY transaction growth for Mastercard Move.

    04

    Strategic Investments in Value-Added Services

    Mastercard's third pillar focuses on diversified solutions in high-growth areas, with approximately 85% of value-added services and solutions revenues being recurring. Strategic partnerships with Galileo, VikingCloud, and Feedzai are expanding distribution and penetration of services like Ethoca alerts, risk scoring, cybersecurity remediation, and fraud solutions. AI is deeply ingrained, enabling approximately one-third of value-added services products in 2024, enhancing fraud detection by over 40% YoY.

    05

    Capital Allocation and Shareholder Returns

    During Q1 FY25, Mastercard repurchased $2.5 billion worth of stock, with an additional $884 million through April 28, 2025, contributing $0.08 to EPS. The company maintains a disciplined approach to capital allocation, balancing investments in growth opportunities with shareholder returns, while monitoring the external environment and having levers to adjust expenses.

    06

    Impact of Capital One-Discover Deal

    Management confirmed that its full-year guidance contemplates the potential impact of Capital One's stated intention to migrate its debit portfolio to the Discover network. While acknowledging the ongoing strong relationship with Capital One in other areas, Mastercard is prepared for potential competitive dynamics and will update if there are significant changes to its estimates.

    AI-generated summary of the company’s earnings call. Not investment advice.