Mastercard Incorporated Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Results: Net revenues were up 15% overall, and value-added services and solutions net revenue was up 22% Y/Y on a non-GAAP currency-neutral basis. The macroeconomic environment was supportive with healthy consumer and business spending.
• Wins and Partnerships: Multiple co-brand wins with large airlines and retailers, renewed strategic partnership with Nordea, Mastercard as neobank's exclusive network partner in the U.S., launch of Mastercard World Legend card and Mastercard Collection.
• Strategic Priorities:
  • Consumer Payments: Targeting cash/check flows in under-penetrated verticals (e.g., rent) and expanding closed-loop payment networks (e.g., transit systems in Italy, Japan, China).
  • Agentic Commerce: Enabling agents to facilitate transactions via Mastercard's payment network, working with OpenAI, Google, Cloudflare, etc., with U.S. Bank and Citibank cardholders already using Agent Pay.
  • Services: Expansive services portfolio including security, consumer engagement, and business/market insights; innovations like on-demand decisioning and Mastercard merchant cloud offering.

Segment Performance

• Payment Network: Net revenue increased 10%, driven by domestic and cross-border transaction and volume growth, including rebates and incentives.
• Value-added Services and Solutions: Net revenue increased 22%, with acquisitions contributing approximately 3 ppt, and underlying drivers such as security, digital, authentication solutions, consumer acquisition and engagement services, and business and market insights accounting for the remaining 19%.

Guidance

• Q4 2025: Expect net revenue growth at the high end of low double-digits range (currency-neutral, excluding acquisitions), acquisitions to add 1-1.5 ppt to net revenue growth, foreign exchange tailwind of 4-4.5 ppt, OpEx growth at low double-digits range (currency-neutral, excluding acquisitions and special items), acquisitions to add 4-5 ppt to OpEx growth, and foreign exchange headwind of ~2 ppt.
• Full Year 2025: Expect net revenues to grow in low teens range (currency-neutral, excluding acquisitions), acquisitions to add 1-1.5 ppt, foreign exchange tailwind of 1-2 ppt, OpEx growth at low end of low double-digits range (currency-neutral, excluding acquisitions and special items), acquisitions to increase OpEx growth by 4-5 ppt, and foreign exchange headwind of 0-1 ppt.

Risks

• Capital One Migration: Impact on U.S. volumes as Capital One cards migrate, with offsetting contractual obligations in 2026 but potential headwinds in 2027.
• Regulatory/Legal Issues: Agentic commerce introduces new legal and regulatory considerations, including certification of bots, security, and compliance.

Question and Answer

Q: Wanted to ask on U.S. payment volume growth. So, steady overall activity is evident here. But just curious on the surface, are you just seeing any evidence of trade down or differing consumer cohort behavior? And then just any early views on potential holiday spend?

A: Sachin Mehra said drivers continue to hold up well across different consumer segments, and Michael Miebach added that consumers at different income levels make different spend decisions but carded spend remains resilient.

Q: Wanted to ask about the evolution and enablement, the Mastercard is providing for agentic commerce. Can you talk a little bit about how not only Mastercard is helping accelerate that, it seems like, but any of the unique threat or risk and even legal issues that you're -- that need to be considered and how we should think about tracking the growth in agentic commerce and its contribution?

A: Michael Miebach discussed agentic commerce involving behavioral change via generative AI, the role of agents in transactions, certification of bots, security, legal considerations, and Mastercard's services to enable safe and secure agentic commerce.