Mastercard Incorporated Q4 FY2025 earnings call

• Strategic Focus: Clear strategy with execution against pillars, including being innovative and agile, diversified and differentiated. Completed strategic review leading to reductions in some areas and investment in others.
• Partnerships and Wins: In U.S. and Canada, renewed partnership with Capital One; in Turkey, Yapi Credi migrated cards; in Latin America, Scotiabank chose Mastercard; in South Africa, secured deals with banks; won over 60 new affluent programs in 2025; continued success with co-brands like Apple Card, Walmart, etc.
• Consumer Payments: Continued innovation, with digital commerce approval rates up 270 basis points in five years, switching over 175 billion transactions last year, and switching over 70% of all Mastercard transactions globally.
• Commercial and New Payment Flows: Commercial credit and debit volumes represented 13% of total GDV in 2025, growing 11% year over year; renewed partnerships with WEX, Barclays, and launched Coupa Mastercard; focused on small business and B2B payments.
• Move Disbursements and Remittances: Over 17 billion endpoints available, with strong transaction growth in Q4 2025 and full year 2025, exceeding 35% versus a year ago.
• Value-added Services and Solutions: Strong performance with 21% growth in 2025, network-linked services benefiting from transaction growth, innovations like Mastercard Credit Intelligence and Agent Suite, and continued tokenization with nearly 40% of transactions tokenized.

In the fourth quarter, Payment Network net revenue increased 9% primarily driven by domestic and cross-border transaction and volume growth, including growth in rebates and incentives. Value-added services and solutions net revenue increased 22%, with acquisitions contributing approximately three ppt to this growth. For the full year 2025, value-added services and solutions had full-year net revenue growth of 21% or 18% excluding acquisitions on a currency-neutral basis. Worldwide gross dollar volume (GDV) increased by 7% year over year in Q4. Switch transactions grew 10% year over year in Q4, with contactless penetration at 77% of all in-person switched purchase transactions, up five ppt since the same period last year. Globally, there are 3.7 billion Mastercard and Maestro branded cards issued.

• For 2026, expect net revenues to grow at the high end of a low double digits range on a currency-neutral basis, excluding inorganic activity. Estimate a tailwind of approximately 1 to 1.5 ppt from foreign exchange. Operating expenses growth expected at the low end of a low double digits range. Q1 2026 to record a one-time restructuring charge of approximately $200 million. Expect a non-GAAP tax rate in the range of 20% to 21% for the full year and approximately 19% to 20% for Q1.

• Geopolitical and macroeconomic uncertainty persists. - Credit Card Competition Act implications, with industry opposition due to concerns about consumer choice, affordability, and cybersecurity. - Rate cap concerns and potential impact on credit access for vulnerable populations.

Q: Please provide more details on the Capital One renegotiation and its impact on share of credit volumes.

A: Extending the credit portfolio agreement with Capital One is important, and Capital One will continue to use several of Mastercard's services. The partnership will continue with continued investment to ensure a differentiated proposition.

Q: Thoughts on the Credit Card Competition Act and its probability of passing?

A: Industry is aligned against the act due to concerns about consumer choice, affordability, and cybersecurity. Little progress has been made, and opposition has intensified.

Q: View on the health of the consumer and spend volumes?

A: Consumer spending remains healthy with a savvy and intentional consumer, supported by a healthy job market and wealth effect across income bands.

Q: Sensitivity of the business to FX rate moves and VAS growth trend?

A: FX impact is factored into guidance with best estimates, and VAS growth is expected to continue due to differentiated underlying growth drivers and curated services.

Q: Timing and impact of issuing wins in 2026 and renewal pipeline?

A: Pipeline is healthy with focus on affluent, cross-border, and secular opportunities, but competitive environment requires differentiation through services and payment network capabilities.

Q: Guidance trajectory and consumer spend assumptions?

A: Base case assumes healthy consumer and business spending, with first half growth lower than second half due to tougher comps from FX volatility. - Q: Thoughts on AgenTek and trust/governance in the space?

A: AgenTekCommerce is an exciting space with focus on consumer protection, safety, and security, leveraging existing protocols and partnerships, with Mastercard positioned to thrive due to its differentiated solutions and global presence.

Q: Mitigation of geopolitical risks?

A: Monitor geopolitics actively, engage with local partners, invest in technology for resilience, and have levers to pull on expenses and investments to navigate uncertain environments.