Mastercard Inc

Previous wording

The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2024 as contained in the Company's 2024 Form 10-K filed with the U.S. Securities and Exchange Commission on February 12, 2025. It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand.

Current wording

The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2024 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 12, 2025 (“2024 Form 10-K”). It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand.

Previous wording

Key highlights for the three months ended March 31, 2025, versus the comparable period in 2024:

Current wording

Key highlights for the three and six months ended June 30, 2025, versus the comparable periods in 2024:

Previous wording

Other financial highlights for the three months ended March 31, 2025 were as follows:

Current wording

Other financial highlights for the six months ended June 30, 2025 were as follows:

Previous wording

•We generated net cash flows from operations of $2.4 billion.

Current wording

•We generated net cash flows from operations of $7.0 billion.

Previous wording

•We repurchased 4.7 million shares of our common stock for $2.5 billion and paid dividends of $694 million.

Current wording

•We repurchased 8.9 million shares of our common stock for $4.8 billion and paid dividends of $1.4 billion.

Previous wording

Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). As described more fully below, our non-GAAP financial measures exclude the impact of gains and losses on our equity investments, which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). We also present growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation, among other things. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items. Operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share, each as adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, should not be relied upon as substitutes for measures calculated in accordance with GAAP.

Current wording

Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). As described more fully below, our non-GAAP financial measures exclude, where applicable, the impact of gains and losses on our equity investments, which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. Our non-GAAP financial measures also exclude, where applicable, the impact of special items, which represent litigation judgments and settlements and/or certain one-time items, as well as the related tax impacts (“Special Items”). We also present growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation, among other things. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items. Operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share, each as adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, should not be relied upon as substitutes for measures calculated in accordance with GAAP.

Previous wording

•In thethree months ended March 31, 2025 and 2024, we recorded net losses of $29 million ($25 million after tax, or $0.03 per diluted share) and net gains of $6 million ($5 million after tax, or $0.01 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.

Current wording

•In thethree and six months ended June 30, 2025, we recorded net gains of $4 million ($5 million after tax, or $0.01 per diluted share) and net losses of $25 million ($19 million after tax, or $0.02 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.

Previous wording

•In the three months ended March 31, 2025, we recorded charges of $151 million ($102 million after tax, or $0.11 per diluted share), primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.

Current wording

•In the three months ended June 30, 2025, we recorded charges of $96 million ($73 million after tax, or $0.08 per diluted share), primarily due to a legal provision associated with the ATM non-discrimination rule surcharge complaints. In the six months ended June 30, 2025, we recorded charges of $247 million ($174 million after tax, or $0.19 per diluted share), primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and a legal provision associated with the ATM non-discrimination rule surcharge complaints.

Previous wording

The following table represents the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:

Current wording

The following tables represents the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:

Previous wording

Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of GDV, which is used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The transactional currency impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three months ended March 31, 2025, GDV on a U.S. dollar-converted basis increased 6%, while GDV on a local currency basis increased 9%, versus the comparable period in 2024. Further, the impact from transactional currency occurs in our key metrics related to transaction processing assessments and other network assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.

Current wording

Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of GDV, which is used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The transactional currency impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three and six months ended June 30, 2025, GDV on a U.S. dollar-converted basis increased 9% and 7%, respectively, while GDV on a local currency basis increased 9% for each of the periods, versus the comparable periods in 2024. Further, the impact from transactional currency occurs in our key metrics related to transaction processing assessments and other network assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.

Previous wording

We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement assets and obligations, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statements of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

Current wording

We incur foreign currency gains and losses from remeasuring monetary assets and liabilities that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statements of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

Previous wording

For the three months ended March 31, 2025, net revenue increased 14%, or 17% on a currency-neutral basis, versus the comparable period in 2024, which included a 1 percentage point increase from acquisitions completed in 2024 (“Acquisitions”). The remaining increase in net revenue was attributable to both our payment network and value-added services and solutions.

Current wording

Net revenue increased 17%, or 16% on a currency-neutral basis, versus the comparable period in 2024, which included a 1 percentage point increase from acquisitions completed in 2024 (“Acquisitions”). The increase in net revenue was attributable to both our payment network and value-added services and solutions.

Previous wording

Net revenue from our value-added services and solutions increased 16%, or 18% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions. The remaining increase was driven primarily by (1) our security and digital and authentication solutions, and consumer acquisition and engagement services, (2) growth in our underlying key drivers and (3) pricing.

Current wording

Net revenue from our value-added services and solutions increased 23%, or 22% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions. The remaining increase was driven primarily by (1) our security and digital and authentication solutions, and consumer acquisition and engagement services, (2) growth in our underlying key drivers and (3) pricing.

Previous wording

Net revenue from our payment network increased 13%, or 16% on a currency-neutral basis, versus the comparable period in 2024. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network included $4,579 million of rebates and incentives provided to customers, which increased 12%, or 15% on a currency-neutral basis, versus the comparable period in 2024, primarily due to an increase in our key drivers as well as new and renewed deals.

Current wording

Net revenue from our payment network increased 13%, or 14% on a currency-neutral basis, versus the comparable period in 2024. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network included $9,502 million of rebates and incentives provided to customers, which increased 14%, or 16% on a currency-neutral basis, versus the comparable period in 2024, primarily due to an increase in our key drivers as well as new and renewed deals.

Previous wording

The following table summarizes the drivers of change in net revenue:

Current wording

The following tables summarize the drivers of change in net revenue:

Previous wording

For the three months ended March 31, 2025, operating expenses increased 13% versus the comparable period in 2024. Adjusted operating expenses increased 13%, or 14% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions.

Current wording

For the three months ended June 30, 2025, operating expenses increased 15% versus the comparable period in 2024. Adjusted operating expenses increased 15%, or 14% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions.

Previous wording

The following table summarizes the drivers of change in operating expenses:

Current wording

The following tables summarize the drivers of change in operating expenses:

Previous wording

For the three months ended March 31, 2025, general and administrative expenses increased 10%, or 12% on a currency-neutral basis, versus the comparable period in 2024, which included a 3 percentage point increase from Acquisitions. The remaining increase was primarily due to higher personnel costs to support the continued investment in our strategic initiatives across payments and value-added services and solutions.

Current wording

For the six months ended June 30, 2025, general and administrative expenses increased 12%, or 13% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions. The remaining increase was primarily due to higher personnel costs to support the continued investment in our strategic initiatives across payments and value-added services and solutions.

Previous wording

For the three months ended March 31, 2025, advertising and marketing expenses increased 32%, or 34% on a currency-neutral basis, versus the comparable period in 2024, which included a 2 percentage point increase from Acquisitions. The remaining increase was primarily due to an increase in spending on marketing campaigns and sponsorships.

Current wording

For the three months ended June 30, 2025, advertising and marketing expenses increased 15%, or 13% on a currency-neutral basis, versus the comparable period in 2024, which included a 3 percentage point increase from Acquisitions. The remaining increase was primarily due to an increase in spending on sponsorships and marketing campaigns.

Previous wording

For the three months ended March 31, 2025, depreciation and amortization expenses increased 27%, or 28% on a currency-neutral basis, versus the comparable period in 2024, which included a 14 percentage point increase from Acquisitions. The remaining increase was primarily due to increased software capitalization driven by the continued growth of our business.

Current wording

For the three months ended June 30, 2025, depreciation and amortization expenses increased 25%, or 23% on a currency-neutral basis, versus the comparable period in 2024, which included a 13 percentage point increase from Acquisitions. The remaining increase was primarily due to higher capitalized software versus the comparable period in 2024, driven by the continued growth of our business.

Previous wording

For the three months ended March 31, 2025, we recorded charges of $151 million, primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation. See “Non-GAAP Financial Information” in this section and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion.

Current wording

For the three months ended June 30, 2025, we recorded charges of $96 million, primarily due to a legal provision associated with the ATM non-discrimination rule surcharge complaints. For the six months ended June 30, 2025, we recorded charges of $247 million, primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and a legal provision associated with the ATM non-discrimination rule surcharge complaints. See “Non-GAAP Financial Information” in this section and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion.

Previous wording

The effective income tax rates for the three months ended March 31, 2025 and 2024 were 18.6% and 15.4%, respectively. The adjusted effective income tax rates for the three months ended March 31, 2025 and 2024 were 19.1% and 15.9%, respectively. Both the as-reported and as-adjusted effective income tax rates for the three months ended March 31, 2025 and 2024 were higher versus the comparable period in 2024, primarily due to the 15% global minimum tax (“Pillar 2 Rules”) that took effect in 2025 in Singapore and various other jurisdictions. The Pillar 2 Rules primarily offset the reduction to our effective income tax rate resulting from our incentive grant received from the Singapore Ministry of Finance.

Current wording

The effective income tax rates for the three months ended June 30, 2025 and 2024 were 20.8% and 17.3%, respectively. The adjusted effective income tax rates for the three months ended June 30, 2025 and 2024 were 20.9% and 17.5%, respectively. The effective income tax rates for the six months ended June 30, 2025 and 2024 were 19.8% and 16.4%, respectively. The adjusted effective income tax rates for the six months ended June 30, 2025 and 2024 were 20.1% and 16.7%, respectively. Both the as-reported and as-adjusted effective income tax rates for the three and six months ended June 30, 2025 were higher versus the comparable periods in 2024, primarily due to the 15% global minimum tax (“Pillar 2 Rules”) that took effect in 2025 in Singapore and various other jurisdictions. The Pillar 2 Rules primarily offset the reduction to our effective income tax rate resulting from our incentive grant received from the Singapore Ministry of Finance. See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 of our 2024 Form 10-K for further information about this incentive grant.

Previous wording

We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, credit and settlement exposure, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:

Current wording

We rely on existing liquidity (our cash, cash equivalents and investments), cash generated from operations and access to capital to fund our global operations, credit and settlement exposure, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:

Previous wording

1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents and restricted security deposits held for customers at March 31, 2025 and December 31, 2024 of $2.4 billion.

Current wording

1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents and restricted security deposits held for customers at June 30, 2025 and December 31, 2024 of $2.5 billion and $2.4 billion, respectively.

Previous wording

We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations, which include litigation provisions and credit and settlement exposure.

Current wording

We believe that our existing liquidity, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations, which include litigation provisions and credit and settlement exposure.

Previous wording

Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our 2024 Form 10-K and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report.

Current wording

Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our 2024 Form 10-K and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements in Part I, Item 1 of this Report.

Previous wording

Net cash provided by operating activities increased $708 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to higher net income after adjusting for non-cash items as well as less cash paid for litigation settlements, partially offset by higher employee incentives paid.

Current wording

Net cash provided by operating activities increased $2,173 million for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to higher net income after adjusting for non-cash items as well as less cash paid for litigation settlements.

Previous wording

Net cash used in investing activities increased $166 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to lower proceeds from maturities of investment securities, partially offset by lower purchases of investment securities.

Current wording

Net cash used in investing activities increased $99 million for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to lower proceeds from maturities and sales of investment securities, partially offset by lower purchases of property and equipment and fewer purchases of investment securities.

Previous wording

Net cash used in financing activities increased $306 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to the repayment of debt and higher cash paid for repurchases of our Class A common stock and dividends, partially offset by cash proceeds received from our February 2025 debt issuance.

Current wording

Net cash used in financing activities increased $55 million for the six months ended June 30, 2025, versus the comparable period in 2024, primarily due to higher cash paid for repurchases of our Class A common stock and dividends, partially offset by higher proceeds from debt in the current year and higher repayment of debt in the prior year.

Previous wording

In March 2025, $750 million of principal related to the 2019 USD Notes matured and was paid. Our total debt outstanding at March 31, 2025 and December 31, 2024 was $18.8 billion and $18.2 billion, respectively, with the earliest maturity of $750 million of principal occurring in November 2026.

Current wording

In March 2025, $750 million of principal related to the 2019 USD Notes matured and was paid. Our total debt outstanding at June 30, 2025 and December 31, 2024 was $19.0 billion and $18.2 billion, respectively, with the earliest maturity of $750 million of principal occurring in November 2026.

Previous wording

Aggregate payments for quarterly dividends for the three months ended March 31, 2025 totaled $694 million.

Current wording

Aggregate payments for quarterly dividends for the six months ended June 30, 2025 totaled$1,385 million.

Previous wording

On February 10, 2025, our Board of Directors declared a quarterly cash dividend of $0.76 per share payable on May 9, 2025 to holders of record as of April 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is $691 million.

Current wording

On June 24, 2025, our Board of Directors declared a quarterly cash dividend of $0.76 per share payable on August 8, 2025 to holders of record as of July 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is $687 million.

Previous wording

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.

Current wording

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements in Part I, Item 1.