The paragraph is an introduction to Mastercard's Third Quarter 2024 Earnings Conference Call. The conference call is being led by Brianna, the operator, and features Devin Corr, Head of Investor Relations, Michael Miebach, CEO, and Sachin Mehra, CFO, who is joining remotely. Devin Corr provides an overview of the call's structure, including the availability of earnings materials on Mastercard's website, and mentions that the call will focus on non-GAAP currency-neutral financial results. He also notes the inclusion of forward-looking statements and their associated risks, and informs that a replay of the call will be available for 30 days. The call is then handed over to CEO Michael Miebach.

In this paragraph, the company reports strong quarterly financial results, highlighting a 14% increase in net revenues and a 13% rise in adjusted net income, supported by healthy consumer spending and strong cross-border volume growth. The company announces planned acquisitions of Recorded Future and Minna Technologies and credits its diversified global footprint and digital-first strategy for tapping into the shift to electronic payments. It emphasizes increasing acceptance through digitizing new transaction areas like transit, and mentions a supportive macroeconomic environment, stable labor market, and moderated inflation. The company maintains a positive growth outlook, focusing on controllable factors and executing its growth strategies.

Over the years, Mastercard has facilitated the global transition to open-loop, contactless payment systems. Their tap-on-phone technology is now available in over 110 markets, significantly increasing acceptance locations, including food trucks, markets, flights, and sports events. Mastercard aims to enhance access through partnerships, like making QR pay-by-link technology available to merchants with KaiOS phones in Africa, supporting small businesses. They focus on cutting-edge technologies like tokenization and passkeys for secure and convenient online shopping. Mastercard's global teams, including those at their tech hub in Pune, India, are developing solutions like biometric pass keys to enhance security and convenience in transactions.

The paragraph discusses the expansion and strategic partnerships of a company in various payment sectors. They are teaming up with noon Payments and India’s Bolt to enhance tokenized contactless payments. The company is also exploring opportunities in commercial payments, collaborating with partners like CBC and Yallo to support retailers and small businesses, particularly in Latin America. In the healthcare sector, they partner with Fundbot to improve supply chain financing. In the disbursements and remittances space, they are integrating into Citi’s cross-border payments network, enabling near real-time transfers to Mastercard debit cards in multiple countries.

Mastercard is expanding its global partnerships and initiatives to drive growth in various regions. In the U.S., it's collaborating with Astra Inc. to promote push-to-card payments, while in Latin America, partnerships with Paysend, Leap Financial, and Felix Pago aim to address cross-border transaction opportunities. Mastercard is also increasing its market share by offering differentiated services and understanding customer needs, evidenced by agreements with Brussels Airlines, BNP Paribas Group, Doha Bank, Alibaba.com, and Mobitel’s e-Mola. The company sees significant potential in Latin America to transition from cash and check transactions to electronic payments, as over 60% of purchases are still made in cash or check.

The paragraph highlights Mastercard's growth efforts in Latin America, including partnerships with major banks in Guatemala and El Salvador to migrate debit portfolios and drive new credit issuance. In Uruguay, Mastercard renewed an agreement with OSEA, and in Chile, they secured partnerships with retail issuers like Cencosud and Banco Ripley. The paragraph also emphasizes Mastercard's commitment to expanding value-added services, notably in cybersecurity, through its acquisition of Recorded Future, enhancing their threat intelligence and real-time fraud scoring capabilities.

The paragraph discusses the strategic enhancements and acquisitions made to strengthen cybersecurity and personalization services. It highlights the integration of Mastercard Insights to bolster cybersecurity offerings and the acquisition of Minna Technologies to provide consumers with better subscription management. Additionally, there's a focus on fostering deeper consumer relationships through loyalty and rewards. The need for personalized consumer experiences is also addressed through the acquisition of Dynamic Yield, which has been successfully scaled to numerous retail partners, including Kerzner. A new solution, Personalization Breeze, is introduced for issuing banks to further enhance the consumer personalization experience.

The paragraph discusses the company's integration of personalized offerings with propensity modeling to enhance communication with cardholders. It highlights open banking as a key offering, providing consumers with more choice and banks with improved efficiency. The company has enhanced its open banking lending program through a partnership with Argyle, allowing lenders to verify income and employment with payroll data. This data is authorized by Fannie Mae and Freddie Mac for use in mortgage underwriting, facilitating a streamlined process for those with limited credit histories. The company continues to enhance its services, including cybersecurity, fraud prevention, marketing, and data insights, aiming to scale and create a synergistic effect where payments and services bolster each other. The paragraph concludes by expressing optimism for future opportunities and mentions an upcoming investment community meeting.

The paragraph provides an overview of the company's financial performance in the third quarter on a currency-neutral basis, excluding special items and equity investment impacts. Net revenue rose by 14% due to growth in both the payment network and additional services, while operating expenses increased by 12%. Operating income grew by 15%, and net income and EPS rose by 13% and 16% respectively. The EPS was $3.89, with a $0.08 contribution from share repurchases. The company bought back $2.9 billion in stock during the quarter and an additional $983 million by October 28, 2024. Key driver growth rates included a 10% year-over-year increase in global GDV, with credit and debit growth in the U.S. and outside the U.S. Card present and not present growth remained strong, with contactless accounting for 70% of in-person transactions. There are 3.4 billion Mastercard and Maestro cards issued globally.

The article paragraph discusses the financial performance of a payment network, highlighting an 11% growth in net revenue driven by increases in domestic and cross-border transactions and volume. Value-added services and solutions also saw a 19% revenue increase, attributed to strong demand for consulting and marketing services, security solutions, and pricing. Key metrics show a 10% increase in domestic assessments and worldwide GDV, and a 22% increase in cross-border assessments with a 17% rise in volumes, influenced by international market pricing and mix. Transaction processing assessments grew 14%, with switched transactions up 11%, affected by mix and pricing. Other network assessments totaled $227 million, subject to fluctuations. Operating expenses rose 12% due to strategic initiative support and increased spending in advertising, marketing, and indirect access. Operating metrics have remained stable in Q3 and early October in the U.S. and globally.

In the U.S., the increase in transaction volumes in early October was influenced by event-related factors, such as the calendar and changes in social security payments. Looking forward, the company remains optimistic about future growth and maintains a strong position due to its diverse business model and demand for digital payment solutions. Despite economic challenges, they are focused on their strategy. For Q4 2024, they anticipate net revenue growth in the low-teens on a currency-neutral basis, while operating expenses are expected to grow at the high end of the low double-digit range due to increased advertising and marketing efforts. Foreign exchange and acquisitions are predicted to have minimal impact on both revenue and expense growth. An expense of approximately $85 million is expected in Q4, assuming stable interest rates and debt levels.

In the paragraph, the speaker discusses the financial outlook and tax implications for their company. They anticipate a non-GAAP tax rate of about 17% in Q4, influenced by the global minimum tax rules known as Pillar Two. These new rules, set to be implemented in 2025, will neutralize the benefits of an incentive grant they have in Singapore. This benefit previously reduced their tax rate by approximately 4% up to Q3 2024. Additionally, Sachin thanks everyone for their well-wishes and feels positive. During the Q&A, Sanjay Sakhrani asks about U.S. consumer spending and its improvement, noting whether lower interest rates impact spending. Sachin confirms that consumer spending remains strong, contributing to positive metrics but advises caution as it's early in the quarter.

The paragraph discusses the continued strength of consumer confidence and spending in the U.S., despite some one-time factors like calendar impacts and social security payment timings affecting metrics. Employment remains strong, and although interest rates initially lowered, they've risen again, yet consumer confidence persists. The conversation then shifts to Tien-tsin Huang from J.P. Morgan, who asks about the adoption and benefits of tokenization technology at Mastercard. Sachin Mehra responds by highlighting that tokenization enhances transaction security, driving adoption and benefiting Mastercard's ecosystem and financial performance.

The paragraph discusses the benefits and strategic importance of tokenization and cybersecurity in online commerce. Tokenization enhances security and contributes to higher conversion rates for merchants. Mastercard is investing in these technologies, such as token lifecycle management, to drive revenue and reduce fraud for customers. The company's cybersecurity solutions are a significant component of their value-added services, driven by the increasing digitization of transactions and the need for enhanced security. It's a growing market opportunity for Mastercard beyond traditional transactions.

The paragraph discusses a company's strategic expansion of transaction-related and cybersecurity services, leveraging acquisitions like Brighterion and RiskRecon. They have enhanced decision intelligence solutions with AI, achieving up to a 20% improvement, and provide cybersecurity solutions that extend beyond transactions. Notably, their services include threat intelligence through a subscription-based model called Recorded Future. Around 50% of their services are transaction-related, while their future growth focuses on non-transactional services like threat intelligence. They express excitement about integrating Recorded Future's impressive customer base post-approval. The segment ends with a transition to the next speaker, Rayna Kumar, from Oppenheimer.

In the paragraph, Sachin Mehra discusses Mastercard's strong performance in Europe, its largest geographic region. He notes positive economic trends in countries like France, Spain, and Germany, and highlights low unemployment and improving consumer confidence across Europe. Mehra points out that Southern Europe has been performing well for a while, and now momentum is building in Northern Europe. He emphasizes that Mastercard sees significant growth opportunities in Europe and continues to gain market share. This is evident from the conversion of important portfolios like UniCredit and Deutsche Bank, along with efforts to transition from Maestro to Debit Mastercard, all contributing to positive metrics.

The paragraph discusses the competitive environment and strategy regarding incentives in a business context. Bryan Keane from Deutsche Bank asks about the rising incentives and renewals. Sachin Mehra explains that the competitive landscape remains consistent with previous years, and emphasizes that offering incentives is essential for winning volume and generating revenue. By optimizing portfolios and delivering services, the business can increase its net value yield. Michael Miebach adds that the company is succeeding, particularly in the U.S. debit market, due to its unique offerings.

The paragraph discusses Mastercard's strategic approach in a competitive environment. It emphasizes their focus on selective deal participation, financial discipline, and ultimately increasing net revenue yield. Tim Chiodo inquires about Mastercard Move, which combines Mastercard Send and Cross-Border Services. He asks about the mix of cross-border versus domestic activities and their revenue accounting. Sachin Mehra explains that these are complementary businesses, highlighting their efforts to simplify cross-border processes and invest in diverse payment flows as part of a long-term, one-stop payment strategy.

The paragraph discusses Mastercard Move's extensive reach, covering 95% of the world's banks across 180 countries and 150 currencies, offering a unique value proposition. It highlights use cases like insurance distribution and remote gig workers, addressing the challenge of effective and affordable cross-border payments. The business has seen over 40% transaction growth in the third quarter, supported by a partnership with Citi that enhances transaction endpoints. The accounting for revenues, whether on card or non-card rails, is also clarified. Finally, Darrin Peller from Wolfe Research comments on the call, noting the impressive yield, spread, and transaction growth in cross-border services, reflecting Mastercard's value to its customers.

The paragraph involves a discussion led by Sachin Mehra addressing questions about the tax rate and yield trends. Mehra first explains that due to Singapore enacting rules related to a global minimum tax, there is a change in the company's tax incentives from Singapore, potentially impacting the tax rate by about four percentage points. Although he can't specify the exact future tax rate, he wants investors to understand this impact. Regarding yield trends, Mehra expresses satisfaction with the value being delivered to customers across various services, including cross-border and domestic areas.

The paragraph discusses the factors affecting the discrepancy between driver metrics and revenue metrics, emphasizing the influence of transactional mix, both cross-border and domestic, and geographical variations. The goal is to optimize yield by targeting profitable portfolios in growth regions. FX volatility provided some benefits recently, but it's unpredictable and at low levels. The company focuses on delivering value and targeting the right portfolios to enhance yield, while acknowledging the macroeconomic factors that impact financial outcomes.

In the paragraph, James Faucette from Morgan Stanley asks about the growth and acceleration of Mastercard's B2B and commercial volumes. Michael Miebach responds, acknowledging the steady progress and the significant opportunity in the commercial sector. He explains that past structural issues, particularly in emerging markets, have hindered acceleration, but notes that these challenges are being addressed. Currently, Mastercard is experiencing 11% growth in commercial volumes, which is higher than consumer growth. However, Miebach refrains from providing a specific future outlook, suggesting that more detailed insights will be shared at an upcoming Investor Day.

The paragraph discusses the growth and changes in business solutions, particularly in back-office systems and digital treasury operations, with partnerships like Oracle and SAP. It highlights the trend of businesses expecting their digital work experiences to match their personal digital experiences. There's excitement about new propositions like mobile-based T&E cards and virtual cards for their working capital benefits. The paragraph also mentions a reorganization to focus on commercial and new payment flows as key growth drivers, with a specific reference to an 11% currency-neutral growth rate in commercial for the third quarter. Lastly, the operator announces the next question from Craig Maurer at FT Partners.

In the paragraph, Michael Miebach discusses Mastercard's strengths in value-added services (VAS), emphasizing their role as a differentiator for the company over the past seven years. Mastercard focuses on two main areas: security solutions to keep digital ecosystems safe and data insights solutions to help businesses understand the increasing availability of data in a digital world. Miebach highlights that Mastercard's security solutions encompass the entire transaction process, from digital identity solutions that verify customer identities before transactions to fraud scoring solutions linked directly to payments.

The paragraph discusses a comprehensive data insight solution designed to help customers, such as merchants and banks, engage more effectively with their end consumers. The solution offers a range of services like campaign management, marketing, loyalty programs, and more, with varied business models including subscription and per-transaction models. It emphasizes providing an end-to-end solution tailored to help customers improve their business, positioning the company as a strategic partner. The solution is highlighted as differentiated and contributing to the company's strong growth and revenue. Following this explanation, the conversation shifts to a question from Trevor Williams about the Q4 outlook for growth and its implications for 2025, with Sachin Mehra set to respond.

The paragraph discusses factors to consider when comparing the years 2024 and 2025, emphasizing the leap year effect in 2024 that won’t be present in 2025. It highlights significant share wins for Mastercard, such as partnerships with Wells Fargo, Citizens, UniCredit, and Deutsche Bank, which will complete their transition and show full financial impact after four quarters. For example, Wells Fargo's migration completed in Q2 2024, with effects appearing in 2025. The text also touches on pricing changes due to innovation investments and how related financial impacts will manifest over time. Further details about 2025 will be discussed in upcoming months. Following this information, the focus shifts to a question from Jamie Friedman regarding China.

The paragraph discusses a company's progress and strategy in expanding its card usage in China. They have launched a unique single-use card offering both domestic and cross-border usage since May. The company is focusing on increasing both global and domestic acceptance, including integrating with local QR wallets and investing in broader acceptance throughout China. The Chinese government is interested in enhancing card acceptance to better connect their economy globally. Despite economic fluctuations, the company views China's large economy as a significant opportunity, requiring ongoing investment and efforts to improve card acceptance. They are working through a joint venture and other activities to strengthen their presence in China.

Sachin Mehra emphasizes the company's consistent approach to investment and pricing strategies. The company heavily invests in innovation to provide value to customers, merchants, and consumers. These investments aim to drive strategic initiatives and develop value propositions, allowing them to adjust pricing appropriately. Mehra indicates that there are no changes in their business philosophy and suggests that they continue to evaluate opportunities for value-based pricing across their product offerings.

In the paragraph, Michael Miebach responds to a question about the potential impact of the DOJ antitrust suit against Visa on Mastercard's market position. He emphasizes that Mastercard competes in a highly competitive market by investing in products and solutions to win market share. Miebach highlights Mastercard's commitment to choice and innovation, citing their early adoption of real-time payments in 2016 as an example of differentiation that helps them succeed. Overall, he refrains from commenting on Visa's legal situation directly but underscores Mastercard's competitive strategy.

The paragraph discusses a company's commitment to its current market strategy, particularly in Europe with partners like UniCredit and NatWest. The speaker emphasizes the potential for growth through strengthening product solutions and acquisitions, despite current market headlines. Will Nance from Goldman Sachs asks about the company's approach to value-added services and alternative payment networks. Michael Miebach responds by highlighting the diverse payment options available today, such as cards, account-to-account payments, digital public infrastructure, and P2P systems, indicating an opportunity to expand services across these various payment methods.

The paragraph discusses the opportunities for Mastercard to expand its cybersecurity services beyond card transactions. It highlights the advantages of card payments, such as fraud protection and digital identity security, and suggests that these services can be extended to non-Mastercard transactions. Mastercard positions itself as a scheme-agnostic provider, offering security solutions and data analytics services to a wide range of businesses, particularly in the retail and commerce sectors. This diversification allows Mastercard to attract new customers and ensure the security of transactions across various payment networks. The paragraph concludes with an invitation to an Investor Community Meeting on November 13.

The speaker expresses anticipation for a future meeting, credits the 34,000 Mastercard employees for their contributions, and extends gratitude to them. The conference call concludes with the operator thanking participants and indicating they may disconnect.

This summary was generated with AI and may contain some inaccuracies.