Mastercard
Incorporated
Fourth-Quarter and Full-Year 2020 Financial Results Conference Call
January 28, 2021
Business Update
Key Trends
Business Highlights
Financial Overview
©2020 Mastercard
January 28, 2021 | 2 |
4th Quarter Selected Financial Performance
($ in millions, except per share data)
YOY Growth | |||||||||||
4Q 20 | 4Q 19 | Currency | |||||||||
Non-GAAP | Non-GAAP | As adjusted | Neutral | ||||||||
Net revenue | $ | 4,120 | $ | 4,414 | (7)% | (7)% | |||||
Adjusted operating expenses | 2,018 | 2,015 | - % | - % | |||||||
Adjusted operating income | 2,102 | 2,399 | (12)% | (12)% | |||||||
Adjusted operating margin | 51.0 % | 54.4 % | (3.3) ppt | (3.2) ppt | |||||||
Adjusted net income | $ | 1,644 | $ | 1,981 | (17)% | (17)% | |||||
Adjusted diluted EPS | $ | 1.64 | $ | 1.96 | (16)% | (16)% | |||||
Adjusted effective tax rate | 17.5 | % | 15.9 | % |
Note: See Appendix A for Non-GAAP reconciliation.
©2020 Mastercard
January 28, 2021 | 3 |
4th Quarter Gross Dollar Volume (GDV)
($ in billions)
Worldwide | United States | Rest of World | ||||||||||||||||||||||
1% Growth | 4% Growth | Flat | ||||||||||||||||||||||
$1,800 | $1,730 | $1,747 | ||||||||||||||||||||||
$1,600 | $1,223 | $1,220 | ||||||||||||||||||||||
$1,400 | $876 | $950 | ||||||||||||||||||||||
$1,200 | ||||||||||||||||||||||||
$1,000 | $622 | $660 | ||||||||||||||||||||||
$800 | $507 | $527 | ||||||||||||||||||||||
$600 | ||||||||||||||||||||||||
$855 | ||||||||||||||||||||||||
$400 | $796 | $254 | $291 | $601 | $560 | |||||||||||||||||||
$200 | $254 | $237 | ||||||||||||||||||||||
$0 | ||||||||||||||||||||||||
4Q19 | 4Q20 | 4Q19 | 4Q20 | 4Q19 | 4Q20 | |||||||||||||||||||
Notes: 1. Growth rates are shown in local currency. | Credit | Debit / Prepaid | ||||||||||||||||||||||
2. Figures may not sum due to rounding.
©2020 Mastercard
January 28, 2021 | 4 |
4th Quarter Switched Transactions and Cards
Switched Transactions | Cards | |||||||||||||||||||
4% Growth* | 6% Growth | |||||||||||||||||||
4,000 | ||||||||||||||||||||
30 | ||||||||||||||||||||
billions)(inTransactions | 23.8 | 24.8 | millions)(inCards | 3,000 | 2,600 | 2,750 | ||||||||||||||
416 | ||||||||||||||||||||
20 | 2,000 | 428 | ||||||||||||||||||
10 | 2,173 | 2,334 | ||||||||||||||||||
1,000 | ||||||||||||||||||||
0 | 0 | |||||||||||||||||||
4Q19 | 4Q20 | |||||||||||||||||||
4Q19 | 4Q20 | |||||||||||||||||||
Notes: Figures may not sum due to rounding. | Mastercard Cards | Maestro Cards | ||||||||||||||||||
*Growth rates have been normalized to eliminate the effects of differing switching and carryover days between periods. |
©2020 Mastercard
January 28, 2021 | 5 |
4th Quarter Revenue
4Q19 | 4Q20 | |||||||
$5,000 | $4,414 | $4,120 | ||||||
$4,000 | ||||||||
$3,000 | $2,263 | $2,379 | ||||||
$1,774 | $1,749 | |||||||
$2,000 | $1,452 | $1,233 | $1,431 | |||||
$1,000 | $867 | |||||||
$0 | ||||||||
$-1,000 | ||||||||
$-2,000 | ||||||||
$-3,000 | $(2,308) | $(2,306) | ||||||
Growth | Domestic | Cross-Border | Transaction | Other | Rebates and | Total Net Revenue |
Assessments | Volume Fees | Processing | Revenues | Incentives | ||
As reported | (1)% | (40)% | 5% | 16% | -% | (7)% |
Currency-neutral | 1% | (41)% | 4% | 17% | 1% | (7)% |
Note: Figures may not sum due to rounding.
©2020 Mastercard
January 28, 2021 | 6 |
4th Quarter Adjusted Operating Expenses
($ in millions)
$3,000 | 4Q19 | 4Q20 | |||||||||||||||
$2,500 | $2,015 | $2,018 | |||||||||||||||
$2,000 | |||||||||||||||||
$1,579 | $1,625 | ||||||||||||||||
$1,500 | |||||||||||||||||
$1,000 | |||||||||||||||||
$500 | $290 | $242 | $146 | $150 | |||||||||||||
$0 | |||||||||||||||||
Growth | General & Administrative | Advertising & Marketing | Depreciation & Amortization | Adjusted Operating Expenses | |||||||||||||
Non-GAAP | 3% | (17)% | 3% | -% | |||||||||||||
Currency-neutral | 3% | (17)% | 2% | -% |
Note: See Appendix A for Non-GAAP reconciliation. Figures may not sum due to rounding.
©2020 Mastercard
January 28, 2021 | 7 |
Business Update Through January 21st
year-over-year growth %
October | November | December | Week ending | Week ending | Week ending | ||||||
Full Month1 | Full Month1 | Full Month1 | January 7 | January 14 | January 21 | ||||||
Switched volume2 | 4% | 4% | 4% | 3% | 3% | 2% | |||||
United States | 7% | 5% | 5% | 11% | 10% | 7% | |||||
Worldwide less U.S. | 2% | 3% | 2% | (4)% | (3)% | (2)% | |||||
Switched transactions3 | 6% | 4% | 3% | 3% | 3% | 2% | |||||
Cross-border volume2 | (34)% | (27)% | (27)% | (34)% | (30)% | (30)% | |||||
Intra-Europe | (21)% | (12)% | (13)% | (22)% | (20)% | (23)% | |||||
Other Cross-Border | (45)% | (39)% | (40)% | (43)% | (39)% | (36)% |
- Growth rates have been normalized to eliminate the effects of differing switching and carryover days between periods
- Mastercard-brandedprograms only; on a local currency basis
- Total number of transactions switched by Mastercard
©2020 Mastercard
January 28, 2021 | 8 |
Cross-border Volume Trends
1. Through January 21st MTD
Note: Cross-border volume growth is calculated in a manner as defined in our Supplemental Operational Performance Data
©2020 Mastercard
January 28, 2021 | 9 |
Looking Ahead
Further thoughts
©2020 Mastercard
January 28, 2021 | 10 |
Appendices
Appendix A
Non-GAAP Reconciliation
($ in millions, except per share data)
Three Months Ended December 31, 2020 | ||||||||||||||||||
Operating | Operating | Operating | Other Income | Effective income | Net income | Diluted earnings | ||||||||||||
expenses | income | margin | (Expense) | tax rate | per share | |||||||||||||
Reported - GAAP | $ | 2,062 | $ | 2,058 | 49.9 % | $ | 110 | 17.6 % | $ | 1,785 | $ | 1.78 | ||||||
(Gains) losses on equity investments 1 | ** | ** | ** | (220) | 0.2 % | (186) | $ | (0.19) | ||||||||||
Litigation provisions 2 | (45) | 45 | 1.1 % | ** | (0.4)% | 45 | $ | 0.04 | ||||||||||
Non-GAAP | $ | 2,018 | $ | 2,102 | 51.0 % | $ | (110) | 17.5 % | $ | 1,644 | $ | 1.64 | ||||||
Three Months Ended December 31, 2019 | ||||||||||||||||||
Operating | Operating | Operating | Other Income | Effective income | Net income | Diluted earnings | ||||||||||||
expenses | income | margin | (Expense) | tax rate | per share | |||||||||||||
Reported - GAAP | $ | 2,015 | $ | 2,399 | 54.4 % | $ | 76 | 15.1 % | $ | 2,100 | $ | 2.07 | ||||||
(Gains) losses on equity investments 1 | ** | ** | ** | (119) | (0.4)% | (92) | $ | (0.09) | ||||||||||
Tax Act 3 | ** | ** | ** | ** | 1.2 % | (27) | $ | (0.03) | ||||||||||
Non-GAAP | $ | 2,015 | $ | 2,399 | 54.4 % | $ | (43) | 15.9 % | $ | 1,981 | $ | 1.96 | ||||||
Note: Figures may not sum due to rounding. ** Not applicable
- Q4'20 and Q4'19, net gains of $220 million and $119 million, respectively, were primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
2 | Q4'20 pre-tax charges of $45 million related to an ongoing confidential legal matter associated with the company's prepaid cards in the U.K. This matter relates to the company's historical business and has no |
impact on current or on-going operations. | |
3 | Mastercard©2020 |
Q4'19 tax benefit of $27 million related to additional foreign tax credits which can be carried back under the transition rules contained in the final foreign tax credit regulations issued in 2019. |
January 28, 2021 | 12 |
Appendix A (continued)
Non-GAAP Reconciliation
Three Months Ended December 31, 2020 as compared to the Three Months Ended December 31, 2019 | ||||||||||||||||
Increase/(Decrease) | ||||||||||||||||
Net revenue | Operating | Operating | Operating | Effective income | Net income | Diluted earnings | ||||||||||
expenses | income | margin | tax rate | per share | ||||||||||||
Reported - GAAP | (7)% | 2 % | (14)% | (4.4) ppt | 2.5 | ppt | (15)% | (14)% | ||||||||
(Gains) losses on equity investments 1 | ** | ** | ** | ** | 0.6 | ppt | (5)% | (6)% | ||||||||
Litigation provisions 2 | ** | (2)% | 2 % | 1.1 ppt | (0.4) ppt | 2 % | 2 % | |||||||||
Tax Act 3 | ** | ** | ** | ** | (1.2) ppt | 1 % | 1 % | |||||||||
Non-GAAP | (7)% | - % | (12)% | (3.3) ppt | 1.5 | ppt | (17)% | (16)% | ||||||||
Currency impact 4 | - % | - % | - % | 0.1 ppt | (0.1) ppt | - % | - % | |||||||||
Non-GAAP - currency-neutral | (7)% | - % | (12)% | (3.2) ppt | 1.5 | ppt | (17)% | (16)% | ||||||||
Note: Figures may not sum due to rounding. ** Not applicable
- Q4'20 and Q4'19, net gains of $220 million and $119 million, respectively, were primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
- Q4'20 pre-tax charges of $45 million related to an ongoing confidential legal matter associated with the company's prepaid cards in the U.K. This matter relates to the company's historical business and has no impact on current or on-going operations.
3 | Q4'19 tax benefit of $27 million related to additional foreign tax credits which can be carried back under the transition rules contained in the final foreign tax credit regulations issued in 2019. |
4 | Mastercard©2020 |
Represents the translational and transactional impact of currency. |
January 28, 2021 | 13 |
Appendix B
Non-GAAP Reconciliation
First quarter 2021 operating expenses outlook
Q1'21 vs. Q1'20 | ||||
Increase/(Decrease) | ||||
Forecasted Growth - GAAP 1 | Low-double-digits | |||
Litigation provisions2 | 0% | |||
Non-GAAP Growth | Low-double-digits | |||
Currency impact 3 | (2)% | |||
Acquisitions 4 | (4-5)% | |||
Non-GAAP Growth, currency neutral, excluding acquisitions | Mid-single-digits | |||
** Not applicable. | ||||
1 | GAAP - Q1'21 Forecast versus Q1'20 reported results | |||
2 | Impact of Q1'20 provisions for litigation ($6M). | |||
3 | Represents the projected translational and transactional impact of currency. | Mastercard©2020 | ||
4 | Acquisitions closed after the beginning of 2020.. | |||
January 28, 2021 | 14 |
Appendix C
Revenue Growth Drivers
Three Months Ended December 31, 2020 | ||||||||
Volume | Acquisitions | Currency | Other2 | Total | ||||
Impact1 | ||||||||
Domestic assessments | 1 % | - % | (3)% | - % 3 | (1)% | |||
Cross-border volume fees | (29)% | - % | 1 % | (12)% | (40)% | |||
Transaction processing | 4 % | - % | 1 % | - % | 5 % | |||
Other revenues | ** | 1 % | (1)% | 16 % 4 | 16 % | |||
Rebates and incentives | (7)% 5 | - % | (1)% | 8 % 6 | - % | |||
Net revenue | (3)% | 1 % | - % | (4)% | (7)% |
Note: Figures may not sum due to rounding. ** Not applicable
- Represents the translational and transactional impact of currency.
- Includes impact from pricing, other non-volume based fees and geographic mix.
- Includes impact of the allocation of revenue to service deliverables, which are primarily recorded in other revenue when services are performed.
4 Includes impacts from cyber and intelligence fees, data analytics and consulting fees and other payment-related products and services. 5 Includes the impact from mix on incentive-related volumes.
6 Includes the impact of new, renewed and expired agreements.
©2020 Mastercard
January 28, 2021 | 15 |
Appendix D
Operating Expense Growth Drivers (Non-GAAP)
Three Months Ended December 31, 2020 | |||||||
Operational | Special | Acquisitions | Currency | Total | |||
Items1 | Impact2 | ||||||
General and administrative | (1)% | ** | 3 % | - % | 3 % | ||
Advertising and marketing | (18)% | ** | 1 % | - % | (17)% | ||
Depreciation and amortization | (1)% | ** | 3 % | 1 % | 3 % | ||
Total operating expense | (3)% | 2 % | 3 % | - % | 2 % |
Note: Figures may not sum due to rounding. ** Not applicable
- Q4'20 pre-tax charges of $45 million related to an ongoing confidential legal matter associated with the company's prepaid cards in the U.K. This matter relates to the company's historical business and has no impact on current or on-going operations.
- Represents the translational and transactional impact of currency.
©2020 Mastercard
January 28, 2021 | 16 |
Appendix E
4th Quarter G&A Detail
($ in millions)
Increase/(Decrease) | ||||||||||
4Q 20 | 4Q 19 | $ | % | |||||||
Personnel | $ | 970 | $ | 936 | $ | 34 | 4 % | |||
Professional fees | 126 | 154 | (28) | (18)% | ||||||
Data processing and telecommunications | 205 | 178 | 27 | 15 % | ||||||
Foreign exchange activity 1 | 19 | 20 | (1) | (4)% | ||||||
Other | 305 | 291 | 14 | 5 % | ||||||
Total general and administrative expenses | $ | 1,625 | $ | 1,579 | $ | 46 | 3 % | |||
Note: Figures may not sum due to rounding. ** Not applicable
- Foreign exchange activity includes gains and losses on foreign exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies.
©2020 Mastercard
January 28, 2021 | 17 |
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