Mastercard MA Q2 2025 Earnings Call

Thank you, Devon. Good morning, everyone. The headline this morning is we delivered another strong quarter with our financial results exceeding our expectations. Second quarter net revenues were up 16% and adjusted net income up 12% versus a year ago on a non-GAAP currency neutral basis. This is all underpinned by our winning strategy, diversified business model, and a relentless focus on executing against the priorities that fuel our growth algorithm. I will share several compelling examples on that today. But before I do, I will provide a few observations on the macro environment. Consumer spending remains healthy, supported by low unemployment and wage growth that continues to outpace inflation. This is true across both affluent as well as mass market consumers. While macro uncertainty remains due to government actions and geopolitical tensions, overall we remain positive about our growth outlook as the fundamentals that support consumer spending have been strong. With that as a backdrop, let's get into the details of the quarter. We continue to deliver a steady drum beat of significant wins with leading merchants and retailers. I'm thrilled that we have extended our exclusive partnership with American Airlines, one of the world's largest credit cobrand portfolios. Our services continue to set us apart. American will leverage our advanced analytics, loyalty, personalization, and security solutions to optimize their card proposition and enhance their industry-leading travel rewards program. We're also partnering with OnePay, a leading consumer fintech platform in Synchrony to launch a new credit card with Walmart that will be available to consumers across the US. And we're expanding our relationship with Uber, extending our exclusive Uber Pro card portfolios in the US and Canada. We will also launch new programs in additional markets, including the UK as part of our global partnership. As you look around the world, it's clear that leading merchants see tremendous value in partnering with Mastercard. We're also winning with Fintechs, buy now pay later providers and marketplaces. With PayPal, we extended our card issuing partnership in the United States. We also signed new credit and debit issuing agreements in the UK and Germany. And we are excited for PayPal's recently launched contactless mobile wallet in Germany. I just love doing things in Germany. In the buy now pay later space, we signed an exclusive prepaid and credit card issuing deal with Afterpay in Australia. In Argentina, we renewed our consumer prepaid deal with e-commerce and fintech platform Mercado Libre. We're also partnering with them to launch new credit card programs in that market. And we renewed our partnership with Sicredi, one of the largest credit unions in Brazil across credit, debit, and commercial. In addition to winning deals, we're capitalizing on the significant volume and transaction opportunity in consumer payments by expanding acceptance, transforming the checkout experience, opening new verticals, leveraging alternative distribution channels, and launching innovative new capabilities. I'll give you a few examples for each of these five dimensions. Starting with acceptance, we continue to leverage our contactless technology to drive open loop acceptance in the transit space. Our momentum here continues. In the second quarter, over 60 new public transport operators hopped on board to accept cards. From Ventura County, California to Taichung Metro in Taiwan. We're also opening transit acceptance in China. This quarter, we launched Tap to Pay in the Shanghai Metro, which followed a successful launch in the Beijing Metro last year in a QR-based ecosystem. This represents an important evolution toward a multi-form factor market that includes NFC technology. We're also transforming the online checkout experience by driving adoption of capabilities like tokenization, Click to Pay, and payment passkeys. We have significant momentum towards our 2030 vision to transform online checkout into a single-click experience. In Europe, over 50% of e-commerce transactions are now tokenized. And for Click to Pay, Commonwealth Bank of Australia and Westpac are automatically enrolling cardholders over the coming months, bringing mass market adoption in Australia. Issuers around the world are committed to removing manual entry by also making Click to Pay a core card benefit, including NatWest, Standard Bank, Bankcom in Ukraine and others. And on the acceptance side, the number of Click to Pay transacting merchants was up 4x in the first half of 2025 versus a year ago. We're also focused on driving acceptance in new verticals that have not historically been well penetrated by card. Insurance payments are a great example. Significant flows, strong consumer demand in a vertical that has undergone a digital transformation in recent years. However, card penetration is far lower relative to other carded categories. We are attacking this opportunity through new agreements with partners like Adyen, Checkout.com, Stripe, Transcard, and Worldpay. These partners will focus on enabling consumers to pay their insurance premiums. They will support claims disbursements to policyholders, and they will facilitate B2B payments from insurers to vendors providing services for these claims. Next, we're tapping into alternative distribution channels. For example, we're enabling stored value wallets around the globe. Our partnership with Alipay in Hong Kong and GCash will enable 36 local e-wallets to extend their use for cross-border through the international Alipay Plus wallet gateway and Mastercard credentials automatically added to the wallets, allowing any stored value to be spent via a simple tap anywhere Mastercard is accepted around the globe. This is again a huge vote of confidence for NFC. Let's look at other areas where we're creating and deploying smart and engaging consumer experiences that drive brand preference and incremental spend. First up, we're providing offerings that meet the unique needs of each individual cardholder. In Canada, we partnered with CIBC to launch the CIBC Adaptive Mastercard, which automatically applies additional rewards against your top three spending categories each month. It also includes our innovative Touch Card functionality which allows cardholders, including the visually impaired, to easily distinguish the card from others in their wallet. Next, affluent cardholders. On average, they spend over two times more per card and up to three times more on cross-border. We're elevating our affluent value proposition with the Mastercard Collection, a comprehensive set of premium benefits created to drive top-of-wallet behavior. That's paired with the expansion of our World product suite in the newly created World Legend Mastercard. Our most prestigious consumer card is now available to banks globally. This first launch is this month with the Citi Strata Elite card. And finally, we're providing greater flexibility for consumers. We've deployed the Mastercard One Credential as a network-level capability worldwide. It enables issuers to offer a single digitally connected credential to give consumers flexibility as to how they want to pay: debit, credit, prepaid, installments, or stablecoin, all through their banking app. And as Raj and Jorn explained in detail in our recent call on Agentic Commerce and stablecoins, we're leaning in to open up and drive new opportunities for our network in these spaces. If you didn't have a chance to join, I encourage you to listen to the replay. Today, I reinforce a few key points. First, Agentic Commerce. We see this as an exciting opportunity across consumer and commercial flows to shop with merchants easily and securely. We're scaling Agent Pay globally, leveraging our capabilities to extend the trust of the Mastercard brand. It enables us to support a new way for consumers to transact. It gives us yet another capability. It sets us apart from domestic and alternative payment systems and it provides a way for us to drive switching and sell more services. And as for stablecoins, we see it as another currency. We also see it as additive to the network with opportunities for us to provide the on and off ramps from fiat to stablecoin, to partner with wallets to bring interoperability, bring relevant services, bring global reach and trust to the specific use cases. With new technologies, we always embrace innovation. We offer choice and extend the network to new partners. And we're doing the same thing here. We will bring our reach, ubiquity, and trust to Agentic Commerce and stablecoins. And we'll provide an environment for our partners to innovate upon. That is the Mastercard way. Now turning to commercial payments. We're driving growth by launching differentiated capabilities, scaling our industry-leading virtual card solutions, and expanding small business card distribution through new and expanded partnerships. In terms of new capabilities, the Small Business Navigator provides us entrepreneurs access to cybersecurity solutions, insights and analytics, and partner tools to support more efficient and effective operations. Through the platform, Fiserv's Clover is partnering with us to offer merchants discounted point of sale capabilities and Square is providing tailored educational programs to help small businesses thrive. In the fleet space, several leading US issuers, including Corpay, are deploying our new capability to integrate fleet cards into digital wallets. For the first time, fleet managers can now instantly issue and manage digital cards, while drivers will be prompted to provide key data like odometer readings when they tap to pay at the pump. When it comes to invoice payments, we continue to scale our proprietary virtual card technology by making it easier for issuers and technology platforms to integrate our capabilities. We're now live with eight leading B2B platforms including Coupa, Concur, GEP, HRS, Navan, Oracle Fusion Cloud ERP, and SAP Taulia. Several more in implementation. On the supplier side, our Receivables Manager platform is now available globally. It's being deployed through partners like Elevant, Run Payments, and Easy Pay to streamline virtual card acceptance and payment reconciliation. We're also driving small business and card distribution through a series of new and expanded issuer and marketplace partnerships. We've enhanced our exclusive relationship with SumUp through a suite of services designed to accelerate growth of their small business customers across Europe. And we're partnering with e-commerce marketplaces like FoxCommerce who will distribute prepaid business cards to their merchants so that they can make and receive payments on cards across several countries in Africa. Shifting to disbursements, we continue to see strong growth in our Mastercard Move capabilities with year-over-year transaction growth of over 35% in quarter 2. We're focused on penetrating a wide range of new and existing use cases. For example, in the disbursement space, we've partnered with Jack Henry to distribute Mastercard Move to thousands of community banks through their Rapid Transfer solution. We've expanded our relationship with Nuvei who will leverage Mastercard Move to enable Canadian businesses to facilitate near-instant payouts to Mastercard debit and prepaid cards. And staying in Canada, Remitly Canada is expanding the use of our cross-border services in about 20 additional corridors. Moving to our third strategic pillar, value-added services and solutions. We continue to leverage the power of our data and product capabilities to differentiate payments and capture adjacent revenue opportunities. We do this by penetrating existing customers, diversifying into new customer types, targeting new buying centers, leveraging B2B partners for distribution, and deploying new services. Our years of experience and full suite of products helps us build fit-for-purpose solutions for clients. We're seeing this in practice with several large customers. For example, we've partnered with Guaranty Bank to support multiple strategic initiatives, including revamping their digital wallet, optimizing collections, and boosting credit card sales across digital channels. And we've partnered with Deutsche Bank to use our open banking capability to grow account payments across Europe. These services deliver significant value in their own right, but they are even more powerful because of the linkage to payments that fuels our virtuous cycle. We also continue to capture payment-adjacent opportunities and win business with customers beyond issuers and acquirers. We're leveraging our test and learn capabilities with partners as diverse as Lufthansa and adtech company Blis to help them conduct scalable, sophisticated testing in areas such as media measurement, operations, and marketing. A range of capabilities also enables us to expand into new buying centers with existing customers. For example, the credit risk team at Stone, one of the largest acquirers in Brazil, plans to leverage our small business credit analytics product to enhance the accuracy of its credit offerings to SMB clients. We're also leveraging B2B channel partners to distribute our services at scale. Solidgate, a payment processing platform in EMEA used by merchants in over 150 countries, will use identity insights for transactions to help reduce fraud and increase acceptance. Finally, we continue to develop new services. We just announced Mastercard Account Protect, which will combine our cutting-edge fraud prevention technology with a new dispute resolution framework to safeguard consumers when making account payments. Deploying services like this across account rails is a major step forward as it helps us grow our addressable market while also further protecting our customers and the ecosystem. We're starting with customers in the UK including NatWest, Santander, and Monzo to bring this global account overlay to other markets later this year. We remain enthusiastic about our future growth potential for services. Our breadth of data, network of partners, unique product capabilities, strong customer relationships, and our incredible talent will help us to continue to differentiate and provide us with substantial runway for growth. So with that, that was a lot. I will wrap it up. In summary, we delivered another very strong quarter despite an uncertain backdrop. There's significant opportunity ahead. The fundamentals of our business are strong. Our proven growth algorithm and differentiated solutions position us to deliver and win as we have demonstrated time and time again. Sachin, over to you.

All right. So let me kick this off with answering the first part here on the vast portfolio. So when I look across the portfolio, I think the first thing to say it's a very carefully curated portfolio. This isn't a set of single pearls on a string. So this is really before, during, after transaction how we can bring value around the payment transaction and then even beyond that when you think about topics like cybersecurity. So carefully curated first point to note. When you think about it over the arc of time, we have been particularly focused over the past decade or so on security solutions. So that's certainly a standout from a differentiation perspective. We've also been incredibly focused on leveraging our data to drive better engagement solutions for our customers. So if you think in a more digital world, your cyber risks will go up. That's why cybersecurity is at the focus.

of what we're doing. And in a more digital world, consumer engagement gets harder and harder, and you need better technology, better differentiation to drive through the clutter. So if I take some specifics out of both of these portfolios, first of all on the cybersecurity side, the stakes are getting higher and higher. The fraudsters are using latest technology, using artificial intelligence, generative AI to power their solutions to break through on the fraud side, on the cybersecurity side, and we're doing exactly the same. So I mentioned this in previous calls. Decision Intelligence Pro is leveraging data out of all sources of the internet, putting it through a generative AI engine for us predicting fraud. So instead of preventing fraud, we're going to predicting fraud, which is the latest stage of this kind of game. And this is clear identifiable value for our customers that are very happy to pay for. And here we are right at the second point of your question on pricing for value. On the customer engagement side, it's very similar. Our personalization engine through our Dynamic Yield acquisition continues to be providing outstanding value to our customers to really drive that personalized solution. Let's say you're a retail bank and you want to drive new account growth. You need a personalized solution, right channel, right context to do that. That's what personalization through Dynamic does for us and for our customers in a way better than anybody else out there. You find us in the top quadrant of the Gartner Magic Quadrant, whatever the top quadrant. So they are really good at that. So a couple of examples. So in a world with some uncertainty from a macroeconomic perspective, the desire for our customers to make sure they got full focus on the fraud line in their P&L to drive their top line with better acquisitions, that allows us to say here is an outcome that you can see that you will see in your P&L, and that gives us power to price for that because we're pricing for that exact value. So that's what I would say. It's a very differentiated proposition across the industry. We've been at it for a decade and we're going to continue to push that forward.

Right. You know, I couldn't agree more, Harshita. The short to medium-term opportunity very much out there in this commercial POS space. There's still so much cash out there. There's so many checks out there. And there's been so many almost virgin markets where issuers, where companies just haven't focused on this. So that is not new news. This is why we put out the market sizing as we did at our investor day. So this is significant. The way to go to market on that is really to build those issuer relationships. We have the product construct today. It's not about building new products in the space. So we have that. It's really finding the partners out there, finding the marketplaces that focus on small business to drive that business. You take another lens at this, it's not just about small business. I mentioned in my comments earlier there is the fleet card business where we're the leader in this business. That's again a leading product and we're differentiating on that. We're pushing that around the world as well as in other regions this starts to come in focus. So the whole wave of digitization, the pressure on profitability, the rebalancing of supply chains, companies are looking for solutions that make running their business easier and this is where this comes in. For example, it's very much about being paid faster as a small business, that's what cards does for them, and that is a very helpful thing. So overall it's a pretty clear go to market, it's not rocket science, but we are differentiated on some of our solutions, fleet card and so forth, and we've been at it a long time. We have now staffed this all up around the world with focused specialized teams and product teams around the world, taking this very seriously, which is why we've gone out with a very ambitious growth target to penetrate that SAM that we shared at the investor day with you.

And on Recorded Future, you know, if I can just remind everybody, thank you for the question, Tien-Tsin. World's largest threat intelligence company, 1,900 customers, 75 countries, so very significant. You see a lot of Fortune 100 companies in there as well as G20 governments, so it's an excellent mix. Based out of Austin, we love them. Pre our acquisition, we already started, we had a partnership with them on a couple of products. We launched a few things there. Now we are in post-acquisition stage. So we've hit the ground running. It is still very early days obviously, but we're already putting out more products with them. Malware Intelligence is one that I called out in the last quarter around this. The beauty here is they have a lot of data which they get from all sources of the internet as I mentioned earlier. At the same time we have a lot of data. The combination of that is the magic sauce here. The effectiveness of us to help our customers predict, to understand targeted threats. If you are a company and you're trying to defend against cybersecurity and you're doing this in a very broad fashion, that is very expensive. What Recorded Future, what Mastercard is now helping our customer with is identifying where the threat vectors actually are. So you can be much more targeted in your response. That is first of all more effective from reducing cybersecurity risk, at the same time it's more effective from a cost perspective. So that's a really winning proposition. We're excited about that, the teams are very busy on the product side to put this out. At the same time, there's obvious synergies of Mastercard's reach with our clients to take these differentiated products and take them to the market. At the same time, we have a whole set of security solutions that we can sell and we want to sell and we will sell into the 1,900 customers and the new customers that they will gain. So this is a very natural extension of our multi-layered security solution strategy to go into threat intelligence which is now the state-of-the-art.

Right. Well, great question, important topic. You've heard us talk about open finance for years, even before the acquisition of Finicity. So this whole idea that a consumer can use their data footprint to avail services in the finance space, and you know, you go from open finance to open data in any other space, I think it's a good notion and that generally resonates and will not go away. You see this, you see it in Europe where we're very active in the open banking, open finance space, in Australia and here in the US. So this more recent conversation, I mean we've all seen the coverage on this. We don't really have full visibility here on what is being specifically considered by a number of banks. I can tell you Chase and other banks are fantastic partners of ours. So that's for sure true. So we'll have to see where this goes. Our fundamental belief that direct consumer consented data and their ability to share that is very important and that will be a winning proposition over time. Various economic considerations out there that are being discussed in the coverage that will have to be figured out, but it's not something that we have been engaged in at this point. So we'll see, we have to work it through. Fundamentally an important space and consumers should be able to do exactly what you just said, Will.

Right, Rayna. Yeah, great question. And certainly a topic that we have been focused on. I gave you some examples in the prepared remarks. What sets us apart in winning against domestic schemes and so forth. So we continue to try to differentiate our product set. You asked specifically about Brazil and countries like that. So maybe that is a good opportunity to just illustrate what I just said a little more in the context of Brazil. So here is a system that has been put out very much with one focus in mind which was to address some financial inclusion aspects and has been very successful at that. At the same time, we have strong partnerships in the Brazilian markets with banks, with fintechs across the board and we've been driving our business to put better solutions into the hands of consumers and that is always a focus on all consumers. So consumers that graduate into the Brazilian digital economy through Pix, you could see them over time graduating into our products that we provide on the card side etc. Now what we've also been doing is you have to be very laser focused on how you compete and one thing that we just as an industry and as a company wanted to do a better job on is make sure that we have the latest state-of-the-art solution for online transactions in the market. So the debit platform in Brazil we have completely revamped and put out a new set of solutions out there that now, Pix is also enabling consumers with their solution and we wanted to make sure that we have a competitive product which we now have in the hands of the banks in Brazil. So that continues. Pix is innovating on various other things, buy now pay later and so forth, and so are we. There's an excellent solution out there in the market already on installment payments. So that is very competitive as far as we can tell. There's recurring payment solutions that Pix is considering. And that's great and we're seeing the benefit in that and we have for a long time and there's a very strong proposition particularly on credit cards that are on file in the market which allows us to win and continue to drive this business. The business continues to see very healthy growth rates for us in Brazil. So from that perspective I think it's just our general approach, provide choice, partner wherever we can, compete effectively in the market. So that's the game and it's a similar game in India on UPI. We always look to partner wherever we can and otherwise have a good solution out there for our partners. So I see tremendous opportunity in the overall growth. This is a very effective digital economy in Brazil that continues to grow at strong rates and we're a big player.

Good. And on ID, you know, this is if you think about a tech stack and elements of the tech stack for the digital economy. So we look at this and say we're powering the digital economy, maybe powering digital commerce, and digital identity is a fundamental element of what needs to happen in that kind of world. So who's behind the transaction? Who's at the other end of the transaction? And that is not just about payments. Exactly to your question. This is about onboarding on anything. You could be a merchant onboarding a consumer. Today this thing, I'm going to send you an email and you confirm that, that is not identifying your consumer. All things can go wrong on that. So digital identity, proper digital identity is really critical. Now the game of digital identity is getting harder and harder with technology. I was talking earlier about cybersecurity risk and so forth. So the stakes are increasing. You got to get better at it. The good thing is we've been at this for a long time. And this is initially around Mastercard payments and transactions. But we have very specific examples out there. For example, you heard us talk about in the open banking space, are we taking a digital identity solution and coupling that with open banking connectivity to make it clear that data can actually be exchanged in a very safe fashion. I gave you one of my favorite use cases in this and this is MLB, Major League Baseball. So if you want to vote for the All-Star game, what is happening is that our identity solutions behind it. This is actually you voting and not your brother and your cousin and so forth. So there's a whole wide range of use cases that go way away from our core business into a whole new set of use cases. So it's really an enabler of the overall digital economy and you see us, if you draw concentric circles around the transaction, the payment transaction being at the center, we try to play further and further out to be truly powering the digital economy.

Right. You know, this is very true. So it's not about taking price but providing value and I think the key aspect is who we provide value to. We provide value to our existing customers but you heard, when we talk about our go to market in services, when we talk about our go to market for a whole set of payment solutions, it's about new customers, about new buying centers, it's about new markets. So our ability where we take and create value, there's a whole sea of opportunity out there. So for us, we continue to do that. That's how we build the business. So if you were asking your question thinking about just one wallet, that's not it. So our share of wallet is the world, is the whole global wallet and we're going to drive value everywhere across the board.

All right. Let's close out the call. So thank you very much again for all those questions, those continued support. Obviously my opportunity to thank the 35,000 people here at Mastercard for driving this value all across and leave you all with wishing you guys enjoying the rest of your summer. Thank you very much. Speak to you next quarter.