Mastercard Inc 10-Q for FY2024 Q1

Mastercard Inc (MA)

10-Q 2024-05-01 For: 2024-03-31

Added on April 02, 2026

About this 10-Q

Mastercard Inc filed this 10-Q on May 1, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.35B; up 10.4% from $5.75B a year earlier
Net income: $3.01B; up 27.5% from net income of $2.36B a year earlier
Diluted EPS: $3.22; up 30.4% from $2.47 a year earlier

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Delaware		13-4172551
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

2000 Purchase Street		10577
Purchase,	NY	(Zip Code)
(Address of principal executive offices)



PART I	5	Item 1.	Consolidated financial statements (unaudited)
	26	Item 2.	Management’s discussion and analysis of financial condition and results of operations
	36	Item 3.	Quantitative and qualitative disclosures about market risk
	37	Item 4.	Controls and procedures


PART II	39	Item 1.	Legal proceedings
	39	Item 1A.	Risk factors
	39	Item 2.	Unregistered sales of equity securities, use of proceeds and issuer purchases of equity securities
	40	Item 5.	Other information
	40	Item 6.	Exhibits
	42	-	Signatures


						Page
Consolidated Statement of Operations — Three Months Ended March 31, 2024 and 2023						6
Consolidated Statement of Comprehensive Income — Three Months Ended March 31, 2024 and 2023						7
Consolidated Balance Sheet — March 31, 2024 and December 31, 2023						8
Consolidated Statement of Changes in Equity — Three Months Ended March 31, 2024 and 2023						9
Consolidated Statement of Cash Flows — Three Months Ended March 31, 2024 and 2023						10
Notes to consolidated financial statements						11


Consolidated Statement of Operations (Unaudited)
	Three Months Ended March 31,
		2024		2023
		(in millions, except per share data)
Net Revenue		$	6,348	$	5,748
Operating Expenses:
General and administrative		2,286		2,043
Advertising and marketing		116		167
Depreciation and amortization		216		191
Provision for litigation		126		211
Total operating expenses		2,744		2,612
Operating income		3,604		3,136
Other Income (Expense):
Investment income		95		55
Gains (losses) on equity investments, net		6		(212)
Interest expense		(150)		(132)
Other income (expense), net		3		6
Total other income (expense)		(46)		(283)
Income before income taxes		3,558		2,853
Income tax expense		547		492
Net Income		$	3,011	$	2,361
Basic Earnings per Share		$	3.23	$	2.48
Basic weighted-average shares outstanding		933		953
Diluted Earnings per Share		$	3.22	$	2.47
Diluted weighted-average shares outstanding		935		956


Consolidated Statement of Comprehensive Income (Unaudited)
	Three Months Ended March 31,
		2024		2023
		(in millions)
Net Income		$	3,011	$	2,361
Other comprehensive income (loss):
Foreign currency translation adjustments		(168)		94
Income tax effect		9		(14)
Foreign currency translation adjustments, net of income tax effect		(159)		80

Translation adjustments on net investment hedges		47		(74)
Income tax effect		(11)		17
Translation adjustments on net investment hedges, net of income tax effect		36		(57)

Cash flow hedges		22		(10)
Income tax effect		(5)		—
Reclassification adjustments for cash flow hedges		5		8
Income tax effect		(2)		1
Cash flow hedges, net of income tax effect		20		(1)







Investment securities available-for-sale		—		2
Income tax effect		—		—
Investment securities available-for-sale, net of income tax effect		—		2

Other comprehensive income (loss), net of income tax effect		(103)		24
Comprehensive Income		$	2,908	$	2,385


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Consolidated Balance Sheet (Unaudited)
	March 31, 2024		December 31, 2023
	(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	7,293	$	8,588

Restricted security deposits held for customers	1,861		1,845
Investments	364		592
Accounts receivable	4,231		4,060
Settlement assets	1,647		1,233
Prepaid expenses and other current assets	3,028		2,643
Total current assets	18,424		18,961
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $2,304 and $2,237, respectively	2,077		2,061
Deferred income taxes	1,329		1,355
Goodwill	7,545		7,660
Other intangible assets, net of accumulated amortization of $2,284 and $2,209, respectively	4,123		4,086
Other assets	9,104		8,325
Total Assets	$	42,602	$	42,448
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable	$	790	$	834
Settlement obligations	1,824		1,399
Restricted security deposits held for customers	1,861		1,845
Accrued litigation	595		723
Accrued expenses	8,062		8,517
Short-term debt	2,086		1,337
Other current liabilities	1,687		1,609
Total current liabilities	16,905		16,264
Long-term debt	13,543		14,344
Deferred income taxes	345		369
Other liabilities	4,501		4,474
Total Liabilities	35,294		35,451
Commitments and Contingencies
Redeemable Non-controlling Interests	22		22
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,403 and 1,402 shares issued and 924 and 927 shares outstanding, respectively	—		—
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 shares issued and outstanding	—		—
Additional paid-in-capital	5,920		5,893
Class A treasury stock, at cost, 479 and 475 shares, respectively	(62,434)		(60,429)
Retained earnings	64,959		62,564
Accumulated other comprehensive income (loss)	(1,202)		(1,099)
Mastercard Incorporated Stockholders' Equity	7,243		6,929
Non-controlling interests	43		46
Total Equity	7,286		6,975
Total Liabilities, Redeemable Non-controlling Interests and Equity	$	42,602	$	42,448


Consolidated Statement of Changes in Equity (Unaudited)

	Stockholders’ Equity
	Common Stock				Additional Paid-In Capital		Class A Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Mastercard Incorporated Stockholders’ Equity		Non- Controlling Interests		Total Equity
	Class A		Class B
	(in millions)








Three Months Ended March 31, 2024
Balance at beginning of period	$	—	$	—	$	5,893	$	(60,429)	$	62,564	$	(1,099)	$	6,929	$	46	$	6,975
Net income	—		—		—		—		3,011		—		3,011		—		3,011
Activity related to non-controlling interests	—		—		—		—		—		—		—		(3)		(3)

Redeemable non-controlling interest adjustments	—		—		—		—		(1)		—		(1)		—		(1)
Other comprehensive income (loss)	—		—		—		—		—		(103)		(103)		—		(103)
Dividends	—		—		—		—		(615)		—		(615)		—		(615)
Purchases of treasury stock	—		—		—		(2,013)		—		—		(2,013)		—		(2,013)
Share-based payments	—		—		27		8		—		—		35		—		35
Balance at end of period	$	—	$	—	$	5,920	$	(62,434)	$	64,959	$	(1,202)	$	7,243	$	43	$	7,286








Three Months Ended March 31, 2023
Balance at beginning of period	$	—	$	—	$	5,298	$	(51,354)	$	53,607	$	(1,253)	$	6,298	$	58	$	6,356
Net income	—		—		—		—		2,361		—		2,361		—		2,361
Activity related to non-controlling interests	—		—		—		—		—		—		—		(2)		(2)
Redeemable non-controlling interest adjustments	—		—		—		—		(3)		—		(3)		—		(3)
Other comprehensive income (loss)	—		—		—		—		—		24		24		—		24
Dividends	—		—		—		—		(541)		—		(541)		—		(541)
Purchases of treasury stock	—		—				(2,894)		—		—		(2,894)		—		(2,894)
Share-based payments	—		—		78		7		—		—		85		—		85
Balance at end of period	$	—	$	—	$	5,376	$	(54,241)	$	55,424	$	(1,229)	$	5,330	$	56	$	5,386


Consolidated Statement of Cash Flows (Unaudited)
	Three Months Ended March 31,
	2024		2023
	(in millions)
Operating Activities
Net income	$	3,011	$	2,361
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer incentives	411		378
Depreciation and amortization	216		191
(Gains) losses on equity investments, net	(6)		212
Share-based compensation	108		108
Deferred income taxes	3		(129)
Other	32		2
Changes in operating assets and liabilities:
Accounts receivable	(219)		(38)

Settlement assets	(417)		35
Prepaid expenses	(1,490)		(761)
Accrued litigation and legal settlements	(127)		9
Restricted security deposits held for customers	16		40
Accounts payable	(21)		(184)
Settlement obligations	430		(241)
Accrued expenses	(446)		(506)

Net change in other assets and liabilities	171		442
Net cash provided by operating activities	1,672		1,919
Investing Activities
Purchases of investment securities available-for-sale	(95)		(50)
Purchases of investments held-to-maturity	(66)		(26)
Proceeds from sales of investment securities available-for-sale	22		4
Proceeds from maturities of investment securities available-for-sale	67		51
Proceeds from maturities of investments held-to-maturity	284		24
Purchases of property and equipment	(157)		(110)
Capitalized software	(221)		(242)
Purchases of equity investments	(8)		(22)
Proceeds from sales of equity investments	—		44


Other investing activities	—		(70)
Net cash used in investing activities	(174)		(397)
Financing Activities
Purchases of treasury stock	(1,992)		(2,878)
Dividends paid	(616)		(545)
Proceeds from debt, net	—		1,489




Tax withholdings related to share-based payments	(170)		(76)
Cash proceeds from exercise of stock options	97		53
Other financing activities	—		2
Net cash used in financing activities	(2,681)		(1,955)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(95)		37
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(1,278)		(396)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period	10,465		9,196
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period	$	9,187	$	8,800


	March 31, 2024		December 31, 2023
	(in millions)
Receivables from contracts with customers
Accounts receivable	$	3,989	$	3,851
Contract assets
Prepaid expenses and other current assets	157		133
Other assets	409		387
Deferred revenue 1
Other current liabilities	632		459
Other liabilities	346		318


	March 31, 2024								December 31, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in millions)
Government and agency securities	$	89	$	—	$	—	$	89	$	86	$	—	$	—	$	86
Corporate securities	194		1		(1)		194		200		1		(1)		200
Total	$	283	$	1	$	(1)	$	283	$	286	$	1	$	(1)	$	286



	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	151	$	151
Due after 1 year through 5 years	132		132

Total	$	283	$	283


	Balance at December 31, 2023		Purchases		Sales		Changes in Fair Value 1		Other 2		Balance at March 31, 2024
	(in millions)
Marketable securities	$	506	$	—	$	—	$	7	$	(1)	$	512
Nonmarketable securities	1,223		8		—		(1)		(5)		1,225
Total equity investments	$	1,729	$	8	$	—	$	6	$	(6)	$	1,737


	Three Months Ended March 31,
	2024		2023
	(in millions)
Net revenue by category:
Payment network	$	3,920	$	3,650
Value-added services and solutions	2,428		2,098
Net revenue	$	6,348	$	5,748
Net revenue by geographic region:
Americas 1	$	2,773	$	2,537
Asia Pacific, Europe, Middle East and Africa	3,575		3,211
Net revenue	$	6,348	$	5,748



	(in millions)
Initial cost basis	$	558
Cumulative adjustments 1:
Upward adjustments	636
Downward adjustments (including impairment)	(181)
Carrying amount, end of period	$	1,013


	March 31, 2024								December 31, 2023
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Assets
Investment securities available-for-sale 1:
Government and agency securities	$	37	$	52	$	—	$	89	$	33	$	53	$	—	$	86
Corporate securities	—		194		—		194		—		200		—		200
Derivative instruments 2:
Foreign exchange contracts	—		54		—		54		—		36		—		36

Marketable securities 3:
Equity securities	512		—		—		512		506		—		—		506
Deferred compensation plan 4:
Deferred compensation assets	101		—		—		101		93		—		—		93

Liabilities
Derivative instruments 2:
Foreign exchange contracts	$	—	$	31	$	—	$	31	$	—	$	104	$	—	$	104
Interest rate contracts	—		88		—		88		—		79		—		79
Deferred compensation plan 5:
Deferred compensation liabilities	100		—		—		100		91		—		—		91


	December 31, 2023		Increase / (Decrease)		Reclassifications		March 31, 2024
	(in millions)
Foreign currency translation adjustments 1	$	(1,119)	$	(159)	$	—	$	(1,278)
Translation adjustments on net investment hedges 2	181		36		—		217
Cash flow hedges
Foreign exchange contracts 3	(17)		17		2		2
Interest rate contracts	(118)		—		1		(117)
Defined benefit pension and other postretirement plans	(25)		—		—		(25)
Investment securities available-for-sale	(1)		—		—		(1)
Accumulated other comprehensive income (loss)	$	(1,099)	$	(106)	$	3	$	(1,202)


	December 31, 2022		Increase / (Decrease)		Reclassifications		March 31, 2023
	(in millions)
Foreign currency translation adjustments 1	$	(1,414)	$	80	$	—	$	(1,334)
Translation adjustments on net investment hedges 2	309		(57)		—		252
Cash flow hedges
Foreign exchange contracts 3	(8)		(10)		8		(10)
Interest rate contracts	(123)		—		1		(122)
Defined benefit pension and other postretirement plans	(11)		—		—		(11)
Investment securities available-for-sale	(6)		2		—		(4)
Accumulated other comprehensive income (loss)	$	(1,253)	$	15	$	9	$	(1,229)


	Grants in 2024	Weighted-Average Grant-Date Fair Value
	(in millions)	(per option/unit)
Non-qualified stock options	0.2	$	165
Restricted stock units	0.9	$	472
Performance stock units	0.2	$	513


	March 31, 2024						December 31, 2023
	Notional		Derivative assets		Derivative liabilities		Notional		Derivative assets		Derivative liabilities
	(in millions)
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1	$	951	$	13	$	11	$	1,006	$	2	$	25
Interest rate contracts in a fair value hedge 2	1,000		—		88		1,000		—		79

Derivatives not designated as hedging instruments
Foreign exchange contracts 1	5,526		41		20		5,424		34		79
Total derivative assets/liabilities	$	7,477	$	54	$	119	$	7,430	$	36	$	183


	Gain (Loss) Recognized in OCI					Gain (Loss) Reclassified from AOCI
	Three Months Ended March 31,				Location of Gain (Loss) Reclassified from AOCI into Earnings	Three Months Ended March 31,
	2024		2023			2024		2023
	(in millions)					(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts	$	22	$	(10)	Net revenue	$	(3)	$	(6)
Interest rate contracts	$	—	$	—	Interest expense	$	(2)	$	(2)

Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts	$	3	$	(39)


	Three Months Ended March 31,						Increase/(Decrease)
		2024				2023
			(in millions, except per share data)
Net revenue			$	6,348						$	5,748		10%
Operating expenses			$	2,744			$	2,612				5%
Operating income			$	3,604			$	3,136				15%
Operating margin			56.8		%		54.6		%			2.2 ppt
Income tax expense			$	547			$	492				11%
Effective income tax rate			15.4		%		17.2		%			(1.9) ppt
Net income			$	3,011			$	2,361				28%
Diluted earnings per share			$	3.22			$	2.47				30%
Diluted weighted-average shares outstanding			935				956					(2)%


Net revenue




Three Months Ended March 31, 2024
GAAP	Non-GAAP (currency-neutral)	Both the as reported and currency-neutral net revenue increase was attributable to growth in our payment network and value-added services and solutions.
up 10%	up 11%


Operating expenses	Adjusted operating expenses




Three Months Ended March 31, 2024
GAAP	Non-GAAP (currency-neutral)	The as reported operating expense increase was primarily due to higher general and administrative expenses, partially offset by lower litigation provisions and advertising and marketing expenses. The as adjusted operating expense increase was primarily due to higher general and administrative expenses, partially offset by lower advertising and marketing expenses.
up 5%	up 9%


Effective income tax rate	Adjusted effective income tax rate




Three Months Ended March 31, 2024		Both the as reported and as adjusted effective income tax rates were lower than the prior year rates primarily due to a change in our geographic mix of earnings as well as discrete tax benefits related to share-based payments.
GAAP	Non-GAAP
15.4%	15.9%
down 1.9 ppt	down 2.3 ppt


	Three Months Ended March 31, 2023
	Operating expenses		Operating margin		Other income (expense)		Effective income tax rate		Net income		Diluted earnings per share
	($ in millions, except per share data)
Reported - GAAP	$	2,612	54.6	%	$	(283)	17.2	%	$	2,361	$	2.47
(Gains) losses on equity investments	**		**		212		—	%	176		0.18
Litigation provisions	(211)		3.7	%	**		1.1	%	140		0.15

Adjusted - Non-GAAP	$	2,401	58.2	%	$	(71)	18.3	%	$	2,678	$	2.80


	Three Months Ended March 31, 2024
	Increase/(Decrease)
	Operational		Acquisitions			Currency Impact 1			Total
Payment network	8	%		**			(1)	%		7	%
Value-added services and solutions	15	%		—	%		—	%		16	%



Net revenue	11	%		—	%		—	%		10	%


	Three Months Ended March 31,					Increase/ (Decrease)
		2024			2023
			($ in millions)
General and administrative			$	2,286		$	2,043	12%
Advertising and marketing			116			167		(31)%
Depreciation and amortization			216			191		13%
Provision for litigation			126			211		**
Total operating expenses			2,744			2,612		5%
Special Items 1			(126)			(211)		**
Adjusted total operating expenses (excluding Special Items 1)			$	2,617		$	2,401	9%


	March 31, 2024		December 31, 2023
	(in billions)
Cash, cash equivalents and investments 1	$	7.7	$	9.2
Unused line of credit	$	8.0	$	8.0




	(in millions, except average price data)
Remaining authorization at December 31, 2023		$	14,142
Dollar-value of shares repurchased during the three months ended March 31, 2024 1		$	1,992
Remaining authorization at March 31, 2024		$	12,150
Shares repurchased during the three months ended March 31, 2024		4.4
Average price paid per share during the three months ended March 31, 2024		$	454.23


Period	Total Number of Shares Purchased	Average Price Paid per Share (including commission cost)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs 1
January 1 - 31	1,584,245	$	428.76	1,584,245	$	13,463,128,353
February 1 - 29	1,399,546	$	461.26	1,399,546	$	12,817,572,326
March 1 - 31	1,401,883	$	475.98	1,401,883	$	12,150,300,756
Total	4,385,674	$	454.23	4,385,674


Exhibit Number						Exhibit Description
10.1*+						Form of Restricted Stock Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 202 4 ).
10.2*+						Form of Stock Option Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 202 4 ).
10.3*+						Form of Performance Stock Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 202 4 ).
31.1*						Certification of Michael Miebach, President and Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Sachin Mehra, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certification of Michael Miebach, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Certification of Sachin Mehra, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*						Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document


Vest Date			Vest Quantity
March 1, 20xx			One third (33.33%)
March 1, 20xx			One third (33.33%)
March 1, 20xx			One third (33.33%)


			Date:			May 1, 2024

			By:			/s/ Michael Miebach
						Michael Miebach
						President and Chief Executive Officer


			Date:			May 1, 2024

			By:			/s/ Sachin Mehra
						Sachin Mehra
						Chief Financial Officer