Mastercard Incorporated : 2020 Q4 Presentation

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)%

1. Growth rates have been normalized to eliminate the effects of differing switching and carryover days between periods
2. Mastercard-brandedprograms only; on a local currency basis
3. 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