Mastercard Incorporated · NYSE:MA
Mastercard — Investor Day (September 2019)
99 slides from Mastercard's investor day presentation, Sep 12, 2019
Slide 1: Mastercard Investment Community Meeting
Mastercard Investment Community Meeting SEPTEMBER 12, 2019
Slide 2: Welcome
Welcome Warren Kneeshaw Executive Vice President, Investor Relations
Slide 3: Agenda
Agenda 8:30 a.m. Welcome 10:35 a.m. Go-to-market updates Warren Kneeshaw US Craig Vosburg, Linda Kirkpatrick, Ron Shultz 8:35 a.m. Capitalizing on our opportunity Ajay Banga Europe Mark Barnett 8:50 a.m. Global Products & Innovation Government engagement Michael Froman, Tim Murphy Consumer – driving
Slide 4: Mastercard management presenters
Mastercard management presenters Ajay Banga Michael Miebach Jess Turner Paul Stoddart Ajay Bhalla Kevin Stanton Craig Vosburg President and Chief Product Officer Executive Vice President, President, President, Cyber & Chief Services Officer President, Chief Executive Officer North America Products N
Slide 5: Additional breakout sessions hosts and management attendees
Additional breakout sessions hosts and management attendees James Anderson Gilberto Caldart Dimitrios Dosis Carlo Enrico Michael Fraccaro Sherri Haymond Francis Hondal Executive Vice President, President, International President, Advisors President, Latin Chief People Officer Executive Vice Presiden
Slide 6: Forward looking statements
Forward looking statements Today’s presentation may contain, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current assumptions, expectations and projectio
Slide 7: Capitalizing on our opportunity
Capitalizing on our opportunity Ajay Banga President and Chief Executive Officer
Slide 8: Our strategy: Grow, Diversify, Build
Our strategy Grow Diversify Build CUSTOMERS AND CORE NEW AREAS GEOGRAPHIES Credit Financial inclusion Data analytics Debit New markets Consulting Commercial Businesses Marketing services Prepaid Governments Loyalty Digital-physical convergence Merchants Cyber and Intelligence Acceptance Digital play
Slide 9: The transformation of Mastercard
The transformation of Mastercard $5.9T 11% 2012 2018 Commercial $3.7T 46% 9% Consumer Debit & Prepaid + Strong debit growth 41% Consumer Credit Product • Consumer credit + Prepaid leadership 43% diversification centric + Fast-growing commercial 50% solutions 2012 2018 GDV1 + Full suite of cyber solu
Slide 10: Staying ahead of the trends
Staying ahead of the trends Initiatives Trends Digital-first solutions Streamlined user experience Multi-rail provider Demand for choice Drive innovation; foster developer ecosystem Emergence of new technologies Cyber & intelligence solutions; AI focused Heightened cybersecurity threats Data analyti
Slide 11: Significant opportunity across multiple payment flows
Significant opportunity across multiple payment flows Market size by payment flow Volume in $ trillions $50 $125 $60 $235 1 1 13 48 68 Cash & Check ACH 38 87% Carded 84 139 2 2 17 2 7 28 2 30 2 13% ©2019 Mastercard. PCE B2B/G2B P2P/B2C/G2C TOTAL Note: Figures may not sum due to rounding 1. Includes
Slide 12: Mastercard's multi-layered approach
Mastercard’s multi-layered approach P2M B2B / G2B P2P / B2C / G2C • Consumer Credit • SME, T&E, P-card, Fleet • Mastercard Send™ • Consumer Debit • Virtual cards • Pay by Account • Mastercard Track™ • Point-of-sale financing – Trade Directory – B2B Hub Applications – Business Payment Service Prepaid
Slide 13: Creating shareholder value
Creating shareholder value Total Shareholder Return2 Mastercard $1,500 S&P 500 Info Tech Currency-neutral S&P 500 $1,459 5-Year CAGR % through 20181 Net Revenue 15% $1,000 EPS 23% $500 $500 $353 $100 AUG 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ©2019 Mastercard. 1. Excludes special ite
Slide 14: Key takeaways
Key takeaways Significant Anticipating trends opportunity ahead and building solutions Differentiating to meet evolving with services requirements Providing choice Doing well Executing on strategy to our customers by doing good and well positioned for long-term growth ©2019 Mastercard. 14
Slide 15: Global Products & Innovation
Global Products & Innovation Michael Miebach Chief Product Officer Jess Turner Executive Vice President, North America Products & Innovation
Slide 16: Our product strategy – differentiate with experience, choice, and relevance
Our product strategy – differentiate with experience, choice, and relevance Grow, Diversify, Build Who What How Diverse partners Best-in-class experiences Enable our partners Consumers Payment choice & flexibility Multi-rail network Businesses Locally relevant solutions New tech & business models ©2
Slide 17: One-stop shop across payment flows
One-stop shop across payment flows Product solutions PCE (P2M) B2B/G2B P2P/B2C/G2C Consumer Cards (Credit, Debit, Prepaid, Tokenization, Secure Remote Commerce) Bill Pay (RPPS Biller Directory, Transactis, Nets Corporate Services Bill Pay1) Person-to-Person & Disbursement (Mastercard Send™)
Slide 18: Sustainable momentum with strong results
Sustainable momentum with strong results 1H19 2018 market Global GDV1 share trend Consumer Credit +9% Consumer Debit +14% Prepaid +19% Commercial2 +13% ©2019 Mastercard. 1. Local currency growth versus 1H18. Gross dollar volume as reported; Mastercard branded only 2. Includes commercial credit and d
Slide 19: Consumer – driving exceptional experiences
Consumer – driving exceptional experiences
Slide 20: Innovating to provide best-in-class consumer experiences
Innovating to provide best-in-class consumer experiences Heightened consumer Delivered by our partners, Focus on digital commerce expectations enabled by Mastercard within P2M Personalization >4x Privacy Global digital commerce growth vs. total retail1 Pay by Account Digital-first Choice & flexibili
Slide 21: Digital commerce – solving for digital-physical convergence
Digital commerce – solving for digital-physical convergence 1 2 3 Technology, in particular AI, Digital transactions Digital and physical continue to connectivity, IoT and new are growing at an come together in everyday life interfaces, will have a profound unprecedented pace impact on commerce ©201
Slide 22: Tokenization – enabling all forms of digital payment
Tokenization – enabling all forms of digital payment E-COMMERCE DEVICES Tokenization IN-APP CREDENTIAL ON FILE NFC QR Issuers Consumers COMMERCE Merchants PLATFORMS TEXT VOICE GUEST CHECKOUT ©2019 Mastercard. Use cases Interfaces 22
Slide 23: Secure Remote Commerce – reinventing guest checkout
Secure Remote Commerce – reinventing guest checkout Optimizing Secure Remote Commerce with Mastercard • Acceptance powered by merchants and payment services providers Authentication • No static passwords NuDetect Mastercard Mastercard Consumer Identity Check • Interoperable with tokenization Tokeniz
Slide 24: Mastercard Digital Wellness
Mastercard Digital Wellness – serving today’s digital-first customer Built on standards Powered by Mastercard • EMVCo Secure Remote Commerce • Mastercard Secure Remote Commerce • EMVCo Tokenization • Mastercard Digital Enablement Service (MDES) • EMVCo 3DS 2.0 • NuData • Cyber Readiness Institute •
Slide 25: Debit Mastercard – enabling digital commerce
Debit Mastercard – enabling digital commerce Upgrading debit portfolio Driving consumer experience with Debit Mastercard Debit card mix1 • Consistent e-commerce and mobile-commerce experience AP • Digital wallet enabled for contactless and in-app use LAC Maestro • Global acceptance DMC Debit Yield v
Slide 26: Prepaid – innovating to grow our leading position
Prepaid – innovating to grow our leading position Distributing through new, digital-first customers Empowering new consumers Gig Digital Fintechs Underserved Vertical economy “giants” expansion Use case Real-time Digital wallets Digital Mobile banking expansion payroll & marketplaces banking ©2019 M
Slide 27: Bill Pay – platform to address additional consumer flows
Bill Pay – platform to address additional consumer flows Targeting global bill pay opportunity and improving experience across the ecosystem Consumer & Bank Mastercard Bill Pay Biller Small Business Pay in-app, in real time “I can view all my bills in one “Customers are spending “It’s cheaper and mo
Slide 28: Commercial – solutions for every business payment
Commercial – solutions for every business payment
Slide 29: Comprehensive commercial card solutions
Comprehensive commercial card solutions Small business cards Travel & Purchasing cards Virtual cards Supplier experience New capabilities, e.g. Platform-based services, e.g. enhancements, e.g. Mastercard Receipt Management Smart Data Straight-Through Processing Efficiency and simplicity for Smarter,
Slide 30: Addressing pervasive pain points in accounts payable
Addressing pervasive pain points in accounts payable A significant B2B opportunity Accounts payable pain points Market size by payment flow Volume in $ trillions • Lack of visibility into supplier payment preference and acceptance conditions 60 • Managing cash flow due to inability to enforce ~$110T
Slide 31: Mastercard Track – modernizing the B2B ecosystem
Mastercard Track™ – modernizing the B2B ecosystem Addressing pain points in B2B commerce Mastercard Track architecture Tackling systemic challenges in B2B payments Global Multi-rail Solving complexities adjacent to payments Data-rich Vast improvements to the way buyers and suppliers conduct trade at
Slide 32: Mastercard Track – expanding our suite of solutions
Mastercard Track™ – expanding our suite of solutions Existing… Features Benefits Mastercard Track • Over 200 million business entities • Supplier risk management Trade Directory • 170 countries Mastercard Track • Accounts payable outsourcing service • Accounts payable automation B2B Hub for mid-mark
Slide 33: Mastercard Track Business Payment Service
Mastercard Track™ Business Payment Service – launching an open-loop commercial payment service Mastercard Track Business Payment Service Buyers Buyer agents Supplier agents Suppliers • Buyer/supplier directory Large Banks Banks Large • Supplier payment rules Mid-market Specialty players Specialty pl
Slide 34: Payment on Delivery – use case on real-time payment rails
Payment on Delivery – use case on real-time payment rails Mastercard Track™ Buyer Buyer agent Business Payment Service Supplier agent Supplier Local Restaurant’s Wholesaler’s Liquor restaurant bank • Supplier payment rules ERP vendor wholesaler • Rich remittance data “I can manage all of my invoices
Slide 35: Mastercard Send – fast, secure B2C disbursements
Mastercard Send™ – fast, secure B2C disbursements Features Benefits Partner examples • Faster funds availability for Instant, scalable payments recipients • Superior user experience drives loyalty and engagement Trusted services & security • Avoidance of check and wire fees for payers Global reach •
Slide 36: At the forefront of real-time payments
At the forefront of real-time payments Paul Stoddart President, New Payment Platforms
Slide 37: The real-time ACH infrastructure opportunity is expanding
The real-time ACH infrastructure opportunity is expanding Enabled by Mastercard Other planned or implemented ©2019 Mastercard. 37
Slide 38: Our full-service approach
Our full-service approach Managed services & hubs Directory Underlying payment Infrastructure technology and rails End-user solutions to P2M B2B / G2B P2P / B2C / G2C Applications connect more senders and recipients Consulting Data analytics Fraud solutions Capabilities that enhance Services real-ti
Slide 39: Nets provides complementary value
Nets1 provides complementary value 1 • Larger markets • Smaller markets • Extended global coverage Infrastructure • Sophisticated & • Fast deployment • Industry-leading solutions customized • Region-specific capabilities • Proven applications • US Bill Pay (C2B) • Europe Bill Pay (e.g. Pay by Accoun
Slide 40: Infrastructure – real-time connectivity, worldwide reach
Infrastructure – real-time connectivity, worldwide reach Live or signed in 11/50 Top GDP markets… …representing 30%+ Global GDP … 2 1 …and supporting 60%+ World population ©2019 Mastercard. 1. Mastercard announced an agreement to acquire the majority of Nets’ Corporate Services business, subject to
Slide 41: Applications – addressing a range of use cases
Applications – addressing a range of use cases P2M B2B / G2B P2P / B2C / G2C Mastercard Track™ 1 Business Payment Service Applications Pay By Account Bill Pay Exchange Send Partners Built on real-time payments infrastructure ©2019 Mastercard. 1. Mastercard announced an agreement to acquire the major
Slide 42: Extending our cross-border capabilities
Extending our cross-border capabilities Providing our partners broad reach through a single API connection Consumers Consumers 125+ countries Businesses Banks Banks Businesses 150 currencies 300+ banks & financial institutions Governments Governments ©2019 Mastercard. ENABLED BY CARDS, REAL-TIME PAY
Slide 43: Services – scaling through new flows
Services – scaling through new flows Financial crime solutions Reporting & analytics Consulting Prevent Report Strategy Trace Benchmark Optimization Account alert Predict Financial crime Verify identity Classify Risk & resiliency ©2019 Mastercard. >100 real-time payment services contracts executed s
Slide 44: Global Products & Innovation Conclusion
Global Products & Innovation Conclusion Michael Miebach Chief Product Officer
Slide 45: Future frontiers – emerging commerce ecosystems
Future frontiers – emerging commerce ecosystems Beyond payments Strategy extension New payment services New payment flows Card services Card payments ©2019 Mastercard. Frontiers 45
Slide 46: Key takeaways
Key takeaways Building innovative Enabling scalable Supporting all forms products for our digital solutions of payment with our diverse partners and multi-rail network their customers ©2019 Mastercard. Powering choice, convenience and security 46
Slide 47: Advancing trust and securing the ecosystem
Advancing trust and securing the ecosystem Ajay Bhalla President, Cyber & Intelligence Solutions
Slide 48: Rapidly changing world presents new opportunities & risks
Rapidly changing world presents new opportunities & risks Digital convergence & IoT Exponential growth in data Weak built-in security Concerns over data security and privacy Age of AI Digitally native generation Disrupting industries and crime Expects experience comes with security ©2019 Mastercard.
Slide 49: Cybersecurity needs of our stakeholders are evolving
Cybersecurity needs of our stakeholders are evolving Consumers Impacted by data breaches – looking for control and trusted brands Merchants Protecting against cyber attacks while optimizing customer experience Businesses Seeking expertise and solutions to mitigate threats and reduce risk Financial I
Slide 50: A multi-layered strategy that advances trust
A multi-layered strategy that advances trust Prevent Identify Detect Experience Secure the physical Identify genuine Stop cyberattacks, Physical and digital world, the digital consumers and reduce fraud experiences that world and the IoT devices grow commerce Artificial Intelligence Powers products
Slide 51: Securing the ecosystem and unlocking new opportunities
Securing the ecosystem and unlocking new opportunities Recent successes Future focus EMV chip 88% 1 Securing the Internet of Things Digital EMV Card transactions Prevent chip enabled SecureCode 3.5 billion 2 Collaborating on Digital Identity Identity Check SecureCode Identify authentications Safety
Slide 52: Growth strategy accelerated by acquired capabilities
Growth strategy accelerated by acquired capabilities Internet Intelligence Digital of Things everywhere experience ethoca • Behavioral biometrics • Globally scalable • Collaborative platform • Block bots/synthetic ID • Ultra high speed • Eliminate chargebacks • Trust devices in the IoT • Unique prop
Slide 53: Key takeaways
Key takeaways Ensuring Creating sources Delivering new ecosystem security of differentiation sources of growth ©2019 Mastercard. 53
Slide 54: Data & Services as a force multiplier
Data & Services as a force multiplier Kevin Stanton Chief Services Officer
Slide 55: Data & Services - end-to-end value proposition
Data & Services - end-to-end value proposition Advice Execution Data Analytics & Consulting Test & Loyalty & Marketing Labs as Management Insights Learn Rewards Services a Service Fully plugged into other Mastercard capabilities • Differentiated by Mastercard data, brand, network • Best-in-class del
Slide 56: Our strategy: Grow, Diversify, Build
Our strategy Grow Diversify Build CUSTOMERS AND CORE NEW AREAS GEOGRAPHIES Credit Financial inclusion Data analytics Debit New markets Consulting Commercial Businesses Marketing services Prepaid Governments Loyalty Digital-physical convergence Merchants Cyber and Intelligence Acceptance Digital play
Slide 57: Mastercard strategy – drill-down on services
Mastercard strategy – drill-down on services • Incremental revenue opportunity Build • Fast growing • Pursuing recurring revenues • New geographies Diversify • New industry verticals • Differentiate in deals Grow • Portfolio performance • Embedded ©2019 Mastercard. 57
Slide 58: Diversify – case studies
Diversify – case studies New geographies | Latin America New industry verticals | Healthcare • Retail, financial services behemoth • Large healthcare network • 100+ locations, ~3M cards • 1 of ~600 in the US alone • Portfolio conversion to spur growth • Optimize revenue management, marketing, clinic
Slide 59: Grow – case studies
Grow – case studies Differentiate in deals | Australia Portfolio performance | Italy Embedded | UK • 9M+ customers • 400,000 cards converted • 14.5M customers • Improve spend and engagement • Improve activation, launch • Embedded installments • Holistic solution leveraging – Loyalty: Pay with Reward
Slide 60: Key takeaways
Key takeaways Fast-growing, Accelerating entry into Core growth incremental revenue new markets and force multiplier opportunity verticals ©2019 Mastercard. 60
Slide 61: Go-to-market update: US
Go-to-market update: US Craig Vosburg President, North America Linda Kirkpatrick Executive Vice President, Merchants and Acceptance Ron Shultz Executive Vice President, New Payments Flows
Slide 62: The US market has significant room for growth
The US market has significant room for growth 2018 market size by payment flow Volume in $ trillions $14 $22 $19 $551 1 Largest Mastercard market 5 (2018 data) 16 Cash & Check 13 • % total revenue 33% ACH • % total GDV 30% Carded 8 • GDV growth 10% 27 • PCE growth 5% 12 1 3 2 5 7 PCE (P2M) B2B/G2B P
Slide 63: Executing against five strategic priorities to drive growth
Executing against five strategic priorities to drive growth Expand product Grow Win in Scale Address new distribution acceptance digital services payments flows Growing market share Increasing quantity and Partnering to enable Delivering added value Capturing B2B, P2P, in all products quality of acc
Slide 64: Three drivers of market share growth
Three drivers of market share growth Enhance value propositions Optimize portfolios Win new business Develop compelling core value Drive growth by increasing: propositions for consumers and small businesses: • Cardholder acquisitions • Activation • Spend • Transaction approval rates ©2019 Mastercard
Slide 65: Winning in co-brand
Winning in co-brand Mastercard Differentiators Our Differentiated Products & Priceless Partnership Data & Analytics Innovation Experiences ©2019 Mastercard. 65
Slide 66: Expanding acceptance in a safe and seamless way
Expanding acceptance in a safe and seamless way US network reach Network upgrades 48M EMV 37M ~65%1 30M US volume EMV enabled Incremental 20M network endpoints Contactless 8M 11M Traditional 8M 10M acceptance ~60%1 locations US card-present volume originates at contactless-enabled merchants ©2019 Ma
Slide 67: Diversifying acceptance solutions to fuel partner success
Diversifying acceptance solutions to fuel partner success Enhancing Driving Delivering next gen innovation value-added Enabling security at the services new flows point of sale ©2019 Mastercard. 67
Slide 68: Partnering to enable and secure the digital ecosystem
Partnering to enable and secure the digital ecosystem Securing and Scaling Enabling streamlining card-on-file digital guest checkout tokenization wallets ©2019 Mastercard. EXCEPTIONAL CUSTOMER EXPERIENCE LEADING SAFETY AND SECURITY 68
Slide 69: Value-added services as a differentiator in the US
Value-added services as a differentiator in the US Data & • Used by over 700 customers Services • Over 60% of top co-brand issuers use APT Loyalty & • Over 70 million accounts managed on loyalty platform Innovation • Over 40 innovation partnerships conducted in 2019 Safety & • Over 1B1 transactions
Slide 70: Momentum in capturing new payment flows
Momentum in capturing new payment flows Examples Progress Single use card primarily for B2B / Market leader in high growth Virtual cards supplier payments segment Mastercard Domestic and cross-border Broadening applications in P2P, B2B, Send™ disbursement and B2C payments Mastercard Track™ Real-time
Slide 71: Key takeaways
Key takeaways Significant Expanding through Increasing market value-added services opportunities for share and accelerated ongoing growth and by capturing new revenue growth payment flows 71
Slide 72: Go-to-market update: Europe
Go-to-market update: Europe Mark Barnett Division President, U.K., Ireland, Nordics & Baltics
Slide 73: Europe – a diverse and dynamic region with strong growth
Europe – a diverse and dynamic region with strong growth 2018 market size by payment flow Volume in $ trillions $131 $31 $16 $601 European region 2 • Population 900M 11 • # of countries 56 14 Cash & Check • # of languages 24 2 ACH 5 • PCE growth 6% Carded 25 42 Mastercard Europe 3 • % total GDV 29%
Slide 74: New market forces are changing the payments landscape
New market forces are changing the payments landscape Traditional E-Commerce PSD2 Domestic schemes Digital-only issuers GDPR New and evolving Frictionless Nationalism experiences New opportunities ©2019 Mastercard. and challenges Regulation Digitalization Competition 74
Slide 75: Making Open Banking more secure, efficient and scalable
Making Open Banking more secure, efficient and scalable Open Banking Ecosystem Solutions for Third Parties Third Parties Financial Institutions Open Banking Connect Solutions for Financial Institutions Open Banking Protect Ecosystem (two-sided) Solutions Open Banking Resolve ©2019 Mastercard. 75
Slide 76: We have a clear strategy
We have a clear strategy Grow Diversify Build Everyday spend Partner with governments Real-time payments to penetrate new payment flows Cross-border and e-commerce Deepen engagement with merchants Open banking solutions Acceptance Continue to lead with fintechs Increased B2B payments Digital roadmap
Slide 77: The UK: a case study
The UK: a case study Product lines Consumer Business Core Consumer Card Solutions (Credit, Debit, Prepaid, Link) Core Commercial Solutions (SME, T&E, P-Card) Accounts Payable Commercial (Virtual cards) Person-to-Person (Mastercard Send™ / Send to Account / PayM) Bill Pay (Overlay service)
Slide 78: Key takeaways
Key takeaways Strong Digital and Open growth potential Banking solutions to address market needs Multi-rail solutions Focused strategy providing choice to to drive customers long-term growth ©2019 Mastercard. 78
Slide 79: Go-to-market update: Government engagement
Go-to-market update: Government engagement Michael Froman Vice Chairman and President, Strategic Growth Tim Murphy General Counsel
Slide 80: Engagement with government is critical
Engagement with government is critical Sizable business opportunity with flows still based in cash and checks… Social benefits, pensions and payroll disbursed by governments to citizens …and strong interest in consulting services and new technologies Government spend with business, including procure
Slide 81: Our government approach focuses on three priorities
Our government approach focuses on three priorities Helping governments Promoting Supporting deliver services inclusive growth governments in efficiently advancing their digital ecosystems ©2019 Mastercard. 81
Slide 82: Government engagement mitigates nationalism
Government engagement mitigates nationalism Nationalism is not new and …with some important …and Mastercard is is here to stay... new trends… responding proactively: …but is a challenge we’ve • Evolving approach to trade 1. Enhanced government coverage proven we can navigate… presents challenges and
Slide 83: Our commitment to sustainability and commercially sustainable social impact
Our commitment to sustainability and commercially sustainable social impact Environmental Social Governance Ethical and Environmental Inclusive Inspired responsible stewardship growth workforce standards ©2019 Mastercard. Financial Inclusive economic Future of Data security development workers for g
Slide 84: Financial perspective
Financial perspective Sachin Mehra Chief Financial Officer ©2019 Mastercard.
Slide 85: Our business has diversified
Our business has diversified 2012 2018 Product diversification – debit/prepaid/commercial mix1 50% 57% Services as a % of net revenue 16% 26% % of net revenue generated outside of the US 61% 67% % of total transactions that we switch 49% 56% ©2019 Mastercard. Contactless transactions2 1% 22% 1. Debi
Slide 86: 2019 business drivers
2019 business drivers As-reported Switched Growth (local currency) Q1 Q2 Q2 Aug QTD Worldwide GDV1 11% 13% 15% 15% US GDV 7% 10% 12% 12% Rest-of-world GDV 13% 14% 18% 18% Switched transactions2 17% 18% 18% 19% Cross-border volume2 13% 16% 16% 16% ©2019 Mastercard. 1. Gross dollar volume as reported;
Slide 87: 2019 full-year financial outlook – reiterated
2019 full-year financial outlook – reiterated Net revenue1 Low-teens growth Operating expenses1,2 High-end of high-single-digits growth Effective tax rate ~19% ©2019 Mastercard. 1. 2019 forecast versus 2018 results (currency-neutral, excluding acquisitions). Refer to Appendix B for reconciliation of
Slide 88: Investment priorities
Investment priorities Grow Diversify Build CUSTOMERS AND CORE NEW AREAS GEOGRAPHIES Network Digital players B2B Acceptance Real-time payments Emerging markets: and applications Digital: India, China, Tokenization, MEA, LAC Cross-border B2B and P2P Secure Remote Commerce Cyber solutions Governments D
Slide 89: Economic model of new applications
Economic model of new applications Direct Indirect Card GDV / Initiative Per transaction Ad valorem Transactions Bill Pay Pay by Account Point-of-sale financing Account-to-account cross-border (FX related) Mastercard Track™ Ethoca ©2019 Mastercard. 89
Slide 90: Capital planning priorities
Capital planning priorities Strong balance sheet Preserve strong balance sheet, liquidity and credit ratings Long-term business growth Invest in strategy-led organic and inorganic opportunities Return excess capital to Return excess capital with bias toward shareholders share repurchases Capital str
Slide 91: Return of capital
Return of capital Share repurchase Dividends $6.0 $6.0 $1.0 $1.0 $4.7 $4.2 $4.3 $36+ billion1 $3.9 $0.9 returned to $0.7 $0.8 $0.5 shareholders $5.0 since IPO $4.9 $ billion $3.5 $3.5 $3.8 $3.4 2 2014 2015 2016 2017 2018 AUG 2019 ©2019 Mastercard. Note: Table may not sum due to rounding 1. Includes
Slide 92: Long-term revenue growth potential
Long-term revenue growth potential Revenue PCE growth potential $50T1 Market ~5% annual growth2 Volume / Services 4-5% annual secular shift2 Transactions Mix opportunity Pricing Low Share double-digits to mid-teens New flows $185T B2B/G2B: $125T B2C/P2P/G2C: $60T ©2019 Mastercard. 1. Includes $12T o
Slide 93: 2019 – 2021 performance objectives – reiterated
2019 – 2021 performance objectives1 – reiterated Highlights Net revenue CAGR % Low-teens • Grow core consumer and commercial solutions, build acceptance and increase share Annual operating • Expand service offerings and grow margin Minimum 50% them faster than the core • Invest in B2B / new payment
Slide 94: Final thoughts
Final thoughts Investments focused Offering broad set of Significant on key growth applications, services and opportunity ahead opportunities infrastructure to meet market requirements Executing on Continuing to return Well positioned for strategy excess capital to long-term growth shareholders ©201
Slide 95: Appendices
Appendices
Slide 96: Appendix A – non-GAAP reconciliation
Appendix A – non-GAAP reconciliation ($ in millions, except per share data) 5-Year CAGR Currency- 2013 2014 2015 2016 2017 2018 CAGR neutral 1 Net revenue $ 8,312 $ 9,441 $ 9,667 $ 10,776 $ 12,497 $ 14,950 12% 15% Operating income - as reported $ 4,503 $ 5,106 $ 5,078 $ 5,761 $ 6,622 $ 7,282 10% 13%
Slide 97: Appendix B – non-GAAP reconciliation
Appendix B – non-GAAP reconciliation 2019 full-year financial outlook 2019 vs. 2018 Increase / (decrease) Net revenue Operating expenses Forecasted growth - U.S. GAAP1 High end of low double- (Mid single-digits) digits Special items2 ** 16% Foreign currency3 2% 1% Acquisitions 4 0 - (1)% (3)% Non-GA
Slide 98: Appendix C – non-GAAP reconciliation
Appendix C – non-GAAP reconciliation Long-term performance objectives 2019-2021 3-Year CAGR Increase/(decrease) Net revenue EPS1 GAAP Low-teens Low to mid 20s Special items2 ** (6)% Acquisitions3 (0-1)% 0% Foreign currency4 1% 1% Non-GAAP – currency-neutral Low-teens High-teens ** Not applicable. 1.
Slide 99: Appendix D – non-GAAP reconciliation
Appendix D – non-GAAP reconciliation 2018 full-year EPS 2018 Diluted Earnings Per Share GAAP $5.60 Litigation provisions2 0.96 Tax act3 (0.07) 2018 Diluted Earnings Per Share Non-GAAP $6.49 ©2019 Mastercard. ** Not applicable. 1. Full-year EPS utilized to measure 3-year EPS target performance (2019-