Slide 1: Fourth-Quarter and Full Year 2018 Financial Results Conference Call
Mastercard Incorporated Fourth-Quarter and Full Year 2018 Financial Results Conference Call January 31, 2019
Slide 2: Business Update, Financial Overview
Business Update Financial Overview Economic Update Business Highlights ©2019 Mastercard January 31, 2019 2
Slide 3: 4th Quarter Selected Financial Performance
4th Quarter Selected Financial Performance ($ in millions, except per share data) YOY Growth 4Q 18 4Q 17 Currency Non-GAAP1 Non-GAAP1 Non-GAAP Neutral Net revenue $ 3,807 $ 3,312 15% 17% Total operating expenses 1,816 1,623 12% 14% Operating income 1,991 1,689 18% 21% Operating margin 52.3% 51.0% 1.
Slide 4: 4th Quarter Gross Dollar Volume (GDV)
4th Quarter Gross Dollar Volume (GDV) ($ in billions) Worldwide United States Rest of World 14% Growth 10% Growth 16% Growth $1,800 $1,550 $1,600 $1,416 $1,400 $1,200 $762 $1,084 $679 $994 $1,000 $800 $464 $525 $600 $422 $466 $400 $738 $787 $238 $215 $530 $560 $200 $207 $228 $0 4Q17 4Q18 4Q17 4Q18 4
Slide 5: 4th Quarter Switched Transactions and Cards
4th Quarter Switched Transactions and Cards Switched Transactions Cards 13% Growth 5% Growth 17% Adjusted Growth* 7% Adjusted Growth* 3,000 2,518 24,000 2,500 2,407 Transactions (in millions) Cards (in millions) 21,000 20,124 496 17,739 595 18,000 2,000 15,000 1,500 2,022 12,000 1,812 9,000 1,000 6,
Slide 6: 4th Quarter Revenue
4th Quarter Revenue ($ in millions) 4Q17 4Q18 $5,000 $3,807 $4,000 $3,312 $3,000 $1,379 $1,579 $1,683 $1,942 $2,000 $1,117 $1,261 $851 $996 $1,000 $0 -$1,000 -$2,000 $(1,718)$(1,971) -$3,000 Domestic Cross-Border Transaction Other Rebates and Growth Assessments Volume Fees Processing Fees Revenues I
Slide 7: 4th Quarter Operating Expenses
4th Quarter Operating Expenses ($ in millions) 4Q17 4Q18 $2,500 $2,000 1 $1,816 $1,623 1,2 $1,401 $1,500 $1,254 $1,000 2 $500 $254 $302 $115 $113 $0 1,2 2 1 Growth General & Administrative Advertising & Marketing Depreciation & Amortization Total Operating Expenses Non-GAAP 12% 19% (2)% 12% Currency
Slide 8: Looking Ahead
Looking Ahead Business update through January 28th Long-Term Performance Objectives Thoughts for 2019 ©2019 Mastercard January 31, 2019 8
Slide 9: 2016-2018 Performance
2016-2018 Performance Currency-neutral basis, excluding acquisitions and Special Items Prior Estimate as of Actuals February 1, 2018 1 Low-teens Net Revenue CAGR 15% (13 - 14%) Annual Operating Margin % Minimum 50% Minimum 50% EPS CAGR % 2 28% Mid 20's 1 Revised for new revenue recognition rules and
Slide 10: 2019-2021 Performance Objectives
2019-2021 Performance Objectives Currency-neutral basis, excluding future acquisitions and Special Items Net Revenue CAGR Low-teens Annual Operating Margin % Minimum 50% EPS CAGR % 1 High-teens ©2019 Mastercard 1 Based on 2018 pro forma EPS of $6.49. See Appendix D for Non-GAAP reconciliation. Janua
Slide 11: Thoughts for 2019
Thoughts for 2019 Currency-neutral basis, excluding future acquisitions and Special Items 2019 Forecasted Growth 1 Net Revenue Low-teens Operating Expense High end of high-single digits Effective Tax Rate 19-20% ©2019 Mastercard 1 See Appendix E for Non-GAAP reconciliation. January 31, 2019 11
Slide 12: Appendices
Appendices
Slide 13: Non-GAAP Reconciliation
Appendix A Non-GAAP Reconciliation ($ in millions, except per share data) Three Months Ended December 31, 2018 General & Operating Operating Operating Effective income Diluted earnings Administrative expenses income margin tax rate Net income per share ($ in millions, except per share data) Reported
Slide 14: Non-GAAP Reconciliation
Appendix A Non-GAAP Reconciliation Three Months Ended December 31, 2018 as compared to the Three Months Ended December 31, 2017 Increase/(Decrease) Diluted Operating Operating Operating Effective income earnings per Net revenue expenses income margin tax rate Net income share Reported - GAAP 15% 44
Slide 15: Non-GAAP Growth Drivers
Appendix B Non-GAAP Growth Drivers Twelve Months Ended December 31, 2018 as compared to the Twelve Months Ended December 31, 2017 Increase/(Decrease) Net revenue Operating income EPS Reported - GAAP 20 % 10 % 53 % Litigation provisions 1 ** 17 % 26 % Tax act 2 ** ** (34)% Venezuela charge 3 ** (3)%
Slide 16: 2016-2018 Performance Non-GAAP CAGR Reconciliation
Appendix C 2016-2018 Performance Non-GAAP CAGR Reconciliation ($ in millions, except per share data) Base Year 2015 2018 3-Year CAGR Net Revenue $9,667 $14,950 15.6% Acquisitions 1 ** (307) (0.8) Foreign currency 2 ** 72 0.2 Net Revenue Non-GAAP $9,667 $14,715 15.0% Base Year 2015 2018 3-Year CAGR D
Slide 17: FY2018 Full-Year Non-GAAP EPS Reconciliation
Appendix D FY2018 Full-Year Non-GAAP EPS Reconciliation1 2018 Diluted Earnings Per Share GAAP $5.60 Litigation provisions 2 0.96 Tax act 3 (0.07) 2018 Diluted Earnings Per Share Non-GAAP $6.49 Note: Figures may not sum due to rounding. 1 Full-Year EPS utilized to measure 3-year EPS target performanc
Slide 18: Non-GAAP Reconciliation: 2019 full-year financial outlook
Appendix E Non-GAAP Reconciliation 2019 full-year financial outlook 2019 vs. 2018 Increase/(Decrease) Net Revenue Operating Expenses High end of Forecasted Growth - U.S. GAAP 1 (High single-digits) low double-digits Special Items - litigation provisions 2 ** 16% Foreign currency 3 2% 1% High end of
Slide 19: 4th Quarter G&A Detail
Appendix F 4th Quarter G&A Detail ($ in millions, except per share data) 4Q 17 Increase/(Decrease) 4Q 18 Non-GAAP1 $ % Personnel $843 $726 $117 16% Professional fees 124 115 9 8% Data processing and telecommunications 163 138 25 19% Foreign exchange activity (7) 13 (20) ** 2 Other 278 262 16 6% Gene
Slide 20: A&M Reclassification (U.S. GAAP)
Appendix G A&M Reclassification (U.S. GAAP) ($ in millions) 2018 2017 Q1 Q2 Q3 Q1 Q2 Q3 Q4 FY Operating Expenses: General and administrative $ 1,321 $ 1,185 $ 1,268 $ 967 $ 1,100 $ 1,165 $ 1,421 $ 4,653 Advertising and marketing 197 204 203 154 189 174 254 771 Litigation settlements 117 225 29 15 —
Slide 21: Revenue Growth Drivers
Appendix H Revenue Growth Drivers Three Months Ended December 31, 2018 Revenue Foreign Volume Acquisitions standard 1 currency 2 Other 3 Total Domestic assessments 14% —% 6% (4)% (1)% 4 15% Cross-border volume fees 16% —% 1% (3)% (1)% 13% Transaction processing 13% —% —% (2)% 4% 15% Other revenues *
Slide 22: Operating Expense Growth Drivers (Non-GAAP)
Appendix I Operating Expense Growth Drivers (Non-GAAP) Three Months Ended December 31, 2018 Revenue Foreign Operational Acquisitions standard 1 currency 2 Total General and administrative 14 % (1)% —% (2)% 12 % Advertising and marketing 6% 1% 15% (3)% 19 % Depreciation and amortization (4)% 3% —% (1