Mastercard Incorporated · NYSE:MA
Mastercard — Investor Day (May 2008)
63 slides from Mastercard's investor day presentation, May 29, 2008
Slide 1: MasterCard Incorporated
May 29, 2008 MasterCard Incorporated Exhibit 99.1
Slide 2: Forward-Looking Statements
May 29, 2008 Forward-Looking Statements Today’s presentations 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
Slide 3: Global Overview
May 29, 2008 Global Overview Bob Selander, President and Chief Executive Officer
Slide 4: MA: Two Years Out of the Gate
May 29, 2008 MA: Two Years Out of the Gate • Extraordinary performance since IPO • Continue to strengthen our organization • Excellent growth in key metrics: – Gross dollar volume – Processed transactions – Net revenue – Net income • Value reflected in stock performance
Slide 5: Global Overview: Cyclical Economic Considerations
Global Overview May 29, 2008 Cyclical Economic Considerations • International Monetary Fund predicts slower global economic growth • Growth in emerging and developing economies is slowing, but still above trend
Slide 6: United States: Cyclical Economic Considerations
United States May 29, 2008 Cyclical Economic Considerations • Real GDP growth forecasted to slow in 2008 • SpendingPulse TM data points to relatively weak readings across most sectors • Low consumer confidence
Slide 7: Driving Customer Value in a Weakened Economy
Customer Needs Examples of MasterCard Offerings May 29, 2008 • Intelligence and Insights • Profitable Growth • Risk Management • Cost Management Driving Customer Value in a Weakened Economy • SpendingPulse • Portfolio Analytics • Account-Level Management • Portfolio Performance Forecasting • Fraud M
Slide 8: Secular Challenges
May 29, 2008 Secular Challenges • Regulatory environment • Threat of disintermediation: – Competition from traditional players – New entrants – Advances in technology – Alternate online payment methods
Slide 9: Secular Opportunities
May 29, 2008 Secular Opportunities • Steady shift from cash and checks • Growth in e-payments, mobile • Globalization spurring cross-border commerce/travel patterns • Debit in the U.S. • SEPA in Europe • Emerging markets
Slide 10: Strategic Approach
May 29, 2008 Strategic Approach • Anticipating continued change in payments sector • Exploring broader trends and impact – Other industries – Technological developments – Economic and social factors – Public policy
Slide 11: Key Differentiators
May 29, 2008 Key Differentiators • Our strengths – Unified, global structure – World-renowned brands – Innovative product & payment solutions – Technology/processing platform – Strong relationships – Knowledge leadership/ MasterCard Advisors – Management expertise • These strengths support our solut
Slide 12: MA: Well Positioned for Future
May 29, 2008 MA: Well Positioned for Future • Strong underlying business momentum – Strong purchase volume growth – Growth in processed transactions – Robust cross-border transaction growth • Well positioned globally in both developed and emerging markets – Approximately 50% of revenues from outside
Slide 13: Summary
May 29, 2008 Summary • Exceptional performance since IPO • Making investments now for future growth • Committed to delivering shareholder value
Slide 14: The Global Growth Story
May 29, 2008 The Global Growth Story Walt Macnee, President, Global Markets
Slide 15: 2007 Macroeconomic and Social Snapshot
38 878 2.4 – 11.1 2.3 - 12.5 22,160 Europe 27 543 7.6 * 4.9 * 5,453 LAC 1.8 3.0 1.8% - 14% 6.1 5.2 0.7%- 14% 39.1 36.7 21.2 - 38.6 33.1 303 232 - 2,445 35,600 46,000 1,800 - 29,800 Canada United States APMEA May 29, 2008 2007 Macroeconomic and Social Snapshot Inflation Inflation (CPI % YOY) (CPI % Y
Slide 16: Asia Pacific Middle East Africa: Trailblazing
Asia Pacific Middle East Africa May 29, 2008 Trailblazing Asia Pacific Middle East Africa
Slide 17: Macroeconomic and Social Snapshot of APMEA Segment Clusters
29.1 2,445 5.9% 5.8% 1,800 Emerging Mass Markets 2%-14% 3.4% 1.8% 0.7%-14% 5.2% 3.6% 21.2 27.2 38.6 1,080 406 232 4,245 3,560 29,800 SAMEA (ex India) Middle Income Cluster High Income Cluster May 29, 2008 Macroeconomic and Social Snapshot of APMEA Segment Clusters Inflation Inflation (CPI % YOY) (CP
Slide 18: APMEA – Growth Opportunity Examples
May 29, 2008 APMEA – Growth Opportunity Examples Opportunity = Trailblazing Opportunity = Trailblazing Opportunity = Trailblazing • Creation of new consumer segments • Tapping into increasing outbound travel • Urbanization
Slide 19: Latin America/Caribbean: Penetration
Latin America/Caribbean May 29, 2008 Penetration Latin America/Caribbean
Slide 20: LAC – 2007 Macroeconomic and Social Snapshot
27 543 7.6 * 4.9 * 5,453 LAC May 29, 2008 LAC – 2007 Macroeconomic and Social Snapshot 2.4 – 11.1 2.3 - 12.5 22,160 Europe 1.8 3.0 1.8% - 14% Inflation Inflation (CPI % YOY) (CPI % YOY) 6.1 5.2 0.7%- 14% Unemployment Unemployment (% of labor force) (% of labor force) 39.1 36.7 21.2 - 38.6 Median Age
Slide 21: Latin America/Caribbean – Growth Opportunity Examples
May 29, 2008 Latin America/Caribbean – Growth Opportunity Examples Opportunity = Penetration Opportunity = Penetration Opportunity = Penetration • Emergence of new consumer segments • Creating acceptance channels • Bringing new ways to pay
Slide 22: The United States: Innovation
The United States May 29, 2008 Innovation The United States
Slide 23: United States – 2007 Macroeconomic and Social Snapshot
3.0 5.2 36.7 303 46,000 United States May 29, 2008 United States – 2007 Macroeconomic and Social Snapshot 2.4 – 11.1 2.3 - 12.5 22,160 Europe 7.6 * 4.9 * 5,453 LAC 1.8 1.8% - 14% Inflation Inflation (CPI % YOY) (CPI % YOY) 6.1 0.7%- 14% Unemployment Unemployment (% of labor force) (% of labor force)
Slide 24: United States – Growth Opportunity Examples
May 29, 2008 United States – Growth Opportunity Examples Opportunity = Innovation Opportunity = Innovation Opportunity = Innovation • Opening up acceptance channels • Expanding ways to pay • Leveraging our insights and information
Slide 25: Canada: Transformation
Canada May 29, 2008 Transformation Canada
Slide 26: Canada – 2007 Macroeconomic and Social Snapshot
1.8 6.1 39.1 33.1 35,600 Canada May 29, 2008 Canada – 2007 Macroeconomic and Social Snapshot 2.4 – 11.1 2.3 - 12.5 22,160 Europe 7.6 * 4.9 * 5,453 LAC 3.0 1.8% - 14% Inflation Inflation (CPI % YOY) (CPI % YOY) 5.2 0.7%- 14% Unemployment Unemployment (% of labor force) (% of labor force) 36.7 21.2 -
Slide 27: Canada – Growth Opportunity Examples
May 29, 2008 Opportunity = Transformation Opportunity = Transformation Opportunity = Transformation Canada – Growth Opportunity Examples • Challenge the debit incumbent • Brand-new acceptance channels • New ways to pay
Slide 28: Europe: Catalyst
Europe May 29, 2008 Catalyst Europe
Slide 29: Macroeconomic and Social Snapshot of Europe Market Clusters
35 468 6.6 - 11.1 4.0 - 12.5 12,376 High Growth and Emerging Markets 42 313 6.0 - 7.9 2.3 - 2.6 32,709 Continental Europe 2.6 - 3.6 2.4 - 6.3 40 97 35,407 UK/Nordics May 29, 2008 Macroeconomic and Social Snapshot of Europe Market Clusters Sources: GDP, population – IMF statistics; Inflation, unemplo
Slide 30: Europe – Growth Opportunity Examples
May 29, 2008 Europe – Growth Opportunity Examples Opportunity = Catalyst Opportunity = Catalyst Opportunity = Catalyst • Continued debit leadership • Expanding merchant and acquirer relationships • Changing consumer experience
Slide 31: Summary: Opportunity = Diversity
May 29, 2008 Summary Opportunity = Diversity Opportunity = Diversity Opportunity = Diversity • New ways to pay • New places to pay • New segments entering the global economy
Slide 32: SEPA Update
May 29, 2008 SEPA Update Javier Perez, President of MasterCard Europe
Slide 33: Evolution of SEPA
• SEPA will . . . – Provide cardholders with a payment card they can use across Europe with the same convenience – Increase competition and transparency in the payments industry – Lower barriers to entry for acquirers, issuers and equipment providers – Benefit European society by reducing the overal
Slide 34: SEPA Options for Banks
• Migration to existing international schemes • Extend national schemes pan-Europe or create new scheme(s) • “Co-brand” International and SCF-compliant scheme + May 29, 2008 SEPA Options for Banks Multiple options for SEPA compliance exist and new opportunities and business models are being explored
Slide 35: Slide 35
Slide 36: MasterCard Worldwide
@ MasterCard Worldwide
Slide 37: Processing Opportunities Linked to SEPA
Footnote appears here May 29, 2008 Processing Opportunities Linked to SEPA • Issuer Processing: – Migrations from local scheme to Maestro only – Maestro co-branded with SCF compliant local brands • Acquirer/Retailer Processing: – Routing of Domestic Transactions on co-branded cards via the Maestro b
Slide 38: Consumer Behaviour Creating a True Single Market
38 May 29, 2008 38 38 Consumer Behaviour Creating a True Single Market Berlin München Kleve Emmerich Konstanz Freilassing Schwalbach Passau Trier Bous Eschweiler Rheinberg Aachen Relative number of foreign Maestro transactions by German city, FY 2007 =
Slide 39: Summary
May 29, 2008 Summary • SEPA is an evolutionary, not revolutionary process • Migration to and co-branding with MasterCard and Maestro result in strengthening our brand and result in opportunities to process • New entrants to domestic debit in SEPA like MasterCard will ensure a competitive and innovat
Slide 40: The U.S. Debit Imperative
May 29, 2008 The U.S. Debit Imperative Tim Murphy, President U.S. Region
Slide 41: MasterCard Worldwide
MasterCard Worldwide
Slide 42: MasterCard Worldwide
MasterCard Worldwide
Slide 43: With Challenge Comes Opportunity
May 29, 2008 Commoditization Opportunity With Challenge Comes Opportunity Conversion Consolidation
Slide 44: MasterCard Worldwide
@® MasterCard Worldwide
Slide 45: Slide 45
Slide 46: Slide 46
Slide 47: Enhancing our U.S. Debit Strategy
Enhancing our U.S. Debit Strategy May 29, 2008 Enhancing our U.S. Debit Strategy
Slide 48: MasterCard Worldwide
MasterCard Worldwide
Slide 49: MasterCard Worldwide
MasterCard Worldwide
Slide 50: MasterCard Worldwide
MasterCard Worldwide
Slide 51: Slide 51
Slide 52: A Strategy That Covers All the Bases
May 29, 2008 A Strategy That Covers All the Bases Optimizing the Franchise for Debit Supporting Our Customers’ Performance Expanding Our Role in the Value Chain Driving MasterCard Share in Debit
Slide 53: Financial Perspective
May 29, 2008 Financial Perspective 2008 Investment Community Day Martina Hund-Mejean – Chief Financial Officer
Slide 54: Global Consumer Payment Transactions 2006-2010
Checks 79 B Cash 2, 662 B Footnote appears here May 29, 2008 Global Consumer Payment Transactions 2006-2010 2010 Electronic (Card & EFT) 279B 2006 Global Consumer Payments Total 2.9T Source: Speer & Associates, Inc. and MasterCard estimates U.S. 57% R.O.W 43% Electronic (Cards and EFT) 148 B U.S. 32
Slide 55: Gross Dollar Volume Trend (2003–2007)
May 29, 2008 $1,248 $1,446 $1,655 $1,922 $2,277 $0 $500 $1,000 $1,500 $2,000 $2,500 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Worldwide GDV Worldwide % (LC) Worldwide less US % (LC) United States % (LC) (LC) = Local Currency Growth Gross Dollar Volume Trend (2003 – 2007) MasterCard Branded
Slide 56: Gross Transaction Trend (2003–2007)
May 29, 2008 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Worldwide Gross Transactions Worldwide % Worldwide less US % United States % Gross Transaction Trend (2003 – 2007) MasterCard Branded
Slide 57: 2008 View
May 29, 2008 2008 View • First eight weeks of the Second Quarter: – Continue to see GDV growth slowing in the U.S. while higher for the ROW, resulting in slightly higher year- over-year GDV growth overall – Cross-border volume remains strong • G&A growth rate expectations remain unchanged • Modest A
Slide 58: Longer-Term Performance Objectives
May 29, 2008 Longer-Term Performance Objectives • Average annual net revenue growth of – 15% • Annual Operating Margin improvement of - ppt • Average annual net income growth of – 30% • Key assumptions – Constant FX rate – Effective tax rate of approximately 35%
Slide 59: Drivers of Net Revenue
Impacts: – Gross dollar volume – Purchase volume – Transactions – User-pay services – Revenue yield May 29, 2008 Drivers of Net Revenue • Secular growth • Non-U.S. growing faster than U.S. • U.S. debit vs. credit • Cross border volume • Pricing / Rebates & Incentives • New products and services
Slide 60: Drivers of Operating Margin
Impacts: – Operating margin expansion – Net income growth May 29, 2008 Drivers of Operating Margin • Leveragability of the model • General & Administrative • Capital requirements • Advertising & Marketing programs
Slide 61: Strong Capital Position
May 29, 2008 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Book Equity Cash & Investments Strong Capital Position • Strong cash flow generation contributes to healthy balance sheet • Requirement for strong credit position to support settlement guarantee • Litigation constrains capital structure choices • Returnin
Slide 62: Summary
May 29, 2008 Summary • Double-digit net revenue growth for 2008, but GDV growth rates are slowing in the U.S. • Longer-term performance objectives based on secular trends and competitive industry conditions • Growth fueled by strong secular market trends • Global diversity provides buffer against re
Slide 63: MasterCard Worldwide
MasterCard Worldwide The Heart of Commerce”