What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2024-02-13 compared with 2023-02-14 · 73 added, 2 removed, 43 unchanged (64% of the section changed)

4 unchanged sentences

There is currently no established public trading market for our Class B common stock.

There were approximately 233 holders of record of our non-voting Class B common stock as of February 8, 2023, constituting approximately 0.8% of our total outstanding equity.

There were approximately 226 holders of record of our non-voting Class B common stock as of February 8, 2024, constituting approximately 0.8% of our total outst anding equity.

Stock Performance Graph

34 unchanged sentences

1 Dollar value of shares that may yet be purchased under the share repurchase programs is as of the end of the period.

2 In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively.

In December 2023 and 2022, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $11.0 billion and $9.0 billion, respectively.

47 MASTERCARD 2023 FORM 10-K

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations

The following discussion should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International”) (together, “Mastercard” or the “Company”), included elsewhere in this Report.

Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand.

For discussion related to the results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Business Overview

Mastercard is a technology company in the global payments industry.

We connect consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic payments and making those payment transactions safe, simple, smart, and accessible.

We make payments easier and more efficient by providing a wide range of payment solutions and services using our family of well-known and trusted brands, including Mastercard®, Maestro® and Cirrus®.

We operate a multi-rail payments network that provides choice and flexibility for consumers, merchants and our customers.

Through our unique and proprietary core global payments network, we switch (authorize, clear and settle) payment transactions.

We have additional payments capabilities that include automated clearing house (“ACH”) transactions (both batch and real-time account-based payments).

Using these capabilities, we offer payment products and services and capture new payment flows.

Our value-added services include, among others, cyber and intelligence solutions designed to allow all parties to transact securely, easily and with confidence, as well as other services that provide proprietary insights, drawing on our principled and responsible use of secure consumer and merchant data.

Our investments in new networks, such as open banking solutions and digital identity capabilities, support and strengthen our payments and services solutions.

Each of our capabilities support and build upon each other and are fundamentally interdependent.

For our core global payments network, our franchise model sets the standards and ground-rules that balance value and risk across all stakeholders and allows for interoperability among them.

We employ a multi-layered approach to help protect the global payments ecosystem in which we operate.

Mastercard is not a financial institution.

We do not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to account holders by issuers, or establish the rates charged by acquirers in connection with merchants’ acceptance of our products.

In most cases, account holder relationships belong to, and are managed by, our customers.

Financial Results Overview

The following table provides a summary of our key GAAP operating results, as reported:

Year ended December 31, 2023

(Decrease) 2022

2023 2022 2021

(in millions, except per share data)

Net revenue $ 25,098 $ 22,237 $ 18,884 13% 18%

Operating expenses $ 11,090 $ 9,973 $ 8,802 11% 13%

Operating income $ 14,008 $ 12,264 $ 10,082 14% 22%

Operating margin 55.8 % 55.2 % 53.4 % 0.7 ppt 1.8 ppt

Income tax expense $ 2,444 $ 1,802 $ 1,620 36% 11%

Effective income tax rate 17.9 % 15.4 % 15.7 % 2.6 ppt (0.4) ppt

Net income $ 11,195 $ 9,930 $ 8,687 13% 14%

Diluted earnings per share $ 11.83 $ 10.22 $ 8.76 16% 17%

Diluted weighted-average shares outstanding 946 971 992 (3)% (2)%

MASTERCARD 2023 FORM 10-K 48

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table provides a summary of our key non-GAAP operating results 1 , adjusted to exclude the impact of gains and losses on our equity investments, Special Items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments.

In addition, we have presented growth rates, adjusted for the impact of currency:

Year ended December 31, 2023

Increase/(Decrease) 2022

Increase/(Decrease)

2023 2022 2021 As adjusted Currency-neutral As adjusted Currency-neutral

($ in millions, except per share data)

Adjusted net revenue $ 25,098 $ 22,200 $ 18,884 13% 13% 18% 23%

Adjusted operating expenses $ 10,551 $ 9,549 $ 8,627 10% 11% 11% 14%

Adjusted operating margin 58.0 % 57.0 % 54.3 % 1.0 ppt 0.9 ppt 2.7 ppt 3.4 ppt

Adjusted effective income tax rate 18.5 % 15.7 % 15.4 % 2.8 ppt 2.7 ppt 0.3 ppt 0.5 ppt

Adjusted net income $ 11,607 $ 10,342 $ 8,333 12% 12% 24% 32%

Adjusted diluted earnings per share $ 12.26 $ 10.65 $ 8.40 15% 15% 27% 34%

Tables may not sum due to rounding.

1 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Key highlights for 2023 as compared to 2022 were as follows:

Net revenue Adjusted net revenue

GAAP Non-GAAP

(currency-neutral) Both the as reported and as adjusted net revenue increase was attributable to growth in our payment network and value-added services and solutions.

up 13% up 13%

Operating expenses Adjusted

operating expenses

GAAP Non-GAAP

(currency-neutral) Both the as reported and as adjusted operating expenses increase was primarily due to higher personnel costs and includes 1 percentage point of growth due to acquisitions.

up 11% up 11%

Effective income tax rate

Adjusted effective income tax rate

GAAP Non-GAAP Both the as reported and as adjusted effective income tax rates were higher than the prior year rates primarily due to the release of a $333 million valuation allowance in 2022 and the establishment of a $327 million valuation allowance in 2023, partially offset by the ability to claim more U.S.

foreign tax credits generated in 2022 and 2023.

Other 2023 financial highlights were as follows:

• We generated net cash flows from operations of $12.0 billion.

• We repurchased 23.8 million shares of our common stock for $9.0 billion and paid dividends of $2.2 billion.

• We completed a debt offering for an aggregate principal amount of $1.5 billion.

49 MASTERCARD 2023 FORM 10-K

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity