Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Financial Information
Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). As described more fully below, our non-GAAP financial measures exclude the impact of gains and losses on our equity investments, which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). We also present growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to, among other things, evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items. Net revenue, operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency should not be relied upon as substitutes for measures calculated in accordance with GAAP.
Our non-GAAP financial measures for the comparable periods exclude the impact of the following:
Gains and Losses on Equity Investments
• During 2024, 2023 and 2022, we recorded net pre-tax losses of $29 million ($25 million after tax, or $0.03 per diluted share), $61 million ($36 million after tax, or $0.04 per diluted share) and $145 million ($126 million after tax, or $0.13 per diluted share), respectively. These net losses were primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.
Special Items
Litigation provisions
• During 2024, we recorded pre-tax charges of $680 million ($495 million after tax, or $0.53 per diluted share), primarily as a result of a legal provision associated with the U.K. consumer class action settlement, settlements with a number of U.K. merchants and a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.
• During 2023, we recorded pre-tax charges of $539 million ($376 million after tax, or $0.40 per diluted share), primarily as a result of changes in the estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and settlements with a number of U.K. and Pan-European merchants.
• During 2022, we recorded pre-tax charges of $356 million ($263 million after tax, or $0.27 per diluted share), primarily as a result of settlements (both final and agreements in principle) with a number of U.K. merchants and a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.
Restructuring charge
• During 2024, we recorded a restructuring charge of $190 million ($147 million after tax, or $0.16 per diluted share). The restructuring action is intended to streamline our organization, delivering efficiencies to enable reinvestment in our business to support the realization of our long-term growth opportunities.
Russia-related impacts
• During 2022, we recorded a net pre-tax charge of $30 million ($24 million after tax, or $0.02 per diluted share), directly related to imposed sanctions and the suspension of our business operations in Russia. The net charge was comprised of general and administrative expenses of $67 million, primarily related to incremental employee-related costs and reserves on uncollectible balances with certain sanctioned customers. This charge was offset by net benefits of $37 million in net revenue, primarily related to a reduction in payment network rebates and incentives liabilities as a result of lower estimates of customer performance for certain customer business agreements due to the suspension of our business operations in Russia.
See Note 7 (Investments) and Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8 of this Report for further discussion related to certain of the items discussed above.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Currency-neutral Growth Rates
Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results and are non-GAAP financial measures. The impact of currency translation represents the effect of translating operating results where the functional currency is different from our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our foreign exchange derivative contracts designated as cash flow hedging instruments (specifically those that manage the impact of foreign currency variability on anticipated revenues and expenses) is recognized in the respective financial statement line item on the statements of operations when the underlying forecasted transactions impact earnings.
The translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments as specified in the preceding paragraph (collectively the “Currency Impact”) has been excluded from our currency-neutral growth rates and has been identified in the “Non-GAAP Reconciliations” tables below and our “Drivers of Change” tables. See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Net Revenue” and “Financial Results - Operating Expenses” for our “Drivers of Change” tables.
Non-GAAP Reconciliations
The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective adjusted non-GAAP financial measures:
Year ended December 31, 2024
Net revenue Operating
expenses
Operating
margin
Other
income
(expense)
Effective
income
tax rate
Net
income
Diluted
earnings
per share
($ in millions, except per share data)
Reported - GAAP $ 28,167 $ 12,585 55.3 % $ (328) 15.6 % $ 12,874 $ 13.89
(Gains) losses on equity investments ** ** ** 29 — % 25 0.03
Litigation provisions ** (680) 2.4 % ** 0.5 % 495 0.53
Restructuring charge
** (190) 0.7 % ** 0.1 % 147 0.16
Adjusted - Non-GAAP $ 28,167 $ 11,714 58.4 % $ (300) 16.2 % $ 13,541 $ 14.60
Year ended December 31, 2023
Net revenue Operating
expenses Operating
margin Other
income
(expense)
Effective
income
tax rate Net
income Diluted
earnings
per share
($ in millions, except per share data)
Reported - GAAP $ 25,098 $ 11,090 55.8 % $ (369) 17.9 % $ 11,195 $ 11.83
(Gains) losses on equity investments ** ** ** 61 0.1 % 36 0.04
Litigation provisions ** (539) 2.1 % ** 0.5 % 376 0.40
Adjusted - Non-GAAP $ 25,098 $ 10,551 58.0 % $ (308) 18.5 % $ 11,607 $ 12.26
Year ended December 31, 2022
Net revenue Operating
expenses Operating
margin Other
income
(expense)
Effective
income
tax rate Net
income Diluted
earnings
per share
($ in millions, except per share data)
Reported - GAAP $ 22,237 $ 9,973 55.2 % $ (532) 15.4 % $ 9,930 10.22
(Gains) losses on equity investments ** ** ** 145 — % 126 0.13
Litigation provisions ** (356) 1.6 % ** 0.3 % 263 0.27
Russia-related impacts (37) (67) 0.2 % ** — % 24 0.02
Adjusted - Non-GAAP $ 22,200 $ 9,549 57.0 % $ (387) 15.7 % $ 10,342 $ 10.65
Note: Tables may not sum due to rounding.
** Not applicable.
49 MASTERCARD 2024 FORM 10-K
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:
Year Ended December 31, 2024 as compared to the Year Ended December 31, 2023
Increase/(Decrease)
Net revenue Operating expenses Operating margin Effective income tax rate Net income Diluted earnings per share
Reported - GAAP 12 % 13 % (0.5) ppt (2.3) ppt 15 % 17 %
(Gains) losses on equity investments ** ** ** (0.1) ppt — % — %
Litigation provisions ** (1) % 0.3 ppt — ppt 1 % 1 %
Restructuring charge
** (2) % 0.7 ppt 0.1 ppt 1 % 1 %
Adjusted - Non-GAAP 12 % 11 % 0.4 ppt (2.3) ppt 17 % 19 %
Currency Impact
1 % — % 0.3 ppt 0.1 ppt 1 % 1 %
Adjusted - Non-GAAP - currency-neutral 13 % 11 % 0.7 ppt (2.2) ppt 18 % 21 %
Year Ended December 31, 2023 as compared to the Year Ended December 31, 2022
Increase/(Decrease)
Net revenue Operating expenses Operating margin Effective income tax rate Net income Diluted earnings per share
Reported - GAAP 13 % 11 % 0.7 ppt 2.6 ppt 13 % 16 %
(Gains) losses on equity investments ** ** ** 0.1 ppt (1) % (1) %
Litigation provisions ** (1) % 0.5 ppt 0.1 ppt 1 % 1 %
Russia-related impacts — % 1 % (0.1) ppt — ppt — % — %
Adjusted - Non-GAAP 13 % 10 % 1.0 ppt 2.8 ppt 12 % 15 %
Currency Impact
— % — % (0.1) ppt (0.1) ppt — % — %
Adjusted - Non-GAAP - currency-neutral 13 % 11 % 0.9 ppt 2.7 ppt 12 % 15 %
Note: Tables may not sum due to rounding.
** Not applicable.
Key Metrics and Drivers
In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods.
Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.
Key Drivers
Gross Dollar Volume (“GDV”) 1 measures dollar volume of activity, including both domestic and cross-border volume, on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. We report period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change.
Cross-border Volume Growth measures the growth of cross-border dollar volume during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Switched Transactions measures the number of transactions switched by Mastercard, which is defined as the number of transactions initiated and switched through our network during the period.
1 Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers.
The following tables provide a summary of the growth trends in our key drivers.
For the Years Ended December 31,
2024 2023
Increase/(Decrease)
USD Local USD Local
Mastercard-branded GDV growth 1
8% 11% 11% 12%
United States 7% 7% 6% 6%
Worldwide less United States 9% 12% 13% 15%
Cross-border volume growth 1
17% 18% 25% 24%
For the Years Ended December 31,
2024 2023
Increase/(Decrease)
Switched transactions growth 11% 14%
1 Excludes volume generated by Maestro and Cirrus cards.
Key Metrics related to the Payment Network
Assessments represent agreed upon standard pricing provided to our customers based on various forms of payment-related activity. Assessments are used internally by management to monitor operating performance as it allows for comparability and provides visibility into cardholder trends. Assessments do not represent our net revenue.
The following provides additional information on our key metrics related to the payment network:
• Domestic assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are the same. These assessments are primarily driven by the domestic dollar volume of activity (e.g., domestic purchase volume, domestic cash volume) or the number of cards issued.
• Cross-border assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are different. These assessments are primarily driven by the cross-border dollar volume of activity (e.g., cross-border purchase volume, cross-border cash volume).
• Transaction processing assessments are charges primarily driven by the number of switched transactions on our payment network. Switching activities include:
◦ Authorization, the process by which a transaction is routed to the issuer for approval
◦ Clearing, the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction
◦ Settlement, which facilitates the determination and exchange of funds between parties
These assessments can also include connectivity services and network access, which are based on the volume of data transmitted and the number of authorization and settlement messages.
• Other network assessments are charges for licensing, implementation and other franchise fees.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides a summary of our key metrics related to the payment network.
Years ended December 31, 2024 2023
Increase/(Decrease)
Increase/(Decrease)
2024 2023 2022 As reported
Currency-neutral
As reported
Currency-neutral
($ in millions)
Domestic assessments $ 10,245 $ 9,566 $ 8,794 7% 9% 9% 9%
Cross-border assessments 10,181 8,409 6,597 21% 22% 27% 28%
Transaction processing assessments 13,602 12,067 10,646 13% 14% 13% 13%
Other network assessments 936 963 766 (3)% (3)% 26% 26%
Foreign Currency
Currency Impact
Our primary functional currencies are the U.S. dollar, euro, British pound and the Brazilian real. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.
Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of gross dollar volume (“GDV”), which is used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The transactional currency impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. In 2024, GDV on a U.S. dollar-converted basis increased 8.1%, while GDV on a local currency basis increased 10.5% versus 2023. In 2023, GDV on a U.S. dollar-converted basis increased 10.6%, while GDV on a local currency basis increased 12.2% versus 2022. Further, the impact from transactional currency occurs in our key metrics related to transaction processing assessments and other network assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.
To manage the impact of foreign currency variability on anticipated revenues and expenses, we may enter into foreign exchange derivative contracts and designate such derivatives as hedging instruments in a cash flow hedging relationship as discussed further in Note 23 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8.
Foreign Exchange Activity
We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement assets and obligations, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statements of operations. The impact of this foreign exchange activity, including with the related hedging activities, has not been eliminated in our currency-neutral results.
Our foreign exchange risk management activities are discussed further in Note 23 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Results
Net Revenue
The components of net revenue were as follows:
For the Years Ended December 31, Increase (Decrease)
2024 2023 2022 2024 2023
($ in millions)
Payment network $ 17,335 $ 15,824 $ 14,358 10% 10%
Value-added services and solutions 10,832 9,274 7,879 17% 18%
Total net revenue 28,167 25,098 22,237 12% 13%
Special Items 1
— — (37) —% **
Adjusted net revenue
$ 28,167 $ 25,098 $ 22,200 12% 13%
Note: Table may not sum due to rounding.
** Not meaningful.
1 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Net revenue increased 12%, or 13% on a currency-neutral basis, in 2024 versus the prior year. The increase in net revenue was attributable to growth in our payment network and value-added services and solutions.
Net revenue from our payment network increased 10%, or 11% on a currency-neutral basis, in 2024 versus the prior year. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network includes $17,629 million of rebates and incentives provided to customers, which increased 16%, or 18% on a currency-neutral basis, in 2024 versus the prior year, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 17%, on both an as-reported and currency-neutral basis, in 2024 versus the prior year. The increase was driven primarily by (1) growth in our underlying key drivers, (2) our consumer acquisition and engagement and business and market insight services, (3) our security and digital and authentication solutions and (4) pricing.
See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 for a further discussion of how we recognize revenue.
Drivers of Change
The following table summarizes the drivers of change in net revenue:
For the Years Ended December 31,
Operational Acquisitions Currency
Impact 1, 2
Special Items 2
Total
2024 2023 2024 2023 2024 2023 2024
2023 2024 2023
Payment network 11% 11% ** —% (1)% —% ** — % 10 % 10 %
Value-added services and solutions 17% 16% —% —% (1)% 1% ** ** 17 % 18 %
Net revenue 13% 13% —% —% (1)% —% ** — % 12 % 13 %
Note: Table may not sum due to rounding.
** Not applicable.
1 Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments.
2 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
No individual country, other than the United States, generated more than 10% of net revenue in any such period. A significant portion of our net revenue is concentrated among our five largest customers. In 2024, the net revenue from these customers was approximately $6.3 billion, or 22%, of total net revenue. The loss of any of these customers or their significant card programs could adversely impact our revenue.
53 MASTERCARD 2024 FORM 10-K
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating Expenses
Operating expenses increased 13% in 2024 versus the prior year. Adjusted operating expenses increased 11%, on both an as-adjusted and currency-neutral basis, versus the prior year.
The components of operating expenses were as follows:
For the Years Ended December 31, Increase (Decrease)
2024 2023 2022 2024 2023
($ in millions)
General and administrative $ 10,193 $ 8,927 $ 8,078 14 % 11 %
Advertising and marketing 815 825 789 (1) % 5 %
Depreciation and amortization 897 799 750 12 % 7 %
Provision for litigation 680 539 356 26 % 51 %
Total operating expenses 12,585 11,090 9,973 13 % 11 %
Special Items 1
(870) (539) (423) ** **
Adjusted total operating expenses 1
$ 11,714 $ 10,551 $ 9,549 11 % 10 %
Note: Table may not sum due to rounding.
** Not meaningful.
1 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Drivers of Change
The following table summarizes the drivers of change in operating expenses:
For the Years Ended December 31,
Operational Acquisitions Currency
Impact 1, 2
Special
Items 2
Total
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
General and administrative 12% 11 % 1 % 1 % — % — % 2 % (1) % 14 % 11 %
Advertising and marketing —% 4 % — % — % (1) % — % ** ** (1) % 5 %
Depreciation and amortization 12% 5 % — % 1 % — % — % ** ** 12 % 7 %
Provision for litigation
** ** ** ** ** ** 26 % 51 % 26 % 51 %
Total operating expenses 11% 10 % — % 1 % — % — % 2 % 1 % 13 % 11 %
Note: Table may not sum due to rounding.
** Not applicable.
1 Represents the translational and transactional impact of currency.
2 See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
General and Administrative
General and administrative expenses increased 14%, on both an as-reported and currency-neutral basis, in 2024 versus the prior year. Current year results include an increase of 2 percentage points from a restructuring charge of $190 million and 1 percentage point from acquisitions. The remaining increase was primarily due to higher personnel and data processing costs to support the continued investment in our strategic initiatives across payments and value-added services and solutions, as well as fulfillment costs to provide marketing services.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The components of general and administrative expenses were as follows:
For the Years Ended December 31, Increase (Decrease)
2024 2023 2022 2024 2023
($ in millions)
Personnel
$ 6,673 $ 6,022 $ 5,263 11% 14%
Professional fees 549 495 480 11% 3%
Data processing and telecommunications 1,119 1,008 926 11% 9%
Foreign exchange activity 1
65 83 102 (22)% (19)%
Other
1,787 1,319 1,307 35% 1%
Total general and administrative expenses $ 10,193 $ 8,927 $ 8,078 14% 11%
Note: Table may not sum due to rounding.
1 Foreign exchange activity includes the impact of remeasurement of assets and liabilities denominated in foreign currencies net of the impact of gains and losses on foreign exchange derivative contracts. See Note 23 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8 for further discussion.
Advertising and Marketing
Advertising and marketing expenses decreased 1%, on both an as-reported and a currency-neutral basis, in 2024 versus the prior year.
Depreciation and Amortization
Depreciation and amortization expenses increased 12%, on both an as-reported and a currency-neutral basis, in 2024 versus the prior year, primarily due to increased software capitalization driven by the continued growth of and investment in our business.
Provision for Litigation
In 2024, we recorded charges of $680 million, primarily as a result of a legal provision associated with the U.K. consumer class action settlement, settlements with a number of U.K. merchants and a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation. In 2023, we recorded charges of $539 million, primarily as a result of changes in the estimate related to the claims of merchants who opted out of the U.S. merchant class litigation and settlements with a number of U.K. and Pan-European merchants. In 2022, we recorded charges of $356 million, primarily as a result of settlements (both final and agreements in principle) with a number of U.K. merchants and a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation. See Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8 for further discussion.
Other Income (Expense)
The components of total other income (expense) were as follows:
For the Years Ended December 31, Increase (Decrease)
2024 2023 2022 2024 2023
(in millions)
Investment income $ 327 $ 274 $ 61 $ 53 $ 213
Gains (losses) on equity investments, net (29) (61) (145) 32 84
Interest expense (646) (575) (471) (71) (104)
Other income (expense), net 20 (7) 23 27 (30)
Total other income (expense) (328) (369) (532) 41 163
(Gains) losses on equity investments 1
29 61 145 (32) (84)
Adjusted total other income (expense) 1
$ (300) $ (308) $ (387) $ 9 $ 79
Note: Table 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.
55 MASTERCARD 2024 FORM 10-K
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Income Taxes
The effective income tax rates for the years ended December 31, 2024 and 2023 were 15.6% and 17.9%, respectively. The adjusted effective income tax rates for the years ended December 31, 2024 and 2023 were 16.2% and 18.5%, respectively. Both the as-reported and as-adjusted effective income tax rates were lower in 2024, primarily due to a discrete tax expense in 2023 related to changes in the valuation allowance associated with the U.S. foreign tax credits deferred tax asset. In 2023, the treatment of foreign taxes paid under the U.S. tax regulations published in 2022 changed due to the foreign tax legislation enacted in Brazil and Notice 2023-55 (the “Notice”) released by the U.S. Department of Treasury. Therefore, we recognized a total $327 million discrete tax expense in 2023 to establish the valuation allowance. This discrete tax expense was partially offset by our ability to claim more U.S. foreign tax credits generated in 2022 and 2023 due to the Notice. Additionally, a change in our geographic mix of earnings in 2024 contributed to the lower effective income tax rates compared to the prior year.
The Organization for Economic Co-operation and Development (“OECD”) Pillar 2 guidelines published to date include transition and safe harbor rules around the implementation of the 15% global minimum tax (the “Pillar 2 Rules”). In 2024, we did not experience a material impact as a result of Pillar 2 Rules. However, in 2025, we expect the Pillar 2 Rules will primarily offset the reduction to our effective income tax rate resulting from our incentive grant received from the Singapore Ministry of Finance. For the year ended December 31, 2024, this incentive grant reduced our effective income tax rate by approximately 4%. We are continuously monitoring developments and evaluating the impacts these new rules may have on our future effective income tax rate, tax payments, financial condition and results of operations.
See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 for further discussion.
Liquidity and Capital Resources
We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, credit and settlement exposure, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us at December 31:
2024 2023
(in billions)
Cash, cash equivalents and investments 1
$ 8.8 $ 9.2
Unused line of credit $ 8.0 $ 8.0
1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.4 billion and $1.9 billion at December 31, 2024 and 2023, respectively.
We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations which include litigation provisions and credit and settlement exposure.
Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be indicative of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic and market conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 22 (Settlement and Other Risk Management) to the consolidated financial statements in Part II, Item 8 for a description of these guarantees.
Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors - Legal and Regulatory Risks and Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash Flows
The table below shows a summary of the cash flows from operating, investing and financing activities:
For the Years Ended December 31,
2024 2023 2022
(in millions)
Net cash provided by operating activities $ 14,780 $ 11,980 $ 11,195
Net cash used in investing activities $ (3,402) $ (1,351) $ (1,470)
Net cash used in financing activities $ (10,836) $ (9,488) $ (10,328)
Net cash provided by operating activities increased $2.8 billion in 2024 versus the prior year, primarily due to higher net income after adjusting for non-cash items, an increase in billing collections, and less cash paid for litigation settlement, partially offset by a decrease in restricted security deposits received from customers.
Net cash used in investing activities increased $2.1 billion in 2024 versus the prior year, primarily due to cash paid for business acquisitions in the current year, partially offset by a net decrease in purchases of investments in time deposits.
Net cash used in financing activities increased $1.3 billion in 2024 versus the prior year, primarily due to higher cash paid for repurchases of our Class A common stock, dividends, and repayments of debt, partially offset by an increase in cash proceeds received from debt issuances.
Debt and Credit Availability
In April 2024, $1 billion of principal related to the 2014 USD Notes matured and was paid. In July 2024, INR28.1 billion ($336 million as of payment date) of principal related to the 2023 INR Term Loan matured and was paid.
During 2024, we issued a total of $4 billion of debt, as follows:
• In May 2024, we issued $1 billion principal amount of notes due May 2034
• In September 2024, we issued $750 million principal amount of notes due January 2028, $1,150 million principal amount of notes due January 2032 and $1,100 million principal amount of notes due January 2035
The issuances in 2024 are collectively referred to as the “2024 USD Notes”. The net proceeds from the issuance of the 2024 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $3.96 billion.
Our total debt outstanding was $18.2 billion at December 31, 2024, with the earliest maturity of $750 million of principal occurring in March 2025.
As of December 31, 2024, we have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $8 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $8 billion revolving credit facility (the “Credit Facility”) that expires in November 2029.
Borrowings under the Commercial Paper Program and the Credit Facility are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. We had no borrowings outstanding under the Commercial Paper Program or the Credit Facility at December 31, 2024.
See Note 15 (Debt) to the consolidated financial statements included in Part II, Item 8 for further discussion on our debt, the Commercial Paper Program and the Credit Facility.
Dividends and Share Repurchases
We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.
57 MASTERCARD 2024 FORM 10-K
PART II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the annual total and per share dividends paid in the years reflected:
For the Years Ended December 31,
2024 2023 2022
(in millions, except per share data)
Cash dividend, per share $ 2.64 $ 2.28 $ 1.96
Cash dividends paid $ 2,448 $ 2,158 $ 1,903
On December 17, 2024, our Board of Directors declared a quarterly cash dividend of $0.76 per share paid on February 7, 2025 to holders of record as of January 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $694 million.
On February 10, 2025, our Board of Directors declared a quarterly cash dividend of $0.76 per share payable on May 9, 2025 to holders of record as of April 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $693 million.
Repurchased shares of our common stock are considered treasury stock. In December 2024 and 2023, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $12.0 billion and $11.0 billion, respectively. The program approved in 2024 will become effective after the completion of the program approved in 2023. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock for the year ended December 31, 2024, unless otherwise noted:
(in millions, except per share data)
Remaining authorization at December 31, 2023 $ 14,142
Dollar-value of shares repurchased in 2024 $ 10,954
Remaining authorization at December 31, 2024 $ 15,188
Shares repurchased in 2024 23.0
Average price paid per share in 2024 $ 475.35
Dollar-value of shares repurchased in 2025 (through February 7, 2025) $ 959
Note: Table may not sum due to rounding.
See Note 16 (Stockholders' Equity) to the consolidated financial statements included in Part II, Item 8 for further discussion.
Critical Accounting Estimates
The application of GAAP requires us to make estimates and assumptions about certain items and future events that directly affect our reported financial condition. Our significant accounting policies, including recent accounting pronouncements, are described in Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part II, Item 8.
Revenue Recognition - Rebates and Incentives
We enter into business agreements with certain customers that provide for rebates and incentives when customers meet certain volume thresholds or other incentives tied to customer performance. We consider various factors in estimating customer performance, including forecasted transactions, card issuance and card conversion volumes, expected payments and historical experience with that customer. Rebates and incentives are recorded within net revenue based on these estimates primarily when volume- and transaction- based revenues are recognized over the contractual term. Differences between actual results and our estimates are adjusted in the period the customer reports actual performance. If our customers’ actual performance is not consistent with our estimates of their performance, net revenue may be materially different.
MASTERCARD 2024 FORM 10-K 58
PART II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Loss Contingencies
We are currently involved in various claims and legal proceedings. We regularly review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of probability and whether an exposure is reasonably estimable. Our judgments are subjective based on the status of the legal or regulatory proceedings, the merits of our defenses and consultation with in-house and outside legal counsel. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise our estimates. Due to the inherent uncertainties of the legal and regulatory process in the multiple jurisdictions in which we operate, our judgments may be materially different than the actual outcomes.
Income Taxes
In calculating our effective income tax rate, estimates are required regarding the timing and amount of taxable and deductible items which will adjust the pretax income earned in various tax jurisdictions. Through our interpretation of local tax regulations, adjustments to pretax income for income earned in various tax jurisdictions are reflected within various tax filings. Although we believe that our estimates and judgments discussed herein are reasonable, actual results may be materially different than the estimated amounts.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Significant judgment is required in determining the valuation allowance. In assessing the need for a valuation allowance, we consider all sources of taxable income, including projected future taxable income, reversing taxable temporary differences and ongoing tax planning strategies. If it is determined that we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings.
We record tax liabilities for uncertain tax positions taken, or expected to be taken, which may not be sustained or may only be partially sustained, upon examination by the relevant taxing authorities. We consider all relevant facts and current authorities in the tax law in assessing whether any benefit resulting from an uncertain tax position is more likely than not to be sustained and, if so, how current law impacts the amount reflected within these financial statements. If upon examination, we realize a tax benefit which is not fully sustained or is more favorably sustained, this would generally increase earnings in the period. In certain situations, we will have offsetting tax credits or taxes in other jurisdictions.
Business Combinations
We account for our business combinations using the acquisition method of accounting. The acquisition purchase price, including contingent consideration, if any, is allocated to the underlying identified, tangible and intangible assets, liabilities assumed and any non-controlling interest in the acquiree, based on their respective estimated fair values on the acquisition date. Any excess of purchase price over the fair value of net assets acquired, including identifiable intangible assets, is recorded as goodwill. The amounts and useful lives assigned to acquisition-related tangible and intangible assets impact the amount and timing of future amortization expense. We use various valuation techniques to determine fair value, primarily discounted cash flows analysis, relief-from-royalty and multi-period excess earnings for estimating the value of intangible assets. These valuation techniques include comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. Determining the fair value of assets acquired, liabilities assumed, any non-controlling interest in the acquiree and the expected useful lives, requires management’s judgment. The significance of management’s estimates and assumptions is relative to the size of the acquisition. Our estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable.
59 MASTERCARD 2024 FORM 10-K
PART II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK