Q4 2025 Earnings Call Transcript

Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Incorporated Q4 and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer session. Followed by the number one on your telephone keypad. Star one multiple times may affect your position in the queue. Mr.

Devin Corr, Head of Investor Relations, you may begin your conference.

Morning, everyone, and thank you for joining us for our fourth quarter 2025 earnings call. With me today are Michael Miebach, our Chief Executive Officer, and Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then that the queue will open for questions.

You can access our earnings release, supplemental performance data, and a slide deck that accompany this call in the Investor Relations section of our website, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis unless otherwise noted. The release and the slide deck include reconciliations of non-GAAP measures to GAAP reported amounts.

Finally, as set forth in more detail in our earnings release, I would like to remind everyone that today's call will include forward-looking statements regarding Mastercard's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance is summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our website for thirty days.

With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach.

Thank you, Devin. Good morning, everyone. There was a lot of activity to close out 2025, and it's been a fast-paced start to the new year. In that spirit, let's jump right in.

My headline for you today is that we continue to deliver, and 2025 was another very strong year. For the fourth quarter, net revenues were up 15% overall, with value-added services and solutions net revenue up 22% versus a year ago on a non-GAAP currency-neutral basis. Our consistently solid performance is driven by several factors. First, we are focused.

Our strategy is clear, and we are executing against it. We are making strong progress against each of our strategic pillars and benefiting from the virtuous cycle across our payment network and services offerings. Second, we are innovative and agile. We spearhead the payments evolution.

At the same time, environments shift. Customer needs, technology, regulation, so we adapt. And we prioritize ensuring we have the right capabilities and skill sets. Recently, we completed a strategic review of our business.

This will result in reductions in some areas and roles but lead to further investment and increased focus in others. And finally, we are diversified and differentiated. Our business extends across geographies, spend categories, and payment adjacencies. The diversification of our business means we benefit from a wide range of growth drivers, which make us more resilient.

As we enter 2026, geopolitical and macroeconomic uncertainty persists. We will continue to monitor and work to navigate just as we have successfully done in the past. But for now, we remain optimistic and confident in our execution and the fundamentals of our business. Looking back at 2025, we won hundreds of new issuing deals and expansions globally.

This doesn't just happen; it is the result of our dedicated sales force, technology, and differentiated value we deliver to our customers. I will share a few highlights from this past quarter. In the U.S. and Canada, we extended our long-standing partnership with Capital One, where we renewed our partnership in credit. We will be the network for a large portion of newly acquired credit accounts.

And across their business, Capital One will continue to use several of Mastercard's services. In Turkey, Yapi Credi will migrate nearly 10 million cards across their consumer credit, debit, and affluent portfolios to Mastercard. Our consulting and marketing services will be used to support the end-to-end portfolio conversion. In Latin America, Scotiabank chose Mastercard as their network partner in Chile and Uruguay.

Why? They see Mastercard's security, loyalty, and analytics offerings as key to fueling their growth. This builds upon our strong relationship with the bank in Peru and the Caribbean markets. In South Africa, our modernized real-time payment switch is a key factor in signing exclusive deals with several players in the market, including Nedbank and Standard Bank.

These wins position us to increase our share in the market by multiple points. And we continue to win in affluence, which is so important. We have secured more than 60 new affluent programs in 2025 across the world. Our drumbeat of wins continued this quarter with new deals secured with PickPay, Zikub, Sis Prime in Brazil, and Nedbank in South Africa, which I just mentioned.

We are seeing the same momentum in co-brands, with leading merchants and digital players. Earlier this month, it was announced that Mastercard will continue to be the exclusive network for the Apple Card, which will transition to JPMorgan Chase as the issuer in approximately 24 months. We supported the launch of this industry-leading co-brand nearly seven years ago, and we are excited to support its continued success. We won the Walmart and Sam's Club co-brands in Mexico in partnership with Invect Spankel.

We renewed our partnership with Barclays, supporting its U.S. co-branded card programs and its Tesco Bank card programs in the UK. And we partnered with Amazon and Emirates Islamic to launch the Amazon credit card in the UAE. As I said, we remain focused on driving long-term growth across each of our strategic pillars. In Consumer Payments, this quarter was about continued innovation and focus on driving incremental growth.

Our drumbeat of wins I just mentioned shows that Mastercard is preferred over alternative networks. Banks chose Mastercard because of our global acceptance, our consumer protections, strong security, and digital capabilities. It's also about our dedicated teams and our commitment to driving mutual growth. We work with our existing customers to optimize their portfolios by using our advanced analytics and AI capabilities.

We help clients activate their cardholders, drive top-of-wallet behavior, and increase approval rates. And it works. We are driving more transactions of our network and in key categories. Think digital or cross-border.

In looking at digital commerce alone, we've seen approval rates increase by 270 basis points in the last five years. Now think about what that means when applied to Mastercard's global payment network. Last year alone, we switched more than 175 billion transactions. That's a lot of potential to further optimize.

We now switch more than 70% of all Mastercard transactions globally, an increase of 10% since 2020. More switched transactions result in more data and more opportunity to sell services and so on. All of which allows us to help our partners drive top and bottom-line growth, enabling seamless and secure experiences for our cardholders. This is the virtuous cycle in motion. The payments industry continues to evolve.

Stablecoins and the Gentecommerce bring new choices to pay and get paid. And we are leaning in just as we have with neobanks, digital wallets, and installments and so on. For us, stablecoins and agenetic commerce are emerging opportunities, ones where Mastercard has a natural role to play. We have been active in the digital asset space for over a decade.

Most use cases for crypto and stablecoin today offer trading and the like. For us, it is another currency we can support within our network. We've made good traction enabling the purchase of these assets, facilitating transactions, and supporting stablecoin for settlement over our network. Trust, interoperability, and global acceptance are key in all payments.

That's where we come in. This quarter we have supported co-brand partners such as MetaMask, as they scale across geographies. We partner with co-brand partners to extend their offerings to new customer types. Gemini brings their success in the digital asset space to launch the first business-focused stablecoin co-brand.

And we continue to expand our settlement capabilities, now working with Ripple. Moving on to Agenci Commerce. Where AI-powered agents assist or act on behalf of consumers throughout their commerce journeys. For us, Agenty Commerce represents another avenue to enable payment choice with the same trust that we always deliver.

It's early days, but we are ready. You remember, last year, we launched Mastercard AgentPay, a framework designed to foster trust in agentic transactions. We have now enabled our US issuers to participate in agent pay. And we are working to enable our global issuer base by the end of the first quarter.

As more agents come on board, there will be more opportunities for consumers to experience a truly seamless commerce experience. We're actively working with ecosystems participants to adopt Agenci commerce across all regions. I'll share a few highlights from this quarter. In Asia, we're partnering with Anthem on card-based tokenized payment solutions for agentic payments.

In The UK, we're consulting clients such as Lloyd's Banking Group, Elavon, and Santander on AgenTek commerce innovations. And in The UAE, we're piloting AgenTik payments with the leading retailer in the entertainment group, Majid Alsattain. And with banks, merchants, and digital players, we continue to position them for success in this new era of commerce. Whether it be through consulting, security, data-driven insights, or new loyalty programs, we are there.

Moving to commercial and new payment flows, one of our three strategic priorities. In 2025, our commercial credit and debit volumes represented 13% of our total GDV, and grew at 11% year over year on a local currency basis. That's a clear reinforcement that our differentiated value propositions and broad-based partnerships are driving meaningful results. In commercial point of sale and invoice-based payment flows, our offerings are designed to meet corporate demands for more efficient, data-rich, and secure transactions.

We continue to expand usage of our virtual cards by enabling transactions to be initiated within B2B and T and E platforms. Mastercard's commercial express program simplifies the integration and onboarding. This quarter, Ambers, a leading T and E platform, and BMO and Huntingbank were the latest issuers to participate. Differentiated solutions benefit our customers.

And that has translated into significant wins. This quarter, we renewed our global partnership with WEX and extended our partnership with Barclays in the UK and across Europe. Also, we partnered with Cooper, a leading business spend management platform, to launch the Coupa Mastercard. Together, we are enabling virtual card payments across the entire customer base, which spans millions of buyers and suppliers globally.

There's much more than winning share. We're actively working to capture the sizable secular opportunity. Small businesses represent more than half of the cash and check opportunity in commercial point of sale that we outlined at our Investor Day. Given the broad-based diversity of the small business segment, we are working across banks, and non-bank partners to serve this segment.

It benefits our partners, Mastercard, and the overall economy. This quarter, we extended our partnerships with Intesa Sanpaolo to drive greater small business issuance in Italy. Partnering with L'Oreal to issue small business cards across Latin America, our first market launch is a co-brand card with Clara for salon owners in Mexico. This is a prime example of how we are using a vertical approach to partner with large-scale players to capture untapped payment flows.

Grow through differentiated value and broad-based partnership continues for Mastercard Move. Our disbursements and remittances capability. Now with more than 17 billion endpoints available, Move is positioned to be the money movement platform with the greatest reach in the industry. Mastercard Move recipients had the option to receive funds across a variety of endpoints, including, but not limited to, bank accounts, debit cards, digital wallets, and cash if you want to.

We continue to expand our network reach just recently by enabling bank account deposits in Bangladesh. By expanding digital wallets and endpoints in The Philippines, a partnership with GCash, and in China through our partnership with Tenpay Global for Weixin Pay. With Stablecoin Wallets through our partnership with Zunes. Our expanded reach and endpoint options are resonating with customers.

This quarter, we partnered with Banco Ripley, a subsidiary of the Ripley Corporation, one of the largest retail companies in South America, to offer Mastercard cross-border services to their customers in Chile and Peru. Also partnered with Capital Bank, a leading neobank in Mexico, which is leveraging Mastercard and Corpay's cross-border payment solutions. Our Mastercard move capability is demonstrated consistently strong transaction growth. In quarter four 2025 and full year 2025, saw transaction growth exceeding 35% versus a year ago.

Our extensive reach and market adoption position us well going forward. Turning to value-added services and solutions. We delivered strong performance in 2025 with full-year net revenue growth of 21% or 18% excluding acquisitions year over year on a currency-neutral basis. This growth was broad-based, with consistently strong growth across regions, and product groups.

Our performance is a clear demonstration of our growth algorithm in action. That steps through that. We have curated a suite of value-added services and capabilities in large and fast-growing addressable markets such as digital, security, and data-driven insights. Mastercard's proprietary data and AI capabilities combined with our payment network reach provide us a real competitive advantage.

Simply put, we provide unique intelligence at scale. There's a natural tailwind to services from payments. At our Investor Day at the 2024, we noted that 60% of our value-added services and solutions net revenues were network-linked. This simply means value-added services and solutions revenues benefit from transaction growth.

And also higher growth drivers such as tokenization. For example, fraud scores and token authentication fall into this category. And we are actively working to further penetrate our customers and markets just like the Mastercard threat intelligence offering we launched last quarter, which has already started scaling across our payment network. In addition to network-linked offerings, we also provide our customers with consulting, marketing, and platform-based offerings.

These non-network services enable us to sell to new buying centers at retail banks. They also extend our reach across a more diversified customer base, including governments, merchants, digital players, and more. This quarter, we supported Costco in Canada and their omnichannel growth strategy using Mastercard's marketing and consulting services, that's meaningful strategic value. Innovation remains core to our long-term growth.

We have a long-standing history of success in launching and scaling innovation. Way back in 2013, we architected the industry standard for tokenization to enable trusted digital transactions. The critical need of customers and partners at that time and still true today. In fact, as of quarter four, we have tokenized nearly 40% of all transactions.

And we continue to see adoption in both card-present and card-not-present use cases. And with this growth, we're seeing higher transactional approval rates enabling further services growth. Our innovations continue to deliver real value to our customers and continue to drive financial benefit today. We're adding to that innovation.

Now with the launch of Mastercard Credit Intelligence, By using Mastercard's proprietary network data, identity, and open finance capabilities, we can deliver faster credit assessments. For individuals and entrepreneurs, this could mean greater access to credit, from banks, greater insights to inform their lending strategies. And that fuels a healthy, inclusive digital economy live in market and seeing adoption across a variety of customer types. In addition, we've launched Mastercard Agent Suite, evolving our consulting practice from AI strategy to now include asset-led engagements.

You will design and deploy AI agents within customer environments to drive operational excellence, and enhance end customer experience. In addition to directly engaging with customers, we're scaling our services through distribution partners, one to many, including FIS, WPP, and Comcast advertising will be added this quarter. So with that, I will wrap it up. In summary, we delivered a very strong fourth quarter and full year 2025. Our performance is a direct reflection of growth strategy deliberate diversification and focused execution.

We're at the forefront of innovation, and we're remaining differentiated versus the competition. This helps us be an agile, trusted, valued partner, especially as markets evolve. With strong momentum moving into 2026 and remain confident in our continued growth, Sachin, over to you.

Thanks, Michael. So turning to page three, which shows our financial performance for the fourth quarter on a currency-neutral basis. Excluding where applicable special items and the impact of gains and losses on our equity investments. Net revenue was up 15% reflecting continued growth in our payment network and our value-added services and solutions.

Acquisitions contributed one ppt to this growth. Before discussing expenses, I am pleased to share that in late December, the company secured various new multiyear government grants related to investments in select geographies. These grants benefit both operating expenses and other income and expense. We expect to realize the operating expense benefit primarily in 2025 and 2026, while the other income and expense benefit will extend multiple years beyond 2026. The Q4 2025 impact reflects the full-year value of the 2025 grants.

With operating expenses growth improving by around 5.5 ppt and other income and expense benefiting by approximately $135 million in the quarter. These positively impacted each of the following metrics, that I will discuss on this page. Operating expenses increased 12% including a five ppt increase from acquisitions. And operating income was up 17%, which includes a one ppt headwind from acquisitions.

Net income and EPS increased 17-20%, respectively. Driven primarily by the strong operating income growth and a positive discrete tax item, which primarily benefited the effective tax rate. EPS was $4.76, which includes a 10¢ contribution from share repurchases. During the quarter, we repurchased $3.6 billion worth of stock and an additional $715 million through 01/26/2026. Now turning to page four.

Let's first look at some of our key volume drivers for the fourth quarter on a local currency basis. Worldwide gross dollar volume or GDV increased by 7% year over year. In The US, GDV increased by 4% with credit growth of 6% and debit growth of 2%. The growth of our debit portfolio was impacted by the Capital One debit migration, which continued through Q4. Outside of The US, volume increased 9% with credit growth of 9% and debit growth of 9%.

Overall, cross-border volume increased 14% globally for the quarter, reflecting continued growth in both travel and non-travel-related cross-border spending. Turning to page five. Switch transactions grew 10% year over year in Q4. We continue to drive contactless penetration, which in Q4 stood at 77% of all in-person switched purchase transactions. This is up five ppt since the same period last year.

In addition, card growth was 6%. Globally, there are 3.7 billion Mastercard and Maestro branded cards issued. Turning now to slide six. A look into our net revenue growth rates for the fourth quarter discussed on a currency-neutral basis.

Payment Network net revenue increased 9% primarily driven by domestic and cross-border transaction and volume growth. It also includes growth in rebates and incentives. Value-added services and solutions net revenue increased 22%. Acquisitions contributed approximately three ppt to this growth.

The remaining 19% increase was primarily driven by growth in our underlying drivers, strong demand across digital and authentication, security solutions, consumer acquisition and engagement, and business and market insights, as well as pricing. As we reflect on value-added services and solutions growth for the full year 2025, we continue to see strong broad-based growth, as Michael mentioned earlier. Looking at our organic growth rates, both AP EMEA and The Americas delivered high teens growth. And we also saw at least high teens growth across all the services product areas apart from other solutions.

Now let's turn to page seven to discuss key metrics related to the payment network. Again, all growth rates are described on a currency-neutral basis. Unless otherwise noted. Looking quickly at each key metric.

Domestic assessments were up 8%, while worldwide GDV grew 7%. The difference is primarily driven by pricing, offset by mix. Cross-border assessments increased 17% while cross-border volumes increased 14%. The three ppt difference is driven primarily by pricing in international markets, partially offset by mix.

Transaction processing assessments were up 14% switched transactions grew 10%. The four ppt difference is primarily due to favorable mix and pricing, partially offset by a decline in revenue from FX volatility. Towards the end of Q4 and month-to-date January, we saw FX volatility well below historical norms. Other network assessments were $272 million this quarter.

Moving on to page eight, you can see that on a non-GAAP currency-neutral basis, excluding special items, total adjusted operating expenses increased 12% which includes a five ppt impact from acquisitions. Excluding acquisitions, the growth of total adjusted operating expenses was primarily driven by increased spending to support various strategic initiatives, including investing in our infrastructure, geographic expansion, and enhancing and delivering our products and services. This was partially offset by the benefit of the government grants I described earlier. Turning to page nine.

Let me comment on the operating metric trends. Starting with Q4 and looking at the metrics on a sequential basis. U.S. Switched volume growth declined primarily due to the migration of the Capital One debit portfolio.

Worldwide less US switched volume saw a slight deceleration driven primarily by tougher comps including the lapping of portfolio wins in Europe. Switch transactions were in line with Q3. Cross-border volume remained strong. Of note, we saw a sequential decline in cross-border card not present ex travel, primarily driven by tougher comps from the lapping of share wins in Europe and higher growth from crypto purchases a year ago. As we look to the first three weeks of January, our metrics continue to remain strong, generally in line with the fourth quarter.

Of note, U.S. Switched volume was flat sequentially, as the Capital One debit roll-off was mostly offset by easier comps due to weather impacts in the prior year. Saw a decline in cross-border travel volumes primarily due to weather-related impacts in Europe this year. Cross-border card not present ex travel continued to be impacted by higher growth from crypto purchases a year ago.

Overall, we continue to see healthy consumer and business spending. Turning to page 10, I wanted to share our thoughts on fiscal year 2026. As Michael said, we delivered very strong results in 2025, across all facets of our business despite an uncertain backdrop. The fundamentals of our business remain strong. The macroeconomic environment remains supportive, with balanced job markets across the globe underpinning healthy consumer and business spending.

That said, there continues to be ongoing geopolitical, and economic uncertainty. We maintain a disciplined capital planning approach and have levers to pull if needed. But most importantly, we're focused on the execution of our strategy. Positioning ourselves for long-term growth and remaining innovative, and differentiated.

Coupled with our diversified business model, this creates resiliency, helps us navigate diverse environments, just as we have done in the past. We remain positive about the growth outlook and our base case for 2026 continues to reflect healthy consumer spending. As it relates to our expectations for the full year 2026, we expect net revenues to grow at the high end of a low double digits range on a currency-neutral basis, excluding inorganic activity. We estimate a tailwind of approximately one to 1.5 ppt from foreign exchange.

From a net revenue perspective, we expect currency-neutral growth in the first half of the year to be lower than in the second half. This is driven by tougher comps in the first half, primarily due to elevated revenue growth from FX volatility in 2025. From an operating expense standpoint, we expect growth to be at the low end of a low double digits range versus a year ago on a currency-neutral basis excluding inorganic activity and special items. We expect a headwind of 0.5 to one ppt from foreign exchange on a full-year basis. Now turning to the 2026. Year over year net revenue growth is expected to be at the low end of a low double digits range.

On a currency-neutral basis, excluding inorganic activity. Estimate a tailwind of approximately 3.5 to four ppt foreign exchange for the quarter. From an operating expense standpoint, we expect Q1 growth to be in the high end of high single-digit range versus a year ago, again, on a currency-neutral basis, excluding inorganic activity and special items. Foreign exchange is forecasted to be a headwind of approximately 2.5 ppt for the quarter.

Separately, as Michael mentioned, based on the recent strategic review of our business, we expect to record a one-time restructuring charge in Q1 of approximately $200 million will be recorded as a special item and is excluded from our non-GAAP metrics. These actions will impact approximately 4% of our full-time employees globally. We expect these actions will free up capacity to further invest in our strategic priorities and best position us to continue to execute on our growth algorithm. Other items to keep in mind, on other income and expenses in Q1, we expect an expense of approximately $50 million including the benefit from the government grants previously discussed.

This excludes gains and losses on our equity investments, which are excluded from our non-GAAP metric. Finally, we expect a non-GAAP tax rate in the range of 20% to 21% for the full year and approximately 19% to 20% for Q1. A lower forecasted tax rate for Q1 as compared to the balance of the year is consistent with prior years, due to expected discrete tax benefits related to share-based payments in the first quarter. And with that, I will turn the call back over to Devin.

Thank you, Sachin. Thank you, Michael. Julianne, you may now open the line for questions.

Thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on times may affect your position in the queue. Our first question comes from William Nance from Goldman Sachs. Please go ahead. Your line is open.

Hi. Thank you for taking the question. I wanted to start on the Capital One renegotiation. Congratulations on announcing that.

Maybe if you could just provide a little bit more details. I think Cap One has talked about wanting to move volumes over to the Discover network over time, but at the same time, has talked about a lot of investments on the acceptance side. So can you talk about just the renegotiation as it relates to your existing Capital One cards outstanding? Are you expecting your share of Capital One credit volumes to remain stable?

As a function of the renegotiation? And if you could just maybe talk about how long the extension was for. I appreciate any details you can share. Thank you.

Yeah. Thanks for the question. So no surprise. We're excited about these recent news that we announced earlier.

So extending our credit portfolio agreement with them is important, but also we should not overlook the aspect of Capital One as the great partner they are to use more of our services across their whole business. It's a strong signal, in my view at least, that the Mastercard network is valued. This is important to consider. We continue to invest in this network because we continue to invest in our acceptance.

We know this is hard to build, and that is really what matters when it comes to affluent portfolios, when it comes to business portfolios, and so forth. So the partnership will continue, but we will continue to invest to ensure that we have a truly differentiated proposition as a partner for Capital One.

Appreciate you taking the question.

Our next question comes from Sanjay Sakhrani from KBW. Please go ahead. Your line is open.

Thank you. Good morning. I just have a question on the CCCA. It's obviously back in the news flow.

I'm just curious how you guys are thinking about the implications to yourselves and the industry and sort of you know, the probability that it may or may not get through. And then just a quick clarification on the Capital One question. I'm just curious, it talks about sort of new account. Is there any volume migrating to Mastercard from Capital One?

Or I'm I just wanted some more clarity there. Thank you.

Let's start with the first topic, CCCA. You know, Sanjay, as you said, it's back in the news, and, yeah, it's been back in the news. But, yeah, it's been ongoing for a long time. So this was first introduced in 2023. And, you know, if you take it down to the facts, little progress has been made.

A lot of discussions there around that, but also, what clearly has emerged is that there's a very united opposition to this proposed bill, as the benefits of the bill are yet to be proven while the risks are pretty clear. That aspect is about taking consumer choice away from consumers. They can't really take pay the way they want to pay. You know, that choice moves to merchants.

This has been discussed in the context of affordability, but there is no particular, you know, consideration in this bill to actually pass on any savings. There's a big topic, that is often overlooked, and that is the potential risk to cybersecurity. This is a race to the bottom for the cheapest network option, but not the safest. Those are all things that haven't really changed since 2023. But the opposition, based on, you know, focused on these points has intensified.

So the industry is very aligned. We're engaging with regulators at every point to educate and ensure that this is fully understood. So it's also important to understand that the payments ecosystem is highly competitive. Now this the Credit Card Competition Act isn't really about It's about lowering cost without considering all the points I just said.

So you know, there is competition. It's working. It's a highly effective ecosystem. So that is our perspective on it.

That hasn't changed. On a probability of this going through, I mean, we shouldn't be speculating here. A few moves weighed over the last couple of weeks, which haven't succeeded, and I think we attribute that to a continued discussion on the, you know, risk associated with this particular regulation. And then, Sanjay, a new question around Capital One.

It's like Michael said in his prepared remarks. Right? We're really excited about the new agreement which we struck with them as it relates to new credit issuance. And, you know, that's the extent of what we'll share with you publicly.

As it relates to the interactions. But suffice it to say, you know, the reality is customer sees real value with what Mastercard brings. That's the reason, you know, we are actually doing what we are doing in the nature of the credit agreement. And, you know, they're seeing that across the payment network as well as value-added services solutions.

Thank you.

Our next question comes from Adam Frisch from Evercore ISI.

Thanks, guys, and thanks for restoring some order. In the marketplace as it relates to your stock this morning. Wanna address the d go back to DC for a second. We wrote earlier this week that CCCA is all but dead for now at least, but would love your views on the topic around a 10% rate cap on credit.

Which seems like it's a back burner for now, but it's only a tweet away from being reignited. So would love your perspective on how you describe the conversations going on between the industry and the administration to address the affordability issue. As it relates to our space? And then if you could also provide some insight around your conversation conversations with issuers and other players in the ecosystem about ways to address the president's concerns without creating a broader crisis in the industry.

Thanks. Good. Yes. Appreciate your first comment, actually, on the order.

So the rate cap. You know, that's a it's a really important conversation around affordability, and we shared that that it should be addressed. Yeah. But when you think about the rate cap in particular, here is a proposal that comes with a whole range of consequences that you think through, how that would something like this would be impacted.

And the, you know, consequence that comes to mind first is what does this mean to credit access for a lot of the most vulnerable people that may not have access to credit any longer should a rate cap like this be passed. So this is an important topic to be understood. To your question about our conversations with the banks, with the issuers, the card issuers, We don't set rates, but, obviously, we have a shared interest in making sure that the overall credit ecosystem does work and provides credit access. So we're sharing data.

We're on you know, we're you know, helping to compute what the impact would be. Then it is really understanding from our bank partners where they are gonna go. Is it, you know, it gonna be different products? It's you know, what is there today?

Part of this is education. What kind of 0% introductory rates are out there today? Low-interest rate products, and so forth. So it's a broad conversation that's going on, and I you know, across the industry leaning in on the topic of affordability and options around that.

So I think overall, a constructive dialogue that was sparked you know, we have yet to see. As I it doesn't affect us directly as we don't set rates, but we're actively engaged as an industry custodian.

Do you see the administration and the industry having more constructive talks about feasible alternatives here? As opposed to a blanket temper?

There's a lot there's a live doc. Yeah. There is a live dialogue here. You know, I think everybody realizes it's an important topic.

I think we need to move to the next question.

Okay. Great. Thanks, guys.

Next question comes from Ramsey El-Assal from Cantor Fitzgerald. Please go ahead. Your line is open.

Ramsey El-Assal: Michael, could you give us a view on the health of the consumer? It's a very noisy kind of media political environment. A lot of mixed signals. On the other hand, it seems like the underlying spend volumes are really hanging in quite solidly across the board. What are you guys seeing out there? Any changing patterns? Anything interesting to call out? Thanks.

Right. You know, it's a it's a great question. You know, when you look back over 2025, over the whole year, and we just take, soft data, like headlines or consumer confidence, data that comes out. You know?

On one hand, consumers fill in surveys that the same time, their spend behavior hasn't actually changed. So that's a pattern that just continues. We see know, just taking 2025, it hasn't changed quarter on quarter. We see a truly savvy and intentional consumer.

So what the digital economy brings to consumers almost back to the affordability topic is an ability to figure out what's the best deal, what do you wanna spend on, Where can you use your rewards to avail something that otherwise you might not do at this time. So is it a savvy and intentional consumer? They're using their loyalty programs, their data to kind of spend on what they wanna spend on anyway. So that has been a continuous trend.

There is a question on how the consumer was affected or not, you know, by some of the tariff changes that we've seen not year. And, you know, that doesn't show up in our data either. So it's not coming through somewhere across the ecosystem between, you know, importers and big brands it's all been adjusted in a way that it hasn't really affected consumer spending. At least we cannot tell that.

There's conversation on how does the you know, the whole spend pattern change when you look across higher income bands and lower income bands. And what we see across the board you know, in the light of a job market that is supporting paychecks and people are spending those paychecks, And the wealth effect on the other hand, so there are different types of supporting kind of factors around that support overall affluent spend as well. Lower income spend. So that hasn't really changed.

And, you know, Sachin talked about it earlier. The first three weeks into January, we see this continue. Now if you zoom out and you look across the world, these patterns are different by region here and there, but the aggregate top line is the consumer spending remains healthy is the same.

Ramsey El-Assal: Got it. Thank you.

Our next question comes from Craig Maurer from ST Partners. Please go ahead. Your line is open.

Yes. Hi. Thanks for taking the questions. First, there's been quite a bit of FX volatility in the past week, which makes a nominal guide a bit of a moving target.

Can you talk about the sensitivity of the overall business to FX rate moves these days? And when you set the FX rates for the guidance? And secondly, vast grew regardless of how I look at it, VAS growth accelerated significantly in '25 versus the growth in the rest of the business. And so I'm curious if this is a trend that we should expect to continue in terms of the relationship between vast revenue growth and however we look at it, whether purchase volume or process transaction growth, or whatever metric you prefer?

Thanks.

Sure, Craig. So let me just take both questions. Here, which is from an FX follow-up release standpoint. I'll be humble enough to tell you I have no idea where FX volatility is gonna be tomorrow.

As it's gonna be in the remaining part of this year. So what we do is we take our best estimates of what we think it's going to be. We look at long-term averages. We kinda look at, you know, what the general environment is.

And, you know, on the basis of that, we build in our best estimates. In quarters in which we see outsized benefit come from FX volatility, we call it out as we did in the first and second quarter of last year. Right? And, in other quarters where we see record low levels of FX volatility, we'll call it out as well as I did today.

So look. I mean, the reality is super hard to predict. Right? And the impact to our business, as you can see, is fact that I'm calling it out means it does have an impact on our business.

In particular, in the transaction processing assessments line. Right? So that's kinda important for people to know where it kinda sits. From an overall perspective.

The more important thing here, though, is Mastercard is actually delivering some incremental value to our customers, which is why we actually generate the revenue associated with whether it's good volatility or bad. The reality is we're delivering currency conversion services. Which means that our customers are seeing value in terms of what we're doing and allows us to actually you know, participate in that volatility to the extent it's high or then, you know, the detrimental impact of that volatility to extent it's low. So that's kind of point number one.

On VAS growth, super pleased with the results. You know, the company continues to be very focused. It's an important part of our various strategic pillars. You can see that the growth rates are healthy.

I'll go back to what Michael said in his prepared remarks. Right? Our business in terms of how we actually operate our vast portfolio is very tightly intertwined with what's going on in the payment network. Let's stop there.

Right? The payment network brings volume onto the system, It brings data. Data enables the creation of the solutions. And that allows the social cycle to keep going.

As it relates to the growth, know, we continue to remain very encouraged about the growth prospects from a vast standpoint. We've we shared with you previously what the building blocks of that growth are. Start with the fact that if there's underlying growth in drivers driven by know, what we're doing in the payment network, You know, there's an attach rate, which is related to that, which actually helps growth take place. Our Investor Day, we talked about how 60% of our 60% of our VAS revenues are network linked.

So if you see the network the payment network growing, and the underlying drivers growing, you're gonna see that the growth of that come through. Second, we are in the business of actually really increasing the attach rate to the there are new solutions we're putting out in the market. Doesn't mean that every new solution that we put under the market is necessarily network link. But those which are allow us, you know, the opportunity to continue that growth algorithm.

Third, we're increasing the penetration of these solutions with our customers globally. So the color I gave you in my prepared remarks today about the fact that our VAS growth is broad-based gives me confidence that this is not episodic in one particular region. Kinda talked about how across AP, EMEA, and Americas, we're seeing good growth from a vast standpoint. As also across the various elements of our services portfolio, we're seeing good growth.

So that's kind of pretty comforting to me to see that we are actually executing across that VAS growth algorithm in a meaningful manner. And the last point I'll make is enabling this growth has been the constant look we do from an innovation standpoint organically, and we've done a bunch of new innovation, which we've announced, But also what we're doing to expand our addressable market. And examples of that would be things like recorded future, which takes us into new and different and fast-growing spaces like threat intelligence. So if I had to bring all of this together for you, I'd say, know, good solid growth in DAS in 2025 and we continue to remain encouraged about the prospects from a growth standpoint from a BaaS standpoint.

Going forward.

Yeah. If I can add a point here, this is you know, what's really important here is the differentiation. Because there's when you look at the competitive landscape and in services, there's specialist companies out there that focus on cybersecurity. There's loyalty companies out there.

There's really not a company out there like us. So it puts us in a very differentiated problem. Prop position here. We have the payment data as Sachin laid out, and we can build a set of services that are truly unique.

It's a very curated set of services. We keep getting the questions from you now and then. What is actually in services? But if think about it from the perspective of cybersecurity solutions, data insight solutions, those are all, you know, you know, types of services that ground it in fundamental growth drivers and needs of the growing digital economy.

So differentiated underlying growth drivers everything that Sachin just said. And all this is powered by a significantly changing distribution network that we're using. By selling these services through many others other than our payment partners. Thank you.

Our next question comes from Tien-Tsin Huang from JPMorgan. Please go ahead. Your line is open.

Tien-Tsin Huang: Hey. Appreciate it. Great growth here. I wanted to ask about Capital One little differently. You mentioned think it's Michael, you mentioned hundreds of issuing wins in twenty five. I'm curious for this year in '26, Any updated callouts on timing and impact on let's say, the KPIs from all these conversions and renewals. In '26? How does the renewal pipeline in general look? And any callouts on pricing or competitive intensity, that kind of thing? Thanks.

Tien-Tsin, it's Sachin. Why don't I take the Look. I mean, you know, again, from an overall, customer engagement standpoint and a deal pipeline standpoint, I'd coming into 2026 is I'd put it in the realm of pretty normal what we see at this time of the year compared to prior year. So active pipeline, you know, lots of great engagement taking place with numerous customers.

Nothing unusual to call out there in terms of the pipeline of deals. As it relates to the competitive environment, we're in a competitive space. There's no question about it. And what we're also very clear about is that in a competitive space, you've got to differentiate.

And differentiation is gonna be driven by what we can do at the payment network level, through our digital capabilities, but also what we can bring in the nature of value-added services solutions. So this virtuous cycle piece kinda comes into play again. And we're seeing ourselves be able to participate and actually grow in such an environment, which is very encouraging. So I think it's a competitive environment.

We have you know, very, what I would call, formidable competitors out there, but you know, I feel very good about our ability to compete given our suite of services and solutions as well as our payment network capabilities that are out there. So net net, here's what I'd share with you, which is feel encouraged about the robustness of the pipeline, and, you know, we'll keep doing what supposed to do in terms of actually driving with our customers to deliver value. To them. The last point I'll make is I don't expect, and I certainly hope that we don't win all deals.

Wanna win the right kind of deals. We've said this in the past. And we will be very focused on doing that, which is making sure that we want to win those deals which are fast-growing, which are cross-border heavy, which are ones where we can bring our services to bear, to actually drive incremental growth for the issuer. That's really important because if you can't drive incremental growth for the issuer, you know, the whole idea of being able to take it take the deal over from the other network is kinda redundant from an issuer standpoint.

So we really gotta push on that. Which is the way we kinda go about doing what we do.

Yeah. I think it's a it's a really important question, Tien-Tsin. So you know, when you look across I'm just looking back at my prepared remarks. Sixteen minutes and you see all the wins in there.

So the pipeline is healthy. But it sounds like maybe it's broad stroke. We are very focused. Based on what Sachin just said, the focus on affluent, for example, on cross-border, on really high-octane kind of, you know, partnerships that help our customers, but also us, really important.

And then as I called it out, it's not just about share. It's about secular. So wins in the secular opportunity context are just as important when I think about small business and I think about B2B and so forth. So full on, Really full on.

That's the plan for '26, but not for everything, as Sachin just said.

Tien-Tsin Huang: Yep. No. It's very good good good detail there. Just forgive me for asking one other clarification question. Just if it looks similar to '25, can we infer that the rebate in incentive outlook is also similar?

Yeah. Here's what I'd share with you. I am not gonna give you a full-year rebate guidance. But what I will share with you is that in Q1, we expect our contra as a percentage of payment network assessments to be flat to slightly down. Sequentially compared to Q4, very much in line with what you've seen in the past.

Tien-Tsin Huang: Terrific. Thank you both.

That's what he really wanted to know.

Our next question comes from Darrin Peller from Wolfe Research. Please go ahead. Your line is open.

Just following up on guidance for a minute. When you look at the trajectory of it, obviously, starting off and then calling for maybe a slight acceleration of the year progresses to the high end of low double digits from low end of low double digits. Maybe just give us a just remind us the puts and takes of your progresses. And then more importantly, just the inputs.

What are you assuming the consumer does spend volumes do both cross-border domestically? What are your thoughts on the potential for more stimulus? Is that embedded in your guide? So any more color on that would be great.

Thanks, guys.

Sure, Darrin. So our base case, which is the basis of the guidance that we've shared with you, is that consumer and business spending remains healthy. That's kinda our going-in position because that's what we've seen. Right?

And like Michael said earlier, you know, the different numbers as it relates to the soft data from a sentiment standpoint, and then there's the hot data. And that's what kinda see. We've kind of triangulated around the best we can, and it's you know, our base case assumes a strong consumer. So that's kind of the starting point of you know, where we are from a driver standpoint.

That contemplates, you know, the dialogue around, you know, a fairly healthy tax refund season, etcetera, All of that's taken into consideration. Again, recognize that The US and then we're a global business as well. We've got 70% of our business, roughly coming from overseas markets. So I think it's important to kinda think about in that whole context.

Now I think you're asking the question as it relates to cadence between the first half and the second half, which is something I shared. You know, I've given you full-year guidance, and I've kinda said that we expect the growth in the first half to be lower than in the second half, and that's primarily driven by the fact that you've got tougher comps. From an FX volatility standpoint. We called this out last year where we talked about first quarter, second quarter of last year, higher FX volatility.

I called out how we're seeing lower FX volatility you know, coming out of Q4 and into the January. Something to keep in mind. And, you know, the reality is it that's really what primarily explains the difference in cadence, which is there between the first half and the second.

Okay. Thanks, guys.

Our next question comes from Trevor Williams from Jefferies.

Sachin, think you called out pricing as a driver across every revenue line. Quarter. So just how should we think about the durability of what we're seeing come through across each of the line items, especially on cross-border, which has been a it's seen a nice pricing tailwind over the course of the year. And then in terms of magnitude, just what you're building into the guide for '26 for pricing relative to '25?

Thanks.

Yeah. I think it's important to actually understand how we go about thinking about what we do and what we call pricing as well. Right? It's kind of very much a function of, you know, what is the nature of products and solutions and services that we have delivered whether they're brand new in nature and or they are you know, modifications or improvements in terms of delivering incremental value to our customers.

Which comes into play. So there is the impact of know, what we've done last year. And not everything starts on January 1, so there's the lapping effect of that which comes through in the following year. And then what do we see in the nature of of pipeline of new capabilities that will deliver incremental value to our customer?

That we will price for, that we build into our forecast. Trevor, I'm not gonna get more specific than that as it relates to, you know, how much of that there is just because at the end of the day, a lot of this is a function of our ability to be able to deliver everything we've got in the nature of the pipeline in terms of new capabilities and new value, which will actually ultimately result in how much we generate in the nature of pricing.

Okay. Fair enough. Thanks.

Our next question comes from Harshita Rawat from Bernstein. Please go ahead. Your line is open.

Hi. Good morning. I wanna on your recent announcements in AgenTek, including the suite you just announced. It's early in this era.

Lots of experimentation happening. But maybe help us frame the different pieces of the capabilities here. You have the identity trust layer, not the platform for custom AI agents. But there's so much fragmentation competing protocols.

I you're partnering with Google and OpenAI. Among others. So how does that frame this and talk about why you believe you'll see Mastercard not only growing, but in a genetic era, but also thriving with respect to the trust, governance, personalization, and other services you can provide. Thank you.

Thank you, Harshita. This is a this is a great question. What what an exciting space. It might be one of those use cases, AI-driven use cases that meet our reality much faster than other AI use cases out.

So I think AgenTeCommerce is gonna come, is gonna come fast. So this whole idea of you know, a consumer using an agent to drive you know, have a better commerce journey, think that just resonates. With people. You get better quality insights.

You get better recommendations. So from that perspective, that's just kind of the starting headline and, hence, when you didn't build out from that, you know, we've been at this for over eight months now with agent pay launching that as our framework around recognizing agents, ensuring identity, and then bringing all the protections of payments into the world of AgenciCommerce. So those are all know, consumer protections and user experience journeys that are understood by consumers, also by our partners. Take a Google, for example.

So this isn't new. And which gives me great confidence because it's understood and it comes it can be delivered at scale. We are a really important partner in this whole journey. So there's new entrants, LLM companies that haven't been really in the commerce space, you know, contrary to somebody like Google maybe.

So yet again, you know, that puts it on us to engage with these partners. From the outset, we ensured as we do in other emerging payment spaces, that the standards are set. We put out protocols. Others put out protocols.

There's a question, how do these protocols all interact with each other? Well, it's it's the focus on consumer protection, safety, security, and cyber. And, you know, registering agents and making sure they're real and all of that. That is really driving this.

And they these protocols generally reinforce each other. So from that perspective, we feel they're very centered here. The cards ecosystem brings a lot of value, and that is understood, and it will bring it into this space. So then you kind of ask yourself and say, well, from here on, what's different then?

Well, new relationships are being built, and, of course, we're stepping forward with a differentiated set of you know, solutions that we can offer. You know, we just talked about services earlier that that's an opportunity. You could start to see that there's a transaction opportunity in all of this, because, you know, a basket might be spread over many merchants. So that's another opportunity.

You could also see that certain application of services, for example, tokenization, get you know, to see a a very different path than it might see without the Gentec Commerce. So these are all aspects that make me very excited about this. We're leaning across the ecosystem. Everybody, you know, wants to talk about this.

If we take a step back right now, it's also true it's early days. But everything that I just said is true, and we're leaning for that. It's hard to predict in when and how to is gonna scale to what degree, but the train is leaving the station, and we're right in front of it. Thank you.

Our next question comes from Bryan Keane from Citi. Please go ahead. Your line is open.

Congrats on the solid results. I was just going to ask, when there's geopolitical risks investors are always trying to figure out what the impact would be to Mastercard. And you talked about you know, levers and mitigation efforts that you guys use. Could you just talk a little bit about some of the things that you could do or pull or know, things you've done in the past when political things have popped up.

To kinda mitigate downside to top line and bottom line? Thanks.

Yeah. So it's a it's a very important topic. You know, we are probably one of the most global businesses 220 countries and territories. So as I said in my prepared remarks, we're monitoring geopolitics all the time.

We have through the past years, and we're doing so today. It's really important for us to that this is not just about geopolitics. If you look at our business model, we're aligned in terms of our interest. You know, with banks around the world.

We're aligned with merchants and companies around the world. We are focused on driving an inclusive digital economy aligns us with broader populations and NGOs and so forth. So it's not just about the politics when you look at the geopolitical landscape. We're engaging with all partners.

An important aspect of this is we don't do the same thing everywhere. This is not a you know, off-the-shelf kind of solution that Mastercard brings. We always strive to understand the local needs the local considerations. Of course, it's very different in Africa, which is why we partnered with MTN.

It's very different in The UAE versus Europe. We just announced in October that we're bringing three additional data centers into Europe, $250 million of investments on the ground to drive better resilience and competitiveness for Europe, So these are all aspects that we can do today because we've invested in our technology. We continue to invest in our technology. So some of the, you know, comments that Sachin earlier made about reprioritization and where we take charges because that is what we need to fuel, that we have that flexibility.

To engage with a country on their path and be a true partner for that. At the same time, we bring global best practice and global cybersecurity solutions and that sets apart to navigate that world very actively. This will only work, with a strong public policy and engagement process and spending time with governments and their understand where they want to go, and that is what we do because we're, you know, in with 125 offices around the world to really stay very close. To the local needs.

Yeah. And I guess, Bryan, you asked what kind of levers do we have in, you know, uncertain environments to the extent we need to pull levers. I think the headline I would first say is that we will not do anything which will impair our ability to grow over the long term. I think that's super important.

But all of that being said, there are several levers we've got. We got levers which we in terms of taking a look at where are we spending our dollars? Are they in favor with our customers? Are there things which, you know, are going to deliver returns in the near term, medium term, or long term?

And we will pull those levers. This could be across all our expense line items, everything from personnel, to our, you know, our a and m spend to our T and E, pro fees, you name it, right, at the end of the day. And also remember, we do have a component of our revenues, which come with know, cost of goods sold. And so if to the extent you're asking what kind of levers are there because revenue is not to actually decline, you know, revenues coming down has a natural effect of bringing cost of goods sold down as well.

So sufficient levers. You know, we'll never be complacent around this. I do want to leave you with one thought, which is we do care about investing for the long term, and that's something we will continue to do. Through up and down cycles because the set of opportunities in front of us is so big that we shouldn't lose sight of that.

Thank you very much. Michael, any closing comments?

Yes. Yes. So we just spent the past hour talking about our diverse global business and how we're winning in the market. None of this is possible, of course, with our colleagues around the world, the dedicated teams.

I mentioned it twice earlier in my remarks, and we're proud about the work that's being done for our customers. We're also grateful for your support. Thank you for the dialogue and the great questions. We're gonna speak to you in a quarter from now.

Thank you very much. Thanks, everyone.

This concludes today's conference call. You may now disconnect.