Mastercard (MA) Q2 2026 earnings call transcript

Good morning, my name is Julianne, and I will be a conference operator today. At this time, I would like to welcome everyone to the MasterCard Incorporated, due to 2026 earnings' conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Please only press star one once to queue up for a question, as pressing star one multiple times may assess your position in the queue.

If you would like to withdraw your question, press star one. Thank you.

Mr. Devon Core, head of investor relations, you may now begin your conference. Thank you, Julianne. Good morning, everyone. And thank you for joining us for our second quarter, 2026 earnings call. With me today are Michael Meebok, our Chief Executive Officer, Sachin Meira, our Chief Financial Officer, and Ling Hai, our President of Asia Pacific, Europe, Middle East, and Africa, and incoming CFO effective August 3rd.

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 the slide deck, a company that's called in the investor relations section of our website, MasterCard. com. Additionally, the release was furnished with the TTC earlier this morning.

Our comments today regarding our financial results will be on a non-gap, currently neutral basis, unless otherwise noted. Both the release and a slide deck include reconciliations of non-gap measures to gap reported amounts.

Finally, as set forth and more detail on earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding MasterCard's future performance. After performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release in our recent TTC filings. A replay of this call will be posted on our website for 30 days.

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

Thank you, Devin. Good morning, everyone. This is Sachin's last earnings call as CFO, and he's sitting right across the table. So before turning to our quarterly results, I'd like to take this moment to thank him and recognize him for the significant impact he's had in the role. Sachin, thank you. And we're excited to see you carry the same focus, discipline, and drive into your new role as Chief Business Officer.

Same time, as you heard from Devin, Ling Hai is in the room today. He will assume the role of CFO bringing his deep knowledge of our business, our products, and our industry. You've seen that play out in the company's strong track record of supporting and growing with customers across Asia-Pacific, Europe, and the least in Africa. These changes, as well as those across the entire leadership team, reflect the strengths and depth of our team.

Operating as one team brings complimentary experience and perspectives that sharpen focus, strength and execution and create greater value for our customers and shareholders. From a position of strength, this evolution will help us capture the opportunities ahead and continue realizing MasterCard's full potential.

And that's priceless, of course. With that, let's drive into these quarters results. The second quarter, 26, was another strong quarter for MasterCard. Net revenues were above our expectations.

The macro environment remains supportive. Consumers and businesses are healthy and continue to spend. Supported by positive job growth, low unemployment, and real purchasing power in many major economies.

At the same time, we continue to monitor geopolitical uncertainty and its potential economic impact. But macro is the only one part of our growth story. Our performance is driven by a clear strategy, discipline, execution, and differentiated value. For our customers, we remain focused on consumer payments, commercial and new payment flows, and value-added services and solutions, each with significant runway, and together, reinforcing MasterCard's virtual cycle.

That's a good roadmap for today's call, so let's dive in, starting with the secular opportunity. There's significant runway to digitize consumer and commercial flows for many years to come. As a reminder, at our last investor day, we shared it only a third of consumer transactions. And the secular opportunity is even larger in commercial flows, targeting the secular opportunity in a way that drives outsized growth to MasterCard. For example, we continue to work with governments around the world to digitize disbursements and benefits programs, making it easier for consumers to access and use benefits and driving more volume to MasterCard.

This includes food assistance programs in the United States, which represent $100 billion of spend each year. Through our exclusive partnership with Evermore, we're now rolling out a new program for beneficiaries to have a simple, more secure solution.

And we're also capturing incremental transactions through our exclusive partnership with Alipay Plus, embedding MasterCard credentials into their network of e-wallets.

This quarter, we're expanding this partnership in Mexico with CLIP, a leading fintech with a small and micro-business network approaching 1 million merchants.

Combining CLIP's merchant network, Alipay Plus wallet capabilities and MasterCard's global payment capabilities is a powerful solution to digitized payments in Mexico. And after country, where more than 70% of consumer payments are cash-based.

MasterCard is exclusively tokenizing the stored wallet balances, enabling users to transact across MasterCard's global acceptance network. Complimenting our efforts to drive outside secular growth, we are finding new ways to power payments.

Switching is critical to our virtuous cycle. More switch transactions lead to more data to fuel our services, increase our ability to distribute services over our network.

We steadily increased our switching penetration, now reaching 72%. The reason MasterCard's rich value proposition, especially compared to local networks.

Our global acceptance reach, consumer protections, digital capabilities and security overlays. We're also expanding our role in switching by flexing our network architecture. We're adapting to best meet the needs of the markets that we serve while ensuring we meet our long-term growth objectives and drive the virtual cycle. That's exactly what we're doing in the United Arab Emirates. The central bank of the UAE through its subsidiary, Al-ITR, payments is partnering with MasterCard to build the switching technology in the UAE for the next phase of the country's domestic payments infrastructure.

And we will serve as the prime international scheme for COBACH credit cards with a domestic scheme named Jaiwan. As part of this partnership, MasterCard will provide switching services behind domestic debit and Jaiwan MasterCard COBACH credit transactions in the UAE. These transactions are incremental to what we process through our global switch. MasterCard will also provide value-add services to the domestic switch, including fraud prevention and cyber security.

Direct relationships with ecosystem customers in the UAE continue as they do today. And that's our best-in-class technology at work locally, powering the UAE's digital economy, facilitating more transactions and further scaling our services.

That is another example of how we partner locally to drive collective value. And we continue to win and expand issuing relationships across our business. In the first half of 2026, we won several hundred flips and deal expansions, which are expected to drive trillions of dollars in incremental volume to our network over the next decade. This quarter, we renewed a key partnership with JT Morgan Chase on the Chase Freedom Flex portfolio in the US. And in Mexico, we renewed our partnership with Panamix, where we have exclusivity for nearly all portfolios, representing almost 19 million cards.

We've expanded our partnership with Revolut, now supporting their affluent debit proposition, ultra, across Singapore and Australia, plus their commercial portfolio in New Zealand, all building up on our growing partnership in the US, and long-standing relationship globally.

We've flipped through lie and federal credits unions, US credit and debit portfolios, as well as Eurobangs, and tie our consumer and commercial portfolios in Greece, once complete, there's over one million new mastercards across the two. We launched new cobras with Uber and Hilton in Mexico, and the recent flip in Saudi National Bank's travel co-brand portfolio were now the exclusive partner across their credit, debit, prepaid and commercial portfolios.

I shared some wins at Span commercial already, but let's dig into that a bit more. MasterCard's commercial debit and credit volumes grew at 12% in the second quarter. We continue to build on this momentum, as banks and large corporates turn to mastercard for modernized commercial payment capabilities. We've added on average 6 million new mastercards, small business cards, the market each quarter for the past several quarters.

And we see incremental issuance from this quarter's wins, including Intuit in the United States. Trueest bank in the US has chosen mastercards leading virtual card capabilities for their corporate invoice-based payments needs. Also, we continue to support global money movement through MasterCard Move. Most recently, partnering with WeChat Pay Hong Kong in fly remit in India. And then in the travel space, we have an exclusive partnership with Riyadh Air, Saudi Arabia's new national airline. This is an exciting global first.

As consumers can use their suite of branded prepaid and credit cards to purchase tickets and build brand loyalty, while travel agents benefit from seamless virtual card payments and Riyadh Air can streamline supply payments.

We're winning our geographic footprint, differentiated proposition and innovation allows to capture more of the market. We have added over 230 million new mastercards into the market in the 12 months to quarter to half this year. That's new issue, expanded relationships, and even more payment transactions, more tokens, all of which we can also attach services to. So when you think about our virtual cycle, it's real and at scale.

The combination of that network scale, the breadth of our data, the depth of our customer relationships with differentiated services underpin our long-term sustainable growth.

All services benefit from mastercards proprietary transactional data, as well as open finance, loyalty, and identity trends and insights. This also includes bespoke services like consulting, marketing, both key to winning carded market share and optimizing our portfolios. For example, starting this quarter, we're managing the portfolio conversions for West Bank and Australia and yuppy credit in Turkey following our recent wins.

We're working with Santander in the UK to accelerate cross-border spend through targeted marketing campaigns, and our work with on Columbia will help optimize their small business and commercial portfolios. The outcome, more payments volume.

Moving to security solutions, a hot topic in today's environment. The proliferation of AI and new frontier models are amplifying new needs. We're seeing increased demand for mastercard's robust and unique security solutions as clients navigate the ever-expanding threat landscape.

Today, we have differentiated capabilities that span cybersecurity, identity, and fraud. A value suite is unmatched, and we continue to build up on it. Let me share a few examples.

We're identifying threats before they materialize, how we're bringing recorded futures, market leading intelligence capabilities to our clients globally and seeing strong engagement across sectors. This quarter, we partnered with Vipro, a global information technology and consulting company to further scale our capabilities.

Building up on our acquisition of recorded futures, we also launched mastercard threat intelligence specifically for payment fraud. In its first three quarters, threat intelligence has identified more than seven million car testing transactions across 192 countries. Stopping that activity prevented an estimated $172 million in fraud, linked to malicious domains. That's real value to us, our customers, and of course, our cart holders.

And with strengthening security and customer experiences, mastercard's identity solutions help customers authenticate identities for payment and non-payment use cases.

This quarter, Rogers Communications in Canada and Delivery Hero leveraged mastercard's identity capabilities to verify transaction authenticity, customer onboarding, and more.

And we continue to make commerce safer through new innovations. Mastercard Merchant Trust Services is a new suite of AI-powered capabilities to help identify fraudulent merchants. Keeping the scammers from setting up shop will reduce fraud, cut out disputes, and provide greater security. The goal, real transactions for real purchases from real merchants.

Our value-added services and solutions growth engine is strong and durable. We benefit from the underlying market tailwinds and security, data and AI, personalization, and more. There are also natural synergies between our value-added services and solutions, and our payment network. That includes distribution.

Today, about 60% of our value-added services and solutions net revenue is network-linked. We're attaching services to mastercard switch transactions, as well as faster growing drivers such as tokens or cart not present transactions.

And customers are using more mastercard services, both existing and new products. We do so through direct engagement and through distribution partners. We recently launched Mastercard Advantage Partner Program and have more than 200 partners expanding our reach.

All of this drives growth and expanding yields, more customers, more services adopted by each with higher contract value. That's the virtual cycle at work, again, and that's powerful. We play a central role in commerce today, and we are shaping the future of commerce, and we're helping our customers navigate that future. Agentic commerce is the next evolution and payments where the importance of security, transparency, and control only increase.

Agentic commerce creates a significant opportunity for mastercard. It leads to incremental transactions and even more opportunity for our services. The mastercard agent pay. We're helping power secure and trusted Agentic transactions across our global acceptance network using tokenization, serial-ability protections, and unique dispute resolution capabilities.

These capabilities adjust a few of the reasons why we expect cards will prevail in an agentic world, both in consumer and commercial use cases. It's early days, but engagement across the globe is energizing. The rise of agentic commerce also brings about an entirely new class of payment use cases, machine-to-machine payments. This is an expansion of our addressable market in one that we are at the forefront.

We recently announced mastercard agent pay for machines, which enables AI agents to purchase low-value digital services, such as APIs, compute, data, content, and machine speed. With on-chain permissioning and off-chain settlement, mastercard is the only network enabling machine-to-machine payments. An ecosystem is rallying behind us. At launch, we had more than 30 industry leaders participating, including Avian, Andrew International, VivianK, Checkout. com, CloudFlare, Coinbase, and OKX.

We are a first mover in this space, and one with credibility and trust to deliver. Next is stablecoins. We believe stablecoins have great potential, but to work, there are a few essential principles for it to scale. Reliability, security, and interoperability, and that's what mastercard delivers.

There's clear utility for stablecoins, for example, in some B2B and P2P flows, but no problem to solve in P2M. In fact, digital asset players are choosing to partner with mastercard to unlock trusted commerce at scale, benefiting from our global acceptance network protections and security. We offer a wide variety of crypto-cobranit propositions as we're seeing strong traction. Our crypto-cobran volume has more than tripled. Over the last two years, this quarter, we expanded our relationships with BitGet and Kraken.

Stablecoins are additive to our network. It's another opportunity for us to enable choice in how our customers and cardholders engage in commerce.

We're also enabling our customers to participate in the emerging digital asset ecosystem through the creation of open standards. For our customer, it provides direct participation, reduced dependency on third parties, and the benefits of distributed economics.

OpenUSD is set to go live later this year. It's another coin that we will enable across our network. We believe the space will evolve, and with it, will be a creation of digital assets, including blockchains, coins, and tokenized deposits, all operating in tandem and with fiat. That's an opportunity for us. We expect to close the BVNK acquisition this quarter.

With BVNK, MasterCard will serve as the trusted interoperable layer, enabling customers to send, receive, store, and convert assets. BVNK's enterprise-grade payment orchestration capabilities, robust licensing, and connectivity are highly differentiated, and they are in market today.

So in summary, we have a proven strategy and continue to deliver consistently strong results. Our confidence is backed by proof points. We are winning, we're capturing outside scrolls, we're delivering the differentiated value, and we are shaping the future of commerce. That is what drives sustainable growth. Searching over to you one more time.

Great. Well, thank you, Michael. Look, before I jump into the numbers, I'd like to take a moment to thank all of our investors and analysts. I truly appreciate your engagement, your thoughtful questions, and the support over the past seven plus years that I've had the privilege of serving as the CFO of this company. MasterCard is a special company with so much opportunity ahead, and I'm excited to continue driving our strategy from a different seat. I'm not going very far, and our paths will cross again in a different capacity, and I look forward to it.

So now let's dive in. Turning to page three, which shows our financial performance for the second 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 12%, reflecting continued growth in our payment network and our value-added services and solutions with minimal impact from dispositions. Operating expenses increased 10%, including a one PPT benefit from dispositions. And operating income was up 14%. Net income and EPS increased 16% and 19% respectively, driven primarily by the strong operating income growth in the quarter.

EPS was $5.04, which includes a 14-cent contribution from Sherry purchases. During the quarter, we repurchased 4.9 billion worth of stock and approximately 700 million of additional stock through July 27, 2026.

Now, turning to page four, where I'll speak to the growth rates of our key volume drivers for the second quarter on a local currency basis. Worldwide growth dollar volume, or GDD, increased by 8% year over year. In the U. S. , GDD increased by 6% with credit growth of 10% and debit growth of 1%. As a reminder, the Capital One debit portfolio migration was basically complete in Q1, excluding the impacts from that migration.

Our U. S. debit GDD growth would have been 8%. Outside of the U. S. , GDD increased 9% with credit growth of 9% and debit growth of 10%. Trustwater volume increased 12% globally for the quarter, reflecting continued growth in both travel and non-travel-related cross-border spending.

Turning to page five, switch transactions grew 9% year over year in Q2. We continued to drive contactless penetration, which in Q2 stood at 80% of all in-person switched purchase transactions. This is up 5PPT since the same period last year. And token penetration reached over 40% of all switched transactions this quarter. In addition, card growth was 5%. Globally, there are 3.7 billion MasterCard and Maestro Branded Card's issue.

Turning to slide six for a look into our net revenue growth rates for the second quarter discussed on a currency neutral basis. Aiming network net revenue increased 8%, primarily driven by domestic and cross-border transaction and volume growth, as well as pricing. It also includes growth in rebates and incentives. Value added services and solutions net revenue increased 18%. This includes a minimal drag from dispositions.

The increase was driven primarily by growth in our underlying drivers, strong demand for our security solutions, consumer acquisition and engagement, digital and authentication, and business and market insights, and pricing.

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 10% while worldwide GDP grew 8%. The two PPT difference is primarily driven by pricing.

Cross-border assessments increased 20% while cross-border volumes increased 12%. The eight PPT difference is driven primarily by pricing in international markets and mix.

Transaction processing assessments were up 12% while switch transactions grew 9%. The three PPT difference is primarily due to favorable mix and pricing, partially offset by lower revenue from FX volatility. And other network assessments were $326 million this quarter.

Moving on to Bayjade, you can see that on a non-gap currency neutral basis, excluding special items, total adjusted operating expenses increased 10%, which includes a one PPT benefit from dispositions. The growth in operating expenses was primarily driven by spending to drive the execution of our strategic priorities, including initiatives to further harden our infrastructure, geographic expansion, and product innovation.

Turning to Bayj9, let me comment on the operating metric trends for Q2 and the first four weeks of July. Switch metrics were generally in line with Q1 and underlying spend remained stable. Off note, excluding Capital One debit on a like-for-like basis, U. S. switched volume growth was 10%, or two PPT higher sequentially. This increase was driven by higher spend on fuel and overall strong consumer and business spending.

Moving to our cross-border metrics, our overall cross-border volume growth remained healthy at 12% in the second quarter. Cross-border guard-not-present X travel remained strong at 20%, benefiting from increased guard-not-present spend from Venezuela and the timing of large retail promotional events. And while cross-border travel was down sequentially, relative to the April metrics we discussed on our last earnings call, we saw improved growth in the quarter due to lower impacts from the developments in the Middle East and timing of holidays.

Now, as we look at the first four weeks of July, our metrics remain relatively stable and strong. Looking specifically at guard-not-present X travel, let's focus on July compared to June. The sequential decline is primarily driven by timing, including the large retail promotional events that happen in June this year as compared to July last year, and by mix of days.

Turning to page 10, in Q2, MasterCard delivered above expectations. This strong performance was broad-based, with the upside primarily driven by lower than anticipated impact from the challenges in the Middle East, an uptick in cross-border spend out of Venezuela, where we are market leaders, and strong demand for our value-added services and solutions. These results, despite an uncertain geopolitical and economic backdrop, are evidence of the resilience of our diversified business model and are continued focus on execution across both payment network and value-added services and solutions.

As Michael said, we continue to see a macroeconomic environment that is generally supported. Around the world, economies are adapting to changing conditions with consumers and businesses continuing to demonstrate resilience. This is reflected in our underlying drivers. We continue to monitor geopolitical tensions and related energy prices, along with critical economic data like unemployment, inflation, and so on. But overall, the underlying fundamentals of consumer and business spending and travel remain healthy.

As we look at the second half of the year, our base case continues to assume spending remains healthy. As noted earlier, impacts from the instability in the Middle East moderated throughout the second quarter and were less severe than we anticipated. As we look to the rest of the year, we estimate impacts from the Middle East conflict will remain at similar levels to what we saw towards the end of Q2.

As you know, the environment in the Middle East remains dynamic, but remember, we are a diversified company, and that's true across payment products, geographies, spend categories, and services. This, coupled with our continued execution, helps us navigate across a range of operating environments.

Now, turning to our thoughts for Q3 and the remainder of the year, which include the impacts related to the acquisition of BVNK that we expect to close in Q3. As it relates to our expectations for the third quarter of 2026, year-over-year net revenue growth is expected to be at the high end of low double digits range on a currency neutral basis, excluding inorganic activity.

We expect a minimal impact from inorganic activity and a headwind of approximately 0.5 PPT from foreign exchange given the recent trajectory of the US dollar. From an operating expense standpoint, we expect Q3 growth to be at the low double digits range versus a year ago on a currency neutral basis, excluding inorganic activity and special items. We anticipate a 0.5 PPT headwind from inorganic activity, while foreign exchange is forecasted to be a tailwind of approximately 0 to 0.5 PPT for the quarter.

As we look to the full year of 2026, we expect net revenue growth to be at the high end of low double digits range on a currency neutral basis, excluding inorganic activity. Although this is the same range we shared previously, we now expect to be higher within the range than our prior expectations, largely due to our stronger first-half performance.

We anticipate minimal impact from inorganic activity and a tailwind of approximately 1 PPT from foreign exchange. As it relates to operating expenses, year-over-year growth is expected to remain at the low double digits range versus a year ago on a currency neutral basis, excluding inorganic activity and special items.

We expect a minimal impact from inorganic activity and a headwind of 0.5 to 1 PPT from foreign exchange on a foliar basis.

Other items to keep in mind, on other income and expense, in Q3, we expect an expense of approximately $125 million.

This is higher sequentially driven primarily by incremental interest expense related to our bond issuance in June. This excludes gains and losses on our equity investments, which are excluded from our non-GAP metrics. And finally, we expect a non-GAP tax rate in the range of 20 to 21% for both Q3 and Q4. And with that, I will turn the call back over to Devon.

Thank you.

Julianne, you may now open the queue for questions. Thank you. At this time, I would like to remind everyone in order to ask a question, press star than the number one on your telephone keypad. Please only press star one once to queue up for a question as pressing star one multiple times may affect your position in the queue.

We'll pause for just a moment to compile the Q&A roster.

Hi, thank you for taking my question. I wanted to ask you about stablecoins and agentic commerce sort of together. They're both sort of focus areas for you, you commented on in your prepared remarks. Do you see use cases in agentic that will require stablecoins, or stablecoins, something like microtransactions perhaps, or can traditional MasterCard credentials basically fulfill all the use cases that stablecoins can? I'm just trying to figure out whether it is a unique value proposition you're looking to solve for with stablecoins.

Right. Thank you for that question, Ramsey. So, you know, as we were laying out earlier, you know, we're innovating around the future of payments, and these are two areas that will shape the future of payments, agentic commerce, and stablecoins.

Let me start off by talking just agentic commerce, and then we see how transactions can flow in agentic commerce. So, there's your, the consumer-oriented use cases in agentic commerce where our, you know, keyword search turns changes, and we may use agents for that. That could be an LLM. That could be a first-party agent by a large retailer.

And, you know, there are transactions that are now then delegated to agents, and that can happen very well through the existing connet works. What you need for that is that's what merchants always need. They need reach.

They need, you know, predictable, you know, particular user experiences. That's the same. That's true for consumers. So, we really believe that cause will prevail in that world. This is a tremendous opportunity for us also on the services side through tokenization inside tokens and so forth. We talked about this many times. The card infrastructure and the card ecosystem and the MasterCard proposition within that is unique. It's unique because we have additional capabilities that we put into the agent pay protocol from us, and one of them is verifiable intent, which allows you to basically challenge a transaction, say, I never wanted to buy this, and then the chargeback process can kick back in. This was, you know, innovated together with Google.

So, there's some unique propositions here on the agent pay side, but it just basically comes back to the main point that cards can prevail there. Now, if you look on the B2B side, you can see there's a range of agent commerce transactions that can happen where you have an agent that does purchasing for a company that can very well happen on the card ecosystem, very similar to what I just said on the consumer side.

Amounts, speeds, purposes, they will need the protection, they need the global reach, all of that can apply, and we believe that's a continued opportunity for us, particularly on the services side again. Now, there could be an entirely new range of transactions, and that is machine-to-machine payments. That is low-ticket, micro-ticket transaction that happens at a very high velocity.

And for that, we can see a world emerging where different kind of underlying infrastructure is required. And for that, we've put out our protocol, which is an evolution of agent pay, which is agent pay for machines. This is the only network protocol that's out there today to facilitate that.

Now, the underlying infrastructure for that, we've mapped it out. You can start to see that there is a transaction that is recognized from one agent to another, these machines talking to each other, but the settlement happens to different kinds of rails. That could involve stablecoins, but it also could involve different types of settlements. We're actually quite open to that, but what it needs is the immediacy of these agents to recognize that transaction. And that is what agent pay for machine actually does.

So, there is a connect to stablecoins. You could see that stablecoins play a role, but not the only thing. Stablecoins on the other end for us is a separate topic generally.

We'll play a role in the financial ecosystem of the future, which is why we have been investing. Our current approach on stablecoins is really facilitating that you can spend your crypto-balances if you still want to, your stablecoin balances, that you purchase the same. We facilitated settlement in our networks, if that is so wanted. We facilitate money movements using stablecoins to drive immediacy, really in transparency of cost. But it's also true that stablecoins isn't the answer to everything because you still need protections, you still need acceptance, and you still need to find your way into fiat.

We expect the world of multiplicity, many coins, many chains, and all of that needs a trusted interoperable layer because people will transact across different coins and so forth. And that is what BV&K will do for us. Sachin mentioned it. We're expecting to close a BV&K acquisition. So, that is another tremendous opportunity for us. Across the whole thing, there's still a services opportunity for us. That's a lot more than you asked for, Ramsay. But it is all very important, very, very excited about it.

And the two topics, very much to your questions, they do interlink.

Sure, Sanjay. So, a couple of things to actually talk to as it relates to, you know, the trends we saw between April and June. Certainly, you know, you saw a recovery in terms of cross border travel in the Middle East. Now, just to give you a little bit of color as to what we're seeing in the Middle East, broadly speaking. So, we did see, you know, better spending trends as it relates to outbound from the impacted GCC countries into other parts of the globe. Hard to identify whether that's necessarily tied to the World Cup or not, but we saw trends which were starting to actually present themselves across both consumer spending and commercial spending. So, for me, the way I kind of think about it is greater confidence in terms of how people are actually doing that outbound.

That's also tied by the way to increasing capacity from flights and airlines and things of that sort. So, that's important to recognize. The other thing which has been supportive of cross border during the quarter has been Venezuela. And I call this out in my prepared remarks important to understand what's going on there. I think all of you are aware that we de-consolidated our Venezuela operations in 2018, where we de-consolidated revenue and we de-consolidated volumes at that point in time. It was a very challenged repatriation environment at that point in time. So, the ability to actually get U. S. dollars from Venezuela was challenged.

Well, what we've seen is actually very interesting because over the course of, you know, the first quarter and particularly going into the second quarter, there has become an increased availability of U. S. dollars in Venezuela. And what that's effectively meant is that consumers have greater access to U. S. dollars, and they're utilizing those U. S. dollars for their cross border spending, mostly in what we call God not present X travel. So, that's less about travel. That's more about God not present X travel.

And those U. S. also just kind of just put a bow around it. We are the market leaders as it relates to Venezuela and it's primarily a debit market. So, that's where you're seeing that spend come through. So, what you're seeing is the impact of both that more, I stay lower than, you know, April effect, which came through in May and June as it relates to outbound travel from the Middle East. But what you're also seeing is the trends from Venezuela, which have been holding up pretty well, to be honest with you. So, you know, this is a competitive differentiator for us. We are the market leaders. And as, you know, you've seen the U. S. dollar availability come into play.

You've seen that volume come through in terms of what we're seeing in God not present X travel there.

So, I want to take you back. I make it slightly shorter than previous answer, I think. I'll make it. I'll take you back to 2022 though. This was a time when we were in COVID and we said, you know, with everything that's going on, it's important to invest in the resilience of our business. And we put a particular focus on a technology strategy really with the goal to allow us to run anything anywhere. So, that's what we did at the time and it drove the modularity of our network.

And that instance in the UAE is exactly that. So, we're basically running a part of the switch in the UAE and it gives us access to transactions that we didn't have before. So, it's a good partnership from that perspective, upside for us, but it gives that resilience and global technology to the UAE tremendous partnership. It's not the only partnership though, where we have that. We have different versions of that, but always coming back to it has to work from a technology perspective, has to work from an economics perspective, the give and take has to work for us. But then we can get access to more transactions, which fuel our virtual cycle, as I said before.

We've done something like this in South Africa, where we build a real-time payment switch that can actually carry anything. It can carry any ISO 2022 transaction, can carry a card transaction. So, this is the kind of technology that we have, or we're in the process of making available in Europe. Now, Europe is a very competitive market with lots of payment choices for consumers there on the P2P side, on the card side.

The digital euro is in the making. There's a lot going on in Europe. So, we feel very good that we have this technology that allows us to partner in different ways. For now, we are very well positioned with our card proposition in Europe. You know, we used to be Eurocard, so we have deep European roots, and we're competing very effectively today. As far as there are these local alternatives, various local gyros and so forth, a lot of co-batch partnerships. We partner with the wallets, like Swiss and Sweden, like Bism and Spain. So, wide set of options right now. At this point in time, we bring the most value through our card propositions, but we have the flexibility to do what we need to do.

Should the time come, we find better engagements. So, that's how I look at it. You go into Asia, you see in the stands, there are partnerships that we have with switches and so forth in other parts of the world. So, this run anything, anywhere. A concept is really important for us to see where the world is going, but always comes down to our economic principles.

Apply our services, economics, and standard technology that we can use. So, we don't have a thousand flowers, blue and kind of landscape for us.

I have a question about Olvath, specifically about cyber demand. So, we think, you know, given what we're seeing in security software, you know, Michael's is driving very strong demand for cyber demand. Can you maybe unpack the upside to that from MasterCard because it should be a pretty big catalyst in our view? Thank you.

Right. So, on the safety and security part of our portfolio, great question, Dan. Hello, Esman. So, you know, we have gone much deeper than other market participants on the cyber side, recognizing that as the world digitizes faster, clearly that's an underlying growth driver for us, a tailwind for us. There's more demand. We initially started out in fraud. We're now in fraud and identity, and we're in cyber. That is the portfolio. Those are three big categories.

On the cyber side, we, you know, we strengthen our proposition with the addition of recorded future. So, that's what the portfolio is. Currently, when you think about what is occupying the minds of CEOs with occupying the minds of directors in the boardroom, it is cyber security. And the recent discussions around frontier models, and, you know, how do you go about them? Is it more of a threat? It was actually a helpful tool for us. You identify vulnerabilities in your company's technology.

It's a bit of both. And we have been engaging from day one on that. So, all of that puts cyber into the kind of the center of the discussion. We have strong relationships with cyber and a lot of our customers really through the fraud site. So, that is a natural growth path for us to engage the CISO and talk about the expanded capabilities that we have, while at the same time the CEO talks to the CISO and say, what are we doing to protect ourselves? So, it all comes together in the moment. We're meeting the moment with this portfolio.

When I was talking earlier about threat intelligence, here, you know, with this ever expanding threat landscape, it is almost impossible for any company to, you know, meet every fraud risk that that potentially is. So, what you really need to know is you have to have targeted information on how you might be targeted and what is the vector, the threat vector that applies to you the most, so you can actually focus there. That's very much what recorded future does today. So, if you take all of that together, I think we're in a good position here. Yeah, as far as our own, our own cybersecurity goes, of course, we have found that leveraging the latest frontier models help us accelerate identifying vulnerabilities.

And we take those learnings and those best practices on how to do that and share that with our customers around the world so that we can keep the whole ecosystem safer. So, fundamentally a strong trend for us, but let's not forget it's not maybe that sexy, but every day fraud gave you that example and $172 million of fraud prevented on malicious domains.

All that is pouring, powering our cybersecurity business today and it's attached to the transaction growth. That, you know, we talked about all the transactions that are going after. This is a flywheel that is very much needed right now. Obviously fraud and cyber risks are not a good thing, but they happen to be a part of a business that we're very good at, so we're helping our customers with that.

Okay, look at me. At the end of the day, our business in Europe continues to perform it exceedingly well. You know, we are very much in the space of looking very closely with our customers to deliver it kind of value, and they're seeing that come through in the nation of the partnerships which we've got there. I'm going to take you back a few years to talk a little bit about all the wins we had in Europe, and because a lot of that kind of explains the trend which you're talking about right here. So if you look at the trend in terms of purchase volumes in Europe, right, I mean, back in Q2 of 2024, we were growing at 16%.

At that point in time, what you were seeing was the tailwind of all of these wins come through, whether it was, you know, Santander, or the fact that we've got, you know, wins with NatWest or, you know, you know, credit, you name and all of that stuff was coming through in those quarters, which was giving us the lift in terms of the share with.

Naturally, what's going to happen after that, if you're looking at conference rates on a sequential basis, you're going to start to see the lapping effect of that come through. So that's certainly a factor which explains what's going on there. And then, you know, we've been pretty clear about, you know, what kind of deals we want to win and what kind of deals we're going to actually pursue. There have been deals which we have competed for, but we've done it within the realm of what we thought made good financial sense for us. And if it didn't work out, we've actually passed on it. For example, in Lloyd's credit, we know, you know, we deliberately actually decided to go to a certain point in time after which you have to kind of make a call as to whether it makes economic sense or doesn't make economic sense for the company.

And that's what we did. So you're seeing that come through as well in the nature of the role of those volumes, very much the case. That discipline is something we're going to adopt and have always adopted because it's really, really important for us. Volume for the sake of volume is not what this company should be chasing. Profitable volume, which is going to drive high net revenue yield is what we're going to chase.

And we're going to do it in a manner which works well for our partners to drive higher growth for our partners. So I'll just give you, and you know this, but I'll just say this anecdotally, winning share of a portfolio which is growing at 1% helps me in the first year and then is a huge drag on growth for the years thereafter. And so if you can't really grow the portfolio, it doesn't really matter.

So that is very much the philosophy we adopt. So I know you asked the question broadly around, you know, Europe and France, but you also asked about the competitive environment. And hopefully that gives you a little bit of color on the mindset that we adopt in terms of how we're actually running our business.

Good morning. And thanks and congrats to Sachin. The U. S. growth is quite healthy here. I'm just curious how broad-based that is. Any difference in income bands to call out? Because again, that 10% cost capital one is really quite strong. I'm just trying to get a sense of a head look. Thanks. Yeah, sure, Tingen. Look, I mean, at the end of the day, the business continues to perform really well. This strong underlying consumer and business spending, which we're seeing in the U. S. There has been a tailwind which has come on account of higher fuel prices, so let's recognize that. You probably have some impact coming through from the World Cup as well, as it relates to the second quarter in particular.

Hard to really quantify what that is, just because it's like, you can't really identify exactly what that is. But I would tell you, the underlying consumer and business spending trends need to hold up well in the U. S. And to your point, if I look at it, it's broad-based. We see it across credit and debit. We see it across consumer and commercial. And the teams are busy. They're busy with our customers, helping drive the growth of the customers, which at the end of the day is what matters. Because our customers grow, we bring our services assets to them, help them grow their portfolios, which is a creative form, a volume standpoint, but also from a revenue standpoint.

So we certainly think that come through. On your question about massless as an affluent engine, I would say they're holding up well both across mass and affluence, certainly in the U. S. , but across the world as well. We try and track the best we can as it relates to what we're seeing and spending patents based on the product codes that are out in the market, which serve the different categories of customers. And when we look at that, we're seeing generally strong trends across both mass and affluence. What you do tend to see is higher growth in the affluence side of spending, but that's kind of not a new phenomenon. That's been with us for some time now.

Yeah, Raina. So a couple of things to keep in mind, underlying growth continues to perform well in AFMEA as the broader region is known right here. The step up that you're seeing between Q1 and Q2 is driven by a couple of factors. Number one, there's a lapping effect. You'll remember last year in the second quarter we had highlighted that there was some moderation in select markets in the Middle East. So you're lapping that effect come through in terms of the growth rate. And then you've also got the impact of fuel, which is coming through in terms of trends. And that's not truly in AFMEA. That's true growth based, actually, the impact of higher field prices.

But not to take away from the fact that the business continues to do well, and we continue to actually drive good growth across the portfolio there.

So, as I said before, it started off in card fraud, and then it branched out into card fraud, into identity, into threat intelligence, cyber security, and large and so forth. But to your point, there is the other dimension. Now, fraud doesn't only happen on cards. I counter account scams and account takeover threats and so forth. This is all the reality, unfortunately, today. So, there is a tremendous opportunity for us to engage our customers there.

Now, cards live in an ecosystem, and here, to come to common fraud solutions through our rules, is something that's a little easier than the account sign, where this is infrastructure. But we have learned through Vocalink and our real-time payment expertise how to do this now in account of account payments. And that is the first step that we've done there to prevent accounts or account fraud through kind of like a consortium approach with the banks in the UK, and that is a good first step. So, that's a bit earlier on its journey, but a significant opportunity that we see going forward.

Yeah, Tim, any question on makes, just to reiterate, what Michael mentioned in his script was that approximately 60% of our VAS revenue is network-linked. And if your question is, how does acquisitions and dispositions impact that? Well, the reality is a lot of the acquisitions which are there, if they're in the security space, tend to be network-linked for the most part. So, as we do more and we start to roll them out on the market and drive the synergistic impact of that, you might see some level of proportionate increase in terms of the network-linked revenues which are there. But that being said, the remaining 40% also continues to grow at a healthy clip. So, just to be clear, I mean, things we're doing from a marketing services standpoint, continues to be actually a key contributor to our VAS world.

So, it's important, right, to actually keep in perspective that that balance of moving away from 60% is not going to change by one or two acquisitions. But, you know, there's a very deliberate and intended kind of focus to make sure we've got good balance in terms of our VAS revenues are generated. We're going to add one more point on that. So, take recorded future, for example. So, this is not a necessary network-delivered on a standalone basis.

But, through Monster Cut thread intelligence, it actually is. But, here, the key point is when we make an acquisition. So, what we bring it would be oftentimes try to do is use the network. That is one option, such and just tuck on that. But, there are the kind of products that we sell in a one-on-one engagement or through a distribution partner, but they still benefit from MasterCard's unique features mostly through our data. So, we bring together the data, all the respective acquisitions with our data, and that makes a huge difference in terms of this is not just us inserting the company and having some sales energies. We have more structural synergies out of that, and that's generally kind of targeted we're looking for.

All right. So, open standard. So, you know, living up to the name open. So, here's a set of company, 140 plus companies that have come together to create a consortium that facilitates the open USD coin, which has a couple of aspects to it. You know, it's a neutral market utility.

It's with a focus on value exchange and payments. And it's a governance structure that is fairly straightforward with, you know, these companies around the table. Not obviously not every 140 participants will have a very specific say on that. Otherwise, we would move anything forward. So, this is what is currently being played out in more detail. But broadly speaking, the focus will be on payment use cases. It will be ensuring that the economics can be distributed and everybody can participate. Those are some of the underlying unique features of that.

And hence, we've seen all of the interest. For us, this is important, but it's not the only thing that we're doing. The key point, I mean, I'm just said in my prepared remarks, this will be one coin that will be enabled on our network. And we will enable other coins. We are working with USDC today, USDC, and so forth. And choice has always been a key criteria. And it will be the same here in stable coins.

So, going forward, important initiative. We're happy we're part of that from the beginning. But we will engage with various other stable coin consortia around the world to ensure choice and payments market.

One last question, Julian.

Sure. So, first, any question on rebates and incentives? For Q2, our rebates and incentives actually came in pretty much in line with what our expectations were. So, that's kind of, you know, pretty much on point. As it relates to Q3, we expect that our rebates and incentives as a percentage of our payment network assessments will be slightly higher than it was in Q2.

You know, look at the end of the day, like you said, it's hard to predict because it's largely based on timing of deals and, you know, deal performance and things of that sort. But all of that being said, you know, you know, at the end of the day, what we're most focused on is making sure that we've got a rich pipeline of deals and that we're executing on the same, which is where, you know, we are right now. We have a rich pipeline. We're executing on that pipeline.

And it's in that vein that I've shared this third-quarter kind of outlook for where I see these incentives. As it relates to the BDNK closure, as Michael mentioned, we expect the acquisition to close in Q3. That is contemplated in what we've shared with you in our recs with the materials which are posted today. So, you can see the impact come through, minimal impact from a net revenue standpoint. There's some impact from an operating expense standpoint where all of that's contemplated in what we've shared with you in our recs.

Yeah, so I want to chime in. Sachin, you got so many congratulations, so I'll do it one more time. Congratulations. Thank you for this last call and Ling Hai.

Looking forward to working with you. Congrats to you as well.

Well, thank you, Michael. I'm very excited about the new job. And I look forward to leading the next earnings call with you, but also my gratitude to Sachin for being such a wonderful CFO. And for those of you on the call for all the investors and analysts, I look forward to engaging more with all of you.

Thank you. So, that leads me to do one important thing. And that is thank our employees around the world to do everything and make everything happen that we just shared with you. And also to thank you for your trust and support of Mastercard. Talk to you next quarter. Thank you very much.

Thank you. This concludes today's conference call. You may now just kind of.