Item 6. [Reserved]

MASTERCARD 2021 FORM 10-K 43

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7. Management’s discussion and analysis of financial condition and results of operations

The following discussion should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International”) (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand. For discussion related to the results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019, please see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Business Overview

Mastercard is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks. We make payments easier and more efficient by providing a wide range of payment solutions and services using our family of well-known and trusted brands, including Mastercard®, Maestro® and Cirrus®. We operate a multi-rail payments network that provides choice and flexibility for consumers and merchants. Through our unique and proprietary core global payments network, we switch (authorize, clear and settle) payment transactions. We have additional payment capabilities that include automated clearing house (“ACH”) transactions (both batch and real-time account-based payments). Using these capabilities, we offer integrated payment products and services and capture new payment flows. Our value-added services include, among others, cyber and intelligence solutions to allow all parties to transact easily and with confidence, as well as other services that provide proprietary insights, drawing on our principled use of consumer and merchant data. Our franchise model sets the standards and ground-rules that balance value and risk across all stakeholders and allows for interoperability among them. Our payment solutions are designed to ensure safety and security for the global payments ecosystem.

Mastercard is not a financial institution. We do not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to account holders by issuers, or establish the rates charged by acquirers in connection with merchants’ acceptance of our products. In most cases, account holder relationships belong to, and are managed by, our customers.

COVID-19

In 2021, our growth rates, which are at various stages of recovery, increased as compared to the respective year ago period as consumer and business spend recovers and we lap the initial effects of the COVID-19 pandemic. The following tables provide a summary of trends in our key metrics for 2021 and 2020 as compared to the respective year ago periods:

						2021 Quarter ended																								Year ended December 31, 2021
						March 31						June 30						September 30						December 31
						Increase/(Decrease)
Gross dollar volume (local currency basis)						8		%				33		%				20		%				23		%				21		%
Cross-border volume (local currency basis)						(17)		%				58		%				52		%				53		%				32		%
Switched transactions						9		%				41		%				25		%				27		%				25		%

						2020 Quarter ended																								Year ended December 31, 2020
						March 31						June 30						September 30						December 31
						Increase/(Decrease)
Gross dollar volume (local currency basis)						8		%				(10)		%				1		%				1		%				—		%
Cross-border volume (local currency basis)						(1)		%				(45)		%				(36)		%				(29)		%				(29)		%
Switched transactions						13		%				(10)		%				5		%				4		%				3		%

The impact of the COVID-19 pandemic, which began in the first quarter of 2020, continues to have negative effects on the global economy. The pandemic has affected business activity, adversely impacting consumers, our customers, suppliers and business partners, as well as our workforce. Variants of the virus have emerged, resulting in a resurgence of infections that have affected regions at different times. New variants may emerge with similar results. The extent to which the resurgence and severity of infections has affected regions is impacted by the ongoing global administration of vaccines and the availability of therapeutic

44 MASTERCARD 2021 FORM 10-K

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

treatments in those locations. Governments, businesses and consumers continue to react to the changing conditions, tightening or loosening safety measures or voluntarily making personal safety decisions, as applicable, based on the current environment of their location.

We continue to monitor the effects of the pandemic and the related impact on our business. The full extent to which the pandemic, and measures and actions taken by stakeholders in response, affect our business, results of operations and financial condition will depend on future developments, including the duration of the pandemic and its impact on the global economy, which are uncertain, and cannot be predicted at this time.

Financial Results Overview

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

						Year ended December 31,																		2021 Increase/ (Decrease)						2020 Increase/ (Decrease)
						2021						2020						2019
						($ in millions, except per share data)
Net revenue						$	18,884					$	15,301					$	16,883					23%						(9)%
Operating expenses						$	8,802					$	7,220					$	7,219					22%						—%
Operating income						$	10,082					$	8,081					$	9,664					25%						(16)%
Operating margin						53.4		%				52.8		%				57.2		%				0.6 ppt						(4.4) ppt
Income tax expense						$	1,620					$	1,349					$	1,613					20%						(16)%
Effective income tax rate						15.7		%				17.4		%				16.6		%				(1.7) ppt						0.8 ppt
Net income						$	8,687					$	6,411					$	8,118					35%						(21)%
Diluted earnings per share						$	8.76					$	6.37					$	7.94					38%						(20)%
Diluted weighted-average shares outstanding						992						1,006						1,022						(1)%						(2)%

The following table provides a summary of our key non-GAAP operating results1, adjusted to exclude the impact of gains and losses on our equity investments, Special Items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments. In addition, we have presented growth rates, adjusted for the impact of currency:

						Year ended December 31,																		2021 Increase/(Decrease)												2020 Increase/(Decrease)
						2021						2020						2019						As adjusted						Currency-neutral						As adjusted						Currency-neutral
						($ in millions, except per share data)
Net revenue						$	18,884					$	15,301					$	16,883					23%						22%						(9)%						(8)%
Adjusted operating expenses						$	8,627					$	7,147					$	7,219					21%						19%						(1)%						(1)%
Adjusted operating margin						54.3		%				53.3		%				57.2		%				1.0 ppt						1.2 ppt						(4.0) ppt						(3.7) ppt
Adjusted effective income tax rate						15.4		%				17.2		%				17.0		%				(1.8) ppt						(1.8) ppt						0.2 ppt						0.3 ppt
Adjusted net income						$	8,333					$	6,463					$	7,937					29%						28%						(19)%						(17)%
Adjusted diluted earnings per share						$	8.40					$	6.43					$	7.77					31%						30%						(17)%						(16)%

Note: Tables may not sum due to rounding.

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

MASTERCARD 2021 FORM 10-K 45

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Key highlights for 2021 as compared to 2020 were as follows:

Net revenue
GAAP						Non-GAAP (currency-neutral)			Net revenue increased 22% on a currency-neutral basis, which includes 2 percentage points of growth from acquisitions. The remaining increase was primarily due to:
up 23%						up 22%
			- Gross dollar volume growth of 21% on a local currency basis
									- Cross-border volume growth of 32% on a local currency basis
									- Switched transactions growth of 25%
									- Other revenues increased 32%, or 31% on a currency-neutral basis, which
									includes 8 percentage points of growth due to acquisitions. The remaining growth
									was driven primarily by our Cyber & Intelligence and Data & Services solutions.
									These increases to net revenue were partially offset by:
									- Rebates and incentives growth of 32%, or 31% on a currency-neutral basis,
									primarily due to increased volumes and transactions and new and renewed deals.

Operating expenses						Adjusted operating expenses
GAAP						Non-GAAP (currency-neutral)			Adjusted operating expenses increased 19% on a currency-neutral basis, which includes 7 percentage points of growth due to acquisitions. The remaining increase was primarily due to higher personnel costs, increased spending on advertising and marketing and increased data processing costs.
up 22%						up 19%

Effective income tax rate						Adjusted effective income tax rate
GAAP						Non-GAAP (currency-neutral)			The adjusted effective income tax rate of 15.4% was lower than prior year, primarily due to the recognition of U.S. tax benefits, the majority of which were discrete, resulting from a higher foreign derived intangible income deduction and greater utilization of foreign tax credits in the U.S. In addition, a more favorable geographic mix of earnings in 2021 contributed to our lower effective tax rate. These benefits were partially offset by a lower discrete tax benefit related to share-based payments in 2021.
15.7%						15.4%

Other 2021 financial highlights were as follows:

• We generated net cash flows from operations of $9.5 billion.

• We completed the acquisitions of businesses for total consideration of $4.7 billion.

• We repurchased 16.5 million shares of our common stock for $5.9 billion and paid dividends of $1.7 billion.

• We completed debt offerings for an aggregate principal amount of $2.1 billion.

Non-GAAP Financial Information

Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Our non-GAAP financial measures exclude the impact of gains and losses on our equity investments which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition and the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). Our non-GAAP financial measures for the comparable periods exclude the impact of the following:

Gains and Losses on Equity Investments

• During 2021, 2020 and 2019, we recorded net gains of $645 million ($497 million after tax, or $0.50 per diluted share), $30 million ($15 million after tax, or $0.01 per diluted share) and $167 million ($124 million after tax, or $0.12 per diluted share), respectively. These net gains were primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities. In addition, in 2021, net gains also included realized gains on sales of marketable equity securities.

46 MASTERCARD 2021 FORM 10-K

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Items

Litigation provisions

• During 2021, we recorded pre-tax charges of $94 million ($74 million after tax, or $0.07 per diluted share) related to litigation settlements and estimated attorneys’ fees with U.K. and Pan-European merchants.

• During 2020, we recorded pre-tax charges of $73 million ($67 million after tax, or $0.07 per diluted share) related to litigation provisions which included pre-tax charges of:

◦$45 million related to a legal matter associated with our prepaid cards in the U.K., and

◦$28 million related to estimated attorneys’ fees and litigation settlements with U.K. and Pan-European merchants.

Indirect tax matter

• During 2021, we recorded a pre-tax charge of $88 million ($69 million after tax, or $0.07 per diluted share) to resolve a foreign indirect tax matter for 2015 through the current period and the related interest.

Tax act

• During 2019, we recorded a $57 million net tax benefit ($0.06 per diluted share), which included a $30 million benefit related to a reduction to the 2017 one-time deemed repatriation tax on accumulated foreign earnings (the transition tax) resulting from final tax regulations issued in 2019 and a $27 million benefit related to additional foreign tax credits which can be carried back under transition rules.

See Note 7 (Investments), Note 20 (Income Taxes) and Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8 for further discussion. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and non-recurring items.

We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to, among other things, evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation.

Currency-neutral Growth Rates

We present growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results. The impact of currency translation represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our foreign exchange derivative contracts designated as cash flow hedging instruments is recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings. We believe the presentation of currency-neutral growth rates provides relevant information to facilitate an understanding of our operating results.

The translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments (“Currency impact”) has been excluded from our currency-neutral growth rates and has been identified in our drivers of change impact tables. See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Revenue and Operating Expenses” for our drivers of change impact tables.

Net revenue, operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with GAAP.

MASTERCARD 2021 FORM 10-K 47

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective non-GAAP adjusted financial measures:

						Year ended December 31, 2021
						Operating expenses						Operating margin						Other income (expense)						Effective income tax rate						Net income						Diluted earnings per share
						($ in millions, except per share data)
Reported - GAAP						$	8,802					53.4		%				$	225					15.7		%				$	8,687					$	8.76
(Gains) losses on equity investments						**						**						(645)						(0.5)		%				(497)						(0.50)
Litigation provisions						(94)						0.5		%				**						0.1		%				74						0.07
Indirect tax matter						(82)						0.4		%				6						0.1		%				69						0.07
Non-GAAP						$	8,627					54.3		%				$	(413)					15.4		%				$	8,333					$	8.40

						Year ended December 31, 2020
						Operating expenses						Operating margin						Other income (expense)						Effective income tax rate						Net income						Diluted earnings per share
						($ in millions, except per share data)
Reported - GAAP						$	7,220					52.8		%				$	(321)					17.4		%				$	6,411					$	6.37
(Gains) losses on equity investments						**						**						(30)						(0.1)		%				(15)						(0.01)
Litigation provisions						(73)						0.5		%				**						(0.1)		%				67						0.07
Non-GAAP						$	7,147					53.3		%				$	(351)					17.2		%				$	6,463					$	6.43

						Year ended December 31, 2019
						Operating expenses						Operating margin						Other income (expense)						Effective income tax rate						Net income						Diluted earnings per share
						($ in millions, except per share data)
Reported - GAAP						$	7,219					57.2		%				$	67					16.6		%				$	8,118					7.94
(Gains) losses on equity investments						**						**						(167)						(0.2)		%				(124)						(0.12)
Tax act						**						**						**						0.6		%				(57)						(0.06)
Non-GAAP						$	7,219					57.2		%				$	(100)					17.0		%				$	7,937					$	7.77

Note: Tables may not sum due to rounding.

** Not applicable

48 MASTERCARD 2021 FORM 10-K

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:

						Year Ended December 31, 2021 as compared to the Year Ended December 31, 2020
						Increase/(Decrease)
						Net revenue						Operating expenses						Operating margin						Effective income tax rate						Net income						Diluted earnings per share
Reported - GAAP						23		%				22		%				0.6		ppt				(1.7)		ppt				35		%				38		%
(Gains) losses on equity investments						**						**						**						(0.4) ppt						(7)		%				(8)		%
Litigation provisions						**						—		%				—		ppt				0.1 ppt						—		%				—		%
Indirect tax matter						**						(1)		%				0.4 ppt						0.1 ppt						1		%				1		%
Non-GAAP						23		%				21		%				1.0		ppt				(1.8) ppt						29		%				31		%
Currency impact 1						(1)		%				(2)		%				0.2		ppt				— ppt						(1)		%				(1)		%
Non-GAAP - currency-neutral						22		%				19		%				1.2		ppt				(1.8) ppt						28		%				30		%

						Year Ended December 31, 2020 as compared to the Year Ended December 31, 2019
						Increase/(Decrease)
						Net revenue						Operating expenses						Operating margin						Effective income tax rate						Net income						Diluted earnings per share
Reported - GAAP						(9)		%				—		%				(4.4)		ppt				0.8		ppt				(21)		%				(20)		%
(Gains) losses on equity investments						**						**						**						— ppt						1		%				1		%
Litigation provisions						**						(1)		%				0.5 ppt						(0.1) ppt						1		%				1		%
Tax act						**						**						**						(0.6) ppt						1		%				1		%
Non-GAAP						(9)		%				(1)		%				(4.0) ppt						0.2 ppt						(19)		%				(17)		%
Currency impact 1						1		%				—		%				0.3 ppt						0.2 ppt						1		%				1		%
Non-GAAP - currency-neutral						(8)		%				(1)		%				(3.7) ppt						0.3 ppt						(17)		%				(16)		%

Note: Tables may not sum due to rounding.

** Not applicable

1See “Non-GAAP Financial Information” for further information on Currency impact.

Key Metrics

In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods.

**Gross Dollar Volume (“GDV”)**1 measures dollar volume of activity on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. We report period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change.

Cross-border Volume2 measures cross-border dollar volume initiated and switched through our network during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.

Switched Transactions2 measures the number of transactions switched by Mastercard, which is defined as the number of transactions initiated and switched through our network during the period.

MASTERCARD 2021 FORM 10-K 49

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.

1 Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers.

2 Growth rates are normalized to eliminate the effects of differing switching and carryover days between periods. Carryover days are those where transactions and volumes from days where the Company does not clear and settle are processed. In the fourth quarter of 2021, we began clearing and settling transactions and volumes on a daily basis.

Foreign Currency

Currency Impact

Our primary revenue functional currencies are the U.S. dollar, euro, Brazilian real and the British pound. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.

Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of gross dollar volume (“GDV”) and gross euro volume (“GEV”), which are used in the calculation of our domestic assessments, cross-border volume fees and certain volume-related rebates and incentives. In most non-European regions, GDV is calculated based on local currency spending volume converted to U.S. dollars using average exchange rates for the period. In Europe, GEV is calculated based on local currency spending volume converted to euros using average exchange rates for the period. As a result, certain of our domestic assessments, cross-border volume fees and volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar versus non-European local currencies and the strengthening or weakening of the euro versus other European local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The currency transactional impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. In 2021, GDV on a U.S. dollar-converted basis increased 21.9%, while GDV on a local currency basis increased 20.5% versus 2020. In 2020, GDV on a U.S. dollar-converted basis decreased 1.9%, while GDV on a local currency basis increased 0.1% versus 2019. Further, the impact from transactional currency occurs in transaction processing revenue, other revenue and operating expenses when the local currency of these items is different than the functional currency of the entity.

Through December 31, 2020, our approach to managing transactional currency exposure consisted of hedging a portion of anticipated revenues impacted by transactional currencies by entering into foreign exchange derivative contracts, and recording the related changes in fair value in general and administrative expenses on the consolidated statement of operations. During the first quarter of 2021, we started to formally designate certain newly-executed foreign exchange derivative contracts, which meet the established accounting criteria, as cash flow hedges. Gains and losses resulting from changes in fair value of these designated contracts are deferred in accumulated other comprehensive income (loss) and subsequently recognized in the respective component of net revenue when the underlying forecasted transactions impact earnings.

Foreign Exchange Activity

We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement assets and obligations, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of a portion of our nonfunctional monetary assets and liabilities. The gains or losses resulting from changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statement of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

Our foreign exchange risk management activities are discussed further in Note 23 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8.

Risk of Currency Devaluation

We are exposed to currency devaluation in certain countries. In addition, we are subject to exchange control regulations that restrict the conversion of financial assets into U.S. dollars. While these revenues and assets are not material to us on a consolidated basis, we can be negatively impacted should there be a continued and sustained devaluation of local currencies relative to the U.S. dollar and/or a continued and sustained deterioration of economic conditions in these countries.

50 MASTERCARD 2021 FORM 10-K

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Results

Revenue

Primary drivers of net revenue, versus the prior year, were as follows:

Gross revenue increased 26%, or 25% on a currency-neutral basis, which includes growth of 2 percentage points from acquisitions. The remaining increase was primarily driven by transaction and volume growth and an increase in our Cyber & Intelligence and Data & Services solutions within other revenue.

Rebates and incentives increased 32%, or 31% on a currency-neutral basis, primarily due to increased volumes and transactions and new and renewed deals.

Net revenue increased 23%, or 22% on a currency-neutral basis, and includes 2 percentage points of growth from acquisitions.

See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 for a further discussion of how we recognize revenue.

The components of net revenue were as follows:

						For the Years Ended December 31,																		Increase (Decrease)
						2021						2020						2019						2021						2020
						($ in millions)
Domestic assessments						$	8,158					$	6,656					$	6,781					23%						(2)%
Cross-border volume fees						4,664						3,512						5,606						33%						(37)%
Transaction processing						10,799						8,731						8,469						24%						3%
Other revenues						6,224						4,717						4,124						32%						14%
Gross revenue						29,845						23,616						24,980						26%						(5)%
Rebates and incentives (contra-revenue)						(10,961)						(8,315)						(8,097)						32%						3%
Net revenue						$	18,884					$	15,301					$	16,883					23%						(9)%

The following table summarizes the drivers of change in net revenue:

						For the Years Ended December 31,
						Operational												Acquisitions												Currency Impact 3																		Total
						2021						2020						2021						2020						2021						2020																		2021						2020
Domestic assessments						22%			1			1%			1			—%						—%						—%						(3)%																		23		%				(2)		%
Cross-border volume fees						30%			1			(37)%			1			—%						—%						3%						—%																		33		%				(37)		%
Transaction processing						22%			1,2			3%			1,2			—%						—%						1%						—%																		24		%				3		%
Other revenues						23%			2			12%			2			8%						3%						1%						(1)%																		32		%				14		%
Rebates and incentives (contra-revenue)						31%						4%						—%						—%						1%						(2)%																		32		%				3		%
Net revenue						20%						(9)%						2%						1%						1%						(1)%																		23		%				(9)		%

Note: Table may not sum due to rounding

1Includes impacts from our key metrics, other non-volume based fees, pricing and mix.

2Includes impacts from our cyber and intelligence solution fees, data analytics and consulting fees and other value-added services.

3Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments.

MASTERCARD 2021 FORM 10-K 51

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables provide a summary of the trend in volumes and transactions.

						For the Years Ended December 31,
						2021												2020
						Increase/(Decrease)
						USD						Local						USD						Local
Mastercard-branded GDV 1						22		%				21		%				(2)		%				—		%
United States						23		%				23		%				2		%				2		%
Worldwide less United States						22		%				20		%				(4)		%				(1)		%
Cross-border volume 1												32		%										(29)		%

1Excludes volume generated by Maestro and Cirrus cards.

						For the Years Ended December 31,
						Increase/(Decrease)
						2021						2020
Switched transactions						25		%				3		%

No individual country, other than the United States, generated more than 10% of net revenue in any such period. A significant portion of our net revenue is concentrated among our five largest customers. In 2021, the net revenue from these customers was approximately $4.2 billion, or 23%, of total net revenue. The loss of any of these customers or their significant card programs could adversely impact our revenue.

Operating Expenses

Operating expenses increased 22% in 2021 versus the prior year. Adjusted operating expenses increased 21%, or 19% on a currency-neutral basis, versus the prior year. Current year results include growth of approximately 7 percentage points from acquisitions. Excluding acquisitions, expenses increased 12% primarily due to higher personnel costs to support our continued investment in our strategic initiatives, increased spending on advertising and marketing and increased data processing costs.

The components of operating expenses were as follows:

						For the Years Ended December 31,																		Increase (Decrease)
						2021						2020						2019						2021						2020
						($ in millions)
General and administrative						$	7,087					$	5,910					$	5,763					20		%				3		%
Advertising and marketing						895						657						934						36		%				(30)		%
Depreciation and amortization						726						580						522						25		%				11		%
Provision for litigation						94						73						—						**						**
Total operating expenses						8,802						7,220						7,219						22		%				—		%
Special Items 1						(176)						(73)						—						**						**
Adjusted operating expenses (excluding Special Items 1)						$	8,627					$	7,147					$	7,219					21		%				(1)		%

Note: Table may not sum due to rounding.

** Not meaningful

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

52 MASTERCARD 2021 FORM 10-K

PART II