Mastercard 10-Q 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

Or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32877

Mastercard Incorporated

(Exact name of registrant as specified in its charter)

Delaware						13-4172551
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification Number)
2000 Purchase Street						10577
Purchase,			NY			(Zip Code)
(Address of principal executive offices)

(914) 249-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class						Trading Symbol						Name of each exchange of which registered
Class A Common Stock, par value $0.0001 per share						MA						New York Stock Exchange
2.1% Notes due 2027						MA27						New York Stock Exchange
1.0% Notes due 2029						MA29A						New York Stock Exchange
2.5% Notes due 2030						MA30						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.												Yes			☒			No			☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)												Yes			☒			No			☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.																					☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)												Yes			☐			No			☒

As of April 24, 2023, there were 940,404,217 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,448,384 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.

MASTERCARD INCORPORATED FORM 10-Q

TABLE OF CONTENTS

PART I			5			Item 1.			Consolidated financial statements (unaudited)
28			Item 2.			Management’s discussion and analysis of financial condition and results of operations
39			Item 3.			Quantitative and qualitative disclosures about market risk
40			Item 4.			Controls and procedures
PART II			42			Item 1.			Legal proceedings
42			Item 1A.			Risk factors
42			Item 2.			Unregistered sales of equity securities and use of proceeds
42			Item 5.			Other information
42			Item 6.			Exhibits
44			-			Signatures

2 MASTERCARD MARCH 31, 2023 FORM 10-Q

In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.

Forward-Looking Statements

This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.

Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:

• regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)

• the impact of preferential or protective government actions

• regulation of privacy, data, security and the digital economy

• regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption, account-based payments systems, and issuer and acquirer practice regulation)

• the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions

• potential or incurred liability and limitations on business related to any litigation or litigation settlements

• the impact of competition in the global payments industry (including disintermediation and pricing pressure)

• the challenges relating to rapid technological developments and changes

• the challenges relating to operating a real-time account-based payments system and to working with new customers and end users

• the impact of information security incidents, account data breaches or service disruptions

• issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants’ continued focus on acceptance costs and unique risks from our work with governments)

• the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls as well as events and resulting actions related to the Russian invasion of Ukraine

• the impact of the global COVID-19 pandemic and measures taken in response

• reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services

• the impact of environmental, social and governance matters and related stakeholder reaction

• the inability to attract and retain a highly qualified and diverse workforce, or maintain our corporate culture

• issues related to acquisition integration, strategic investments and entry into new businesses

• exposure to loss or illiquidity due to our role as guarantor and other contractual obligations

• issues related to our Class A common stock and corporate governance structure

Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD MARCH 31, 2023 FORM 10-Q 3

						PART I
						Item 1. Consolidated financial statements (unaudited)
						Item 2. Management’s discussion and analysis of financial condition and results of operations
						Item 3. Quantitative and qualitative disclosures about market risk
						Item 4. Controls and procedures

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Item 1. Consolidated financial statements (unaudited)

Mastercard Incorporated

Index to consolidated financial statements (unaudited)

						Page
Consolidated Statement of Operations — Three Months Ended March 31, 2023 and 2022						6
Consolidated Statement of Comprehensive Income — Three Months Ended March 31, 2023 and 2022						7
Consolidated Balance Sheet — March 31, 2023 and December 31, 2022						8
Consolidated Statement of Changes in Equity — Three Months Ended March 31, 2023 and 2022						9
Consolidated Statement of Cash Flows — Three Months Ended March 31, 2023 and 2022						10
Notes to consolidated financial statements						11

MASTERCARD MARCH 31, 2023 FORM 10-Q 5

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Statement of Operations (Unaudited)
												Three Months Ended March 31,
																		2023						2022
																		(in millions, except per share data)
Net Revenue																		$	5,748					$	5,167
Operating Expenses:
General and administrative																		2,043						1,844
Advertising and marketing																		167						181
Depreciation and amortization																		191						192
Provision for litigation																		211						—
Total operating expenses																		2,612						2,217
Operating income																		3,136						2,950
Other Income (Expense):
Investment income																		55						5
Gains (losses) on equity investments, net																		(212)						(76)
Interest expense																		(132)						(110)
Other income (expense), net																		6						4
Total other income (expense)																		(283)						(177)
Income before income taxes																		2,853						2,773
Income tax expense																		492						142
Net Income																		$	2,361					$	2,631
Basic Earnings per Share																		$	2.48					$	2.69
Basic weighted-average shares outstanding																		953						977
Diluted Earnings per Share																		$	2.47					$	2.68
Diluted weighted-average shares outstanding																		956						981

The accompanying notes are an integral part of these consolidated financial statements.

6 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Statement of Comprehensive Income (Unaudited)
												Three Months Ended March 31,
																		2023						2022
																		(in millions)
Net Income																		$	2,361					$	2,631
Other comprehensive income (loss):
Foreign currency translation adjustments																		94						(64)
Income tax effect																		(14)						12
Foreign currency translation adjustments, net of income tax effect																		80						(52)
Translation adjustments on net investment hedges																		(74)						86
Income tax effect																		17						(19)
Translation adjustments on net investment hedges, net of income tax effect																		(57)						67
Cash flow hedges																		(10)						1
Income tax effect																		—						—
Reclassification adjustments for cash flow hedges																		8						(5)
Income tax effect																		1						1
Cash flow hedges, net of income tax effect																		(1)						(3)
Investment securities available-for-sale																		2						(2)
Income tax effect																		—						1
Investment securities available-for-sale, net of income tax effect																		2						(1)
Other comprehensive income (loss), net of income tax effect																		24						11
Comprehensive Income																		$	2,385					$	2,642

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD MARCH 31, 2023 FORM 10-Q 7

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Balance Sheet (Unaudited)
						March 31, 2023						December 31, 2022
						(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents						$	6,566					$	7,008
Restricted cash for litigation settlement						596						589
Investments						402						400
Accounts receivable						3,511						3,425
Settlement assets						1,236						1,270
Restricted security deposits held for customers						1,608						1,568
Prepaid expenses and other current assets						2,501						2,346
Total current assets						16,420						16,606
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $2,002 and $1,904, respectively						2,006						2,006
Deferred income taxes						1,267						1,151
Goodwill						7,575						7,522
Other intangible assets, net of accumulated amortization of $2,018 and $1,960, respectively						4,027						3,859
Other assets						7,641						7,580
Total Assets						$	38,936					$	38,724
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable						$	735					$	926
Settlement obligations						870						1,111
Restricted security deposits held for customers						1,608						1,568
Accrued litigation						1,107						1,094
Accrued expenses						7,310						7,801
Short-term debt						276						274
Other current liabilities						1,745						1,397
Total current liabilities						13,651						14,171
Long-term debt						15,292						13,749
Deferred income taxes						389						393
Other liabilities						4,197						4,034
Total Liabilities						33,529						32,347
Commitments and Contingencies
Redeemable Non-controlling Interests						21						21
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,400 and 1,399 shares issued and 941 and 948 shares outstanding, respectively						—						—
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 and 8 shares issued and outstanding, respectively						—						—
Additional paid-in-capital						5,376						5,298
Class A treasury stock, at cost, 459 and 451 shares, respectively						(54,241)						(51,354)
Retained earnings						55,424						53,607
Accumulated other comprehensive income (loss)						(1,229)						(1,253)
Mastercard Incorporated Stockholders' Equity						5,330						6,298
Non-controlling interests						56						58
Total Equity						5,386						6,356
Total Liabilities, Redeemable Non-controlling Interests and Equity						$	38,936					$	38,724

The accompanying notes are an integral part of these consolidated financial statements.

8 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I

Consolidated Statement of Changes in Equity (Unaudited)
						Three Months Ended March 31, 2023
						Stockholders’ Equity
						Common Stock												Additional Paid-In Capital						Class A Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Mastercard Incorporated Stockholders' Equity						Non- Controlling Interests						Total Equity
						Class A						Class B
						(in millions)
Balance at December 31, 2022						$	—					$	—					$	5,298					$	(51,354)					$	53,607					$	(1,253)					$	6,298					$	58					$	6,356
Net income						—						—						—						—						2,361						—						2,361						—						2,361
Activity related to non-controlling interests						—						—						—						—						—						—						—						(2)						(2)
Redeemable non-controlling interest adjustments						—						—						—						—						(3)						—						(3)						—						(3)
Other comprehensive income (loss)						—						—						—						—						—						24						24						—						24
Dividends						—						—						—						—						(541)						—						(541)						—						(541)
Purchases of treasury stock						—						—						—						(2,894)						—						—						(2,894)						—						(2,894)
Share-based payments						—						—						78						7						—						—						85						—						85
Balance at March 31, 2023						$	—					$	—					$	5,376					$	(54,241)					$	55,424					$	(1,229)					$	5,330					$	56					$	5,386

						Three Months Ended March 31, 2022
						Stockholders’ Equity
						Common Stock												Additional Paid-In Capital						Class A Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Mastercard Incorporated Stockholders' Equity						Non- Controlling Interests						Total Equity
						Class A						Class B
						(in millions)
Balance at December 31, 2021						$	—					$	—					$	5,061					$	(42,588)					$	45,648					$	(809)					$	7,312					$	71					$	7,383
Net income						—						—						—						—						2,631						—						2,631						—						2,631
Activity related to non-controlling interests						—						—						—						—						—						—						—						(3)						(3)
Redeemable non-controlling interest adjustments						—						—						—						—						(2)						—						(2)						—						(2)
Other comprehensive income (loss)						—						—						—						—						—						11						11						—						11
Dividends						—						—						—						—						(477)						—						(477)						—						(477)
Purchases of treasury stock						—						—						—						(2,411)						—						—						(2,411)						—						(2,411)
Share-based payments						—						—						(35)						5						—						—						(30)

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Net revenue from our payment network increased 28%, or 33% on a currency-neutral basis, in 2022 versus 2021. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. The 33% increase on a currency-neutral basis is 1 percentage point higher due to the Russia-related Special Item in 2022. Net revenue from our payment network includes $2,724 million of rebates and incentives provided to customers, which increased 25%, or 28% on a currency-neutral basis, in 2022 versus 2021, primarily due to an increase in our key drivers as well as new and renewed deals. The 28% increase on a currency-neutral basis is 1 percentage point lower due to the Russia-related Special Item in 2022.

Net revenue from our value-added services and solutions increased 17%, or 20% on a currency-neutral basis, in 2022 versus 2021, which includes a 6 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of our cyber and intelligence solutions, driven by growth in our underlying key drivers as well as the scaling of our authentication solutions. In addition, growth in our consulting and data analytics services further contributed to the increase.

See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for a further discussion of how we recognize revenue.

Drivers of Change

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

						Three Months Ended March 31,
						Increase/(Decrease)
						Operational																					Acquisitions												Currency Impact 3												Special Items 4												Total
						2023						2022																		2023						2022						2023						2022						2023						2022						2023															2022
Payment network						11		%	1			33		%	1															—		%				—		%				(3)		%				(6)		%				(1)		%				1		%				7		%													28		%
Value-added services and solutions						20		%	2			14		%	2															1		%				6		%				(2)		%				(3)		%				**						**						19		%													17		%
Net revenue						14		%				25		%																—		%				2		%				(3)		%				(3)		%				(1)		%				1		%				11		%													24		%

Note: Table may not sum due to rounding.

** Not applicable.

1Includes impacts from our key drivers and metrics, offset by rebates and incentives.

2Includes impacts from cyber and intelligence, data and services, processing and gateway, ACH batch and real-time account-based domestic and cross-border payments and solutions, opening banking and digital identity, offset by rebates and incentives.

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

4See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

Operating Expenses

For the three months ended March 31, 2023, operating expenses increased 18% versus the comparable period in 2022. Adjusted operating expenses increased 10%, or 12% on a currency-neutral basis, versus the comparable period in 2022, which includes a 2 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs.

The components of operating expenses were as follows:

																		Three Months Ended March 31,												Increase/ (Decrease)
																					2023						2022
																								($ in millions)
General and administrative																								$	2,043					$	1,844					11%
Advertising and marketing																								167						181						(8)%
Depreciation and amortization																								191						192						—%
Provision for litigation																								211						—						**
Total operating expenses																								2,612						2,217						18%
Special Items 1																								(211)						(34)						**
Adjusted total operating expenses (excluding Special Items 1)																								$	2,401					$	2,182					10%

Note: Table may not sum due to rounding.

** Not meaningful.

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

MASTERCARD MARCH 31, 2023 FORM 10-Q 35

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Drivers of Change

The following tables summarize the drivers of changes in operating expenses:

						Three Months Ended March 31, 2023
						Increase/(Decrease)
						Operational						Acquisitions						Currency Impact 1						Special Items 2						Total
General and administrative						13%						2%						(2)%						(2)%						11%
Advertising and marketing						(6)%						—%						(3)%						**						(8)%
Depreciation and amortization						—%						2%						(3)%						**						—%
Provision for litigation						**						**						**						**						**
Total operating expenses						10%						2%						(2)%						8%						18%

Note: Table may not sum due to rounding.

** Not applicable/meaningful.

1Represents the translational and transactional impact of currency.

2See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

General and Administrative

For the three months ended March 31, 2023, general and administrative expenses increased 11%, or 13% on a currency-neutral basis, versus the comparable period in 2022. Current period results include growth of 2 percentage points from acquisitions. The remaining increase was primarily due to higher personnel costs to support our continued investment in our strategic initiatives across payments, services and new network capabilities, partially offset by a decrease of 2 percentage points from the Special Item for Russia-related impacts in 2022.

The components of general and administrative expenses were as follows:

																		Three Months Ended March 31,												Increase/(Decrease)
																					2023						2022
																								($ in millions)
Personnel 1																								$	1,426					$	1,181					21%
Professional fees																								100						86						16%
Data processing and telecommunications																								235						235						—%
Foreign exchange activity 2																								16						36						**
Other 1																								266						306						(13)%
Total general and administrative expenses																								$	2,043					$	1,844					11%

Note: Table may not sum due to rounding.

** Not meaningful.

1 For the three months ended March 31, 2022, total general and administrative expenses includes a Special Item for Russia-related impacts of $34 million, of which $5 million is included within Personnel and $29 million is included within Other. See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

2 Foreign exchange activity includes the impact of remeasurement of assets and liabilities denominated in foreign currencies net of the impact of gains and losses on foreign exchange derivative contracts. See Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.

Advertising and Marketing

For the three months ended March 31, 2023, advertising and marketing expenses decreased 8%, or 5% on a currency-neutral basis, versus the comparable period in 2022, primarily due to a decrease in spending on marketing campaigns and advertising, partially offset by an increase in spending on sponsorships.

Depreciation and Amortization

For the three months ended March 31, 2023, depreciation and amortization expenses were relatively flat on both an as reported and a currency-neutral basis, versus the comparable period in 2022.

36 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Provision for Litigation

For the three months ended March 31, 2023, we recorded litigation provisions of $211 million as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation. See Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report and “Non-GAAP Financial Information” in this section for further discussion.

Other Income (Expense)

For the three months ended March 31, 2023, other income (expense) was unfavorable $106 million, versus the comparable period in 2022, primarily due to higher net losses in the current year versus the prior year related to unrealized fair market value adjustments on marketable and nonmarketable equity securities. Adjusted other income (expense) was favorable $30 million versus the prior year, primarily due to an increase in our investment income, partially offset by increased interest expense related to our 2022 and 2023 debt issuances.

The components of other income (expense) were as follows:

																		Three Months Ended March 31,												Increase/ (Decrease)
																					2023						2022
																								($ in millions)
Investment income																								$	55					$	5					**
Gains (losses) on equity investments, net																								(212)						(76)						**
Interest expense																								(132)						(110)						20%
Other income (expense), net																								6						4						**
Total other income (expense)																								(283)						(177)						**
(Gains) losses on equity investments 1																								212						76						**
Adjusted total other income (expense) 1																								$	(71)					$	(101)					(30)%

Note: Table may not sum due to rounding.

** Not meaningful.

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

Income Taxes

The effective income tax rates were 17.2% and 5.1% for the three months ended March 31, 2023 and 2022, respectively. The adjusted effective income tax rates were 18.3% and 5.3% for the three months ended March 31, 2023 and 2022, respectively. Both the as reported and as adjusted effective income tax rates were higher versus the comparable period in 2022, primarily due to a prior year discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022, which resulted in a valuation allowance release of $333 million associated with the U.S. foreign tax credit carryforward deferred tax asset. Additionally, the U.K. statutory tax rate increase, effective in 2023, contributed to the higher as reported and as adjusted effective income tax rates.

Liquidity and Capital Resources

We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:

			March 31, 2023						December 31, 2022
			(in billions)
Cash, cash equivalents and investments 1			$	7.0					$	7.4
Unused line of credit			8.0						8.0

1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.2 billion at March 31, 2023 and December 31, 2022.

We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations which include litigation provisions and credit and settlement exposure.

MASTERCARD MARCH 31, 2023 FORM 10-Q 37

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be an indication of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 16 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 for a description of these guarantees.

Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022 and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report.

Cash Flow

The table below shows a summary of the cash flows from operating, investing and financing activities:

			Three Months Ended March 31,
			2023						2022
			(in millions)
Net cash provided by operating activities			$	1,919					$	1,782
Net cash used in investing activities			(397)						(287)
Net cash used in financing activities			(1,955)						(2,154)

Net cash provided by operating activities increased $137 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to higher net income after adjusting for non-cash items and an increase in restricted security deposits held for customers and income taxes payable, partially offset by higher accounts receivable balances.

Net cash used in investing activities increased $110 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to an increase in capitalized software.

Net cash used in financing activities decreased $199 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to higher proceeds from debt issuances partially offset by higher repurchases of our Class A common stock.

Debt and Credit Availability

In March 2023, the Company issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion. Our total debt outstanding was $15.6 billion and $14.0 billion at March 31, 2023 and December 31, 2022, respectively, with the earliest maturity of INR22.7 billion ($277 million as of March 31, 2023) of principal occurring in July 2023.

In April 2023, the Company entered into an additional unsecured INR4.97 billion ($61 million as of the date of settlement) term loan, also due July 2023 (the “2023 INR Term Loan”).

As of March 31, 2023, we have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $8 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $8 billion revolving credit facility (the “Credit Facility”) which expires in November 2027.

Borrowings under the Commercial Paper Program and the Credit Facility are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. We had no borrowings outstanding under the Commercial Paper Program or the Credit Facility at March 31, 2023 and December 31, 2022.

See Note 10 (Debt) to the consolidated financial statements included in Part I, Item 1 for further discussion on our debt and Note 15 (Debt) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion on our debt, the Commercial Paper Program and the Credit Facility.

Dividends and Share Repurchases

We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.

38 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Aggregate payments for quarterly dividends totaled $545 million for the three months ended March 31, 2023.

On December 6, 2022, our Board of Directors declared a quarterly cash dividend of $0.57 per share paid on February 9, 2023 to holders of record on January 9, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $545 million.

On February 14, 2023, our Board of Directors declared a quarterly cash dividend of $0.57 per share payable on May 9, 2023 to holders of record on April 7, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $541 million.

Repurchased shares of our common stock are considered treasury stock. In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively. The program approved in 2022 will become effective after completion of the share repurchase program approved in 2021. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock through March 31, 2023:

												(in millions, except average price data)
Remaining authorization at December 31, 2022																		$	12,174
Dollar-value of shares repurchased during the three months ended March 31, 2023 1																		$	2,878
Remaining authorization at March 31, 2023																		$	9,296
Shares repurchased during the three months ended March 31, 2023																		8.0
Average price paid per share during the three months ended March 31, 2023																		$	361.70

1 The dollar-value of shares repurchased does not include a 1% excise tax on share repurchases that became effective January 1, 2023. The incremental tax is recorded in treasury stock on the consolidated balance sheet and is payable annually beginning in 2024.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.