Cover and table of contents

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Cover and table of contents

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 September 30, 2023


☐			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 October 23, 2023, there were 930,438,307 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,337,754 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)
32	Item 2.	Management’s discussion and analysis of financial condition and results of operations
48	Item 3.	Quantitative and qualitative disclosures about market risk
49	Item 4.	Controls and procedures


PART II	51	Item 1.	Legal proceedings
51	Item 1A.	Risk factors
51	Item 2.	Unregistered sales of equity securities , use of proceeds and issuer purchases of equity securities
51	Item 5.	Other information
52	Item 6.	Exhibits
54	-	Signatures

2 MASTERCARD SEPTEMBER 30, 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 SEPTEMBER 30, 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 and Nine Months Ended September 30, 2023 and 2022						6
Consolidated Statement of Comprehensive Income — Three and Nine Months Ended September 30, 2023 and 2022						7
Consolidated Balance Sheet — September 30, 2023 and December 31, 2022						8
Consolidated Statement of Changes in Equity — Three and Nine Months Ended September 30, 2023 and 2022						9
Consolidated Statement of Cash Flows — Nine Months Ended September 30, 2023 and 2022						11
Notes to consolidated financial statements						12

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 5

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Statement of Operations (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions, except per share data)
Net Revenue	$	6,533	$	5,756	$	18,550	$	16,420
Operating Expenses:
General and administrative	2,285		2,069		6,528		5,860
Advertising and marketing	193		182		561		573
Depreciation and amortization	211		185		594		566
Provision for litigation	—		208		231		341
Total operating expenses	2,689		2,644		7,914		7,340
Operating income	3,844		3,112		10,636		9,080
Other Income (Expense):
Investment income	71		16		185		28
Gains (losses) on equity investments, net	(6)		60		(95)		(133)
Interest expense	(151)		(120)		(427)		(344)
Other income (expense), net	3		4		19		12
Total other income (expense)	(83)		(40)		(318)		(437)
Income before income taxes	3,761		3,072		10,318		8,643
Income tax expense	563		573		1,914		1,238
Net Income	$	3,198	$	2,499	$	8,404	$	7,405
Basic Earnings per Share	$	3.40	$	2.59	$	8.88	$	7.63
Basic weighted-average shares outstanding	941		965		947		971
Diluted Earnings per Share	$	3.39	$	2.58	$	8.85	$	7.60
Diluted weighted-average shares outstanding	943		968		949		974

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

6 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Statement of Comprehensive Income (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Net Income	$	3,198	$	2,499	$	8,404	$	7,405
Other comprehensive income (loss):
Foreign currency translation adjustments	(239)		(743)		(92)		(1,517)
Income tax effect	1		62		(13)		105
Foreign currency translation adjustments, net of income tax effect	(238)		(681)		(105)		(1,412)

Translation adjustments on net investment hedges	138		372		53		772
Income tax effect	(31)		(82)		(12)		(171)
Translation adjustments on net investment hedges, net of income tax effect	107		290		41		601

Cash flow hedges	17		14		(7)		21
Income tax effect	(4)		(3)		2		(5)
Reclassification adjustments for cash flow hedges	12		(4)		29		(9)
Income tax effect	(3)		1		(7)		2
Cash flow hedges, net of income tax effect	22		8		17		9



Reclassification adjustments for defined benefit pension and other postretirement plans	—		—		—		(1)
Income tax effect	—		—		—		—
Defined benefit pension and other postretirement plans, net of income tax effect	—		—		—		(1)

Investment securities available-for-sale	1		(2)		3		(6)
Income tax effect	—		—		—		1
Investment securities available-for-sale, net of income tax effect	1		(2)		3		(5)

Other comprehensive income (loss), net of income tax effect	(108)		(385)		(44)		(808)
Comprehensive Income	$	3,090	$	2,114	$	8,360	$	6,597

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

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 7

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Balance Sheet (Unaudited)
	September 30, 2023		December 31, 2022
	(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	6,890	$	7,008
Restricted cash for litigation settlement	—		589
Investments	602		400
Accounts receivable	3,925		3,425
Settlement assets	1,118		1,270
Restricted security deposits held for customers	1,824		1,568
Prepaid expenses and other current assets	2,624		2,346
Total current assets	16,983		16,606
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $2,140 and $1,904, respectively	1,972		2,006
Deferred income taxes	1,370		1,151
Goodwill	7,488		7,522
Other intangible assets, net of accumulated amortization of $2,137 and $1,960, respectively	4,022		3,859
Other assets	7,839		7,580
Total Assets	$	39,674	$	38,724
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable	$	589	$	926
Settlement obligations	992		1,111
Restricted security deposits held for customers	1,824		1,568
Accrued litigation	475		1,094
Accrued expenses	7,775		7,801
Short-term debt	1,337		274
Other current liabilities	1,527		1,397
Total current liabilities	14,519		14,171
Long-term debt	14,229		13,749
Deferred income taxes	385		393
Other liabilities	4,160		4,034
Total Liabilities	33,293		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, 1,401 and 1,399 shares issued and 932 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	5,791		5,298
Class A treasury stock, at cost, 470 and 451 shares, respectively	(58,573)		(51,354)
Retained earnings	60,390		53,607
Accumulated other comprehensive income (loss)	(1,297)		(1,253)
Mastercard Incorporated Stockholders' Equity	6,311		6,298
Non-controlling interests	49		58
Total Equity	6,360		6,356
Total Liabilities, Redeemable Non-controlling Interests and Equity	$	39,674	$	38,724

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

8 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q

PART I

Next: Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)