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

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

The following tables provide a summary of the growth trends in our key drivers:


	Three Months Ended March 31,
		2025	2024
	Increase/(Decrease)
			USD	Local	USD	Local
Mastercard-branded GDV growth 1			6%	9%	9%	11%
United States			7%	7%	6%	6%
Worldwide less United States			5%	10%	10%	13%

Cross-border volume growth 1			12%	15%	19%	18%


	Three Months Ended March 31,
		2025	2024
	Increase/(Decrease)
Switched transactions growth		9%	13%

1 Excludes volume generated by Maestro and Cirrus cards.

Key Metrics related to the Payment Network

Assessments represent agreed-upon standard pricing provided to our customers based on various forms of payment-related activity. Assessments are used internally by management to monitor operating performance as it allows for comparability and provides visibility into cardholder trends. Assessments do not represent our net revenue.

The following provides additional information on our key metrics related to the payment network:

Domestic assessments** are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are the same. These assessments are primarily driven by the domestic dollar volume of activity (e.g., domestic purchase volume, domestic cash volume) or the number of cards issued.
Cross-border assessments** are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are different. These assessments are primarily driven by the cross-border dollar volume of activity (e.g., cross-border purchase volume, cross-border cash volume).
Transaction processing assessments** are charges primarily driven by the number of switched transactions on our payment network. Switching activities include:

◦Authorization, the process by which a transaction is routed to the issuer for approval

◦Clearing, the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction

◦Settlement, which facilitates the determination and exchange of funds between parties

These assessments can also include connectivity services and network access, which are based on the volume of data transmitted and the number of authorization and settlement messages.

Other network assessments** are charges for licensing, implementation and other franchise fees.

The following table provides a summary of our key metrics related to the payment network:


	Three Months Ended March 31,	Increase/(Decrease)
		2025		2024		As reported	Currency-neutral
		($ in millions)
Domestic assessments		$	2,658	$	2,470	8%	12%
Cross-border assessments		2,595		2,238		16%	18%
Transaction processing assessments		3,527		3,086		14%	17%
Other network assessments		231		226		2%	3%

32 MASTERCARD MARCH 31, 2025 FORM 10-Q

PART I

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

Foreign Currency

Currency Impact

Our primary revenue functional currencies are the U.S. dollar, euro, British pound and the Brazilian real. 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 GDV, which is used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus 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 transactional currency 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. For the three months ended March 31, 2025, GDV on a U.S. dollar-converted basis increased 6%, while GDV on a local currency basis increased 9%, versus the comparable period in 2024. Further, the impact from transactional currency occurs in our key metrics related to transaction processing assessments and other network assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.

To manage the impact of foreign currency variability on anticipated revenues and expenses, we may enter into foreign exchange derivative contracts and designate such derivatives as hedging instruments in a cash flow hedging relationship as discussed further in Note 16 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

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 our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the 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 statements 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 16 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

Financial Results

Net Revenue

The components of net revenue were as follows:


	Three Months Ended March 31,					Increase/(Decrease)
		2025			2024
			($ in millions)
Payment network			$	4,432		$	3,920	13%
Value-added services and solutions			2,818			2,428		16%
Total net revenue			$	7,250		$	6,348	14%

For the three months ended March 31, 2025, net revenue increased 14%, or 17% on a currency-neutral basis, versus the comparable period in 2024, which included a 1 percentage point increase from acquisitions completed in 2024 (“Acquisitions”). The remaining increase in net revenue was attributable to both our payment network and value-added services and solutions.

Net revenue from our payment network increased 13%, or 16% on a currency-neutral basis, versus the comparable period in 2024. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting growth trends across all of our key drivers. Net revenue from our payment network included $4,579 million of rebates and incentives provided to customers, which increased 12%, or 15% on a currency-neutral basis, versus the comparable period in 2024, primarily due to an increase in our key drivers as well as new and renewed deals.

MASTERCARD MARCH 31, 2025 FORM 10-Q 33

PART I

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

Net revenue from our value-added services and solutions increased 16%, or 18% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions. The remaining increase was driven primarily by (1) our security and digital and authentication solutions, and consumer acquisition and engagement services, (2) growth in our underlying key drivers and (3) pricing.

See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 of our 2024 Form 10-K for a further discussion of our revenue recognition policies.

Drivers of Change

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


	Three Months Ended March 31, 2025
	Increase/(Decrease)
	Operational		Acquisitions			Currency impact 1			Total
Payment network	16	%		**			(3)	%		13	%
Value-added services and solutions	15	%		4	%		(2)	%		16	%



Net revenue	15	%		1	%		(3)	%		14	%

Note: Table may not sum due to rounding.

** Not applicable.

1Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments. See “Non-GAAP Financial Information - Currency-neutral Growth Rates” for further information on our currency impact non-GAAP adjustment.

Operating Expenses

For the three months ended March 31, 2025, operating expenses increased 13% versus the comparable period in 2024. Adjusted operating expenses increased 13%, or 14% on a currency-neutral basis, versus the comparable period in 2024, which included a 4 percentage point increase from Acquisitions.

The components of operating expenses were as follows:


	Three Months Ended March 31,					Increase/ (Decrease)
		2025			2024
			($ in millions)
General and administrative			$	2,523		$	2,286	10%
Advertising and marketing			152			116		32%
Depreciation and amortization			275			216		27%
Provision for litigation			151			126		19%
Total operating expenses			3,101			2,744		13%
Special Items 1			(151)			(126)		19%
Adjusted total operating expenses 1			$	2,950		$	2,617	13%

Note: Table 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.

34 MASTERCARD MARCH 31, 2025 FORM 10-Q

PART I

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

Drivers of Change

The following table summarizes the drivers of change in operating expenses:


	Three Months Ended March 31, 2025
	Increase/(Decrease)
	Operational	Acquisitions	Currency impact 1, 2	Special Items 2	Total
General and administrative	9%	3%	(2)%	**	10%
Advertising and marketing	32%	2%	(2)%	**	32%
Depreciation and amortization	14%	14%	(1)%	**	27%
Provision for litigation	**	**	**	19%	19%
Total operating expenses	10%	4%	(2)%	—%	13%

Note: Table may not sum due to rounding.

** Not applicable.

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, 2025, general and administrative expenses increased 10%, or 12% on a currency-neutral basis, versus the comparable period in 2024, which included a 3 percentage point increase from Acquisitions. The remaining increase was primarily due to higher personnel costs to support the continued investment in our strategic initiatives across payments and value-added services and solutions.

The components of general and administrative expenses were as follows:


	Three Months Ended March 31,					Increase/(Decrease)
		2025			2024
			($ in millions)
Personnel			$	1,688		$	1,514	11%
Professional fees			113			116		(2)%
Data processing and telecommunications			292			263		11%
Foreign exchange activity 1			1			28		**
Other			429			365		18%
Total general and administrative expenses			$	2,523		$	2,286	10%

** Not meaningful.

1Foreign 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 16 (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, 2025, advertising and marketing expenses increased 32%, or 34% on a currency-neutral basis, versus the comparable period in 2024, which included a 2 percentage point increase from Acquisitions. The remaining increase was primarily due to an increase in spending on marketing campaigns and sponsorships.

Depreciation and Amortization

For the three months ended March 31, 2025, depreciation and amortization expenses increased 27%, or 28% on a currency-neutral basis, versus the comparable period in 2024, which included a 14 percentage point increase from Acquisitions. The remaining increase was primarily due to increased software capitalization driven by the continued growth of our business.

Provision for Litigation

For the three months ended March 31, 2025, we recorded charges of $151 million, primarily 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 “Non-GAAP Financial Information” in this section and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion.

MASTERCARD MARCH 31, 2025 FORM 10-Q 35

PART I

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

Other Income (Expense)

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


	Three Months Ended March 31,							Favorable/ (Unfavorable)
		2025			2024
			(in millions)
Investment income			$	88		$	95		$	(7)
Gains (losses) on equity investments, net			(29)			6			(35)
Interest expense			(182)			(150)			(32)
Other income (expense), net			5			3			2
Total other income (expense)			(118)			(46)			(72)
(Gains) losses on equity investments 1			29			(6)			35


Adjusted total other income (expense) 1			$	(89)		$	(52)		$	(37)

Note: Table 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.

Income Taxes

The effective income tax rates for the three months ended March 31, 2025 and 2024 were 18.6% and 15.4%, respectively. The adjusted effective income tax rates for the three months ended March 31, 2025 and 2024 were 19.1% and 15.9%, respectively. Both the as-reported and as-adjusted effective income tax rates for the three months ended March 31, 2025 and 2024 were higher versus the comparable period in 2024, primarily due to the 15% global minimum tax (“Pillar 2 Rules”) that took effect in 2025 in Singapore and various other jurisdictions. The Pillar 2 Rules primarily offset the reduction to our effective income tax rate resulting from our incentive grant received from the Singapore Ministry of Finance.

Liquidity and Capital Resources

We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, credit and settlement exposure, 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, 2025		December 31, 2024
	(in billions)
Cash, cash equivalents and investments 1	$	7.9	$	8.8
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 and restricted security deposits held for customers at March 31, 2025 and December 31, 2024 of $2.4 billion.

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.

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 indicative 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 and market conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 15 (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 2024 Form 10-K and Note 14 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report.

36 MASTERCARD MARCH 31, 2025 FORM 10-Q

PART I

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

Cash Flows

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


	Three Months Ended March 31,
	2025		2024
	(in millions)
Net cash provided by operating activities	$	2,380	$	1,672
Net cash used in investing activities	$	(340)	$	(174)
Net cash used in financing activities	$	(2,987)	$	(2,681)

Net cash provided by operating activities increased $708 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to higher net income after adjusting for non-cash items as well as less cash paid for litigation settlements, partially offset by higher employee incentives paid.

Net cash used in investing activities increased $166 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to lower proceeds from maturities of investment securities, partially offset by lower purchases of investment securities.

Net cash used in financing activities increased $306 million for the three months ended March 31, 2025, versus the comparable period in 2024, primarily due to the repayment of debt and higher cash paid for repurchases of our Class A common stock and dividends, partially offset by cash proceeds received from our February 2025 debt issuance.

Debt and Credit Availability

In February 2025, we issued $300 million principal amount of Floating Rate Notes due March 2028, $450 million principal amount of 4.550% notes due March 2028 and $500 million principal amount of 4.950% notes due March 2032 (collectively the “2025 USD Notes”). The net proceeds from the issuance of the 2025 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.242 billion.

In March 2025, $750 million of principal related to the 2019 USD Notes matured and was paid. Our total debt outstanding at March 31, 2025 and December 31, 2024 was $18.8 billion and $18.2 billion, respectively, with the earliest maturity of $750 million of principal occurring in November 2026.

As of March 31, 2025, 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”) that expires in November 2029.

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, 2025 and December 31, 2024.

See Note 9 (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 2024 Form 10-K 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.

Aggregate payments for quarterly dividends for the three months ended March 31, 2025 totaled $694 million.

On December 17, 2024, our Board of Directors declared a quarterly cash dividend of $0.76 per share paid on February 7, 2025 to holders of record as of January 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $694 million.

On February 10, 2025, our Board of Directors declared a quarterly cash dividend of $0.76 per share payable on May 9, 2025 to holders of record as of April 9, 2025 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is $691 million.

MASTERCARD MARCH 31, 2025 FORM 10-Q 37

PART I

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

Repurchased shares of our common stock are considered treasury stock. In December 2024 and 2023, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $12.0 billion and $11.0 billion, respectively. The program approved in 2024 became effective in April 2025 after the completion of the program approved in 2023. 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, 2025, unless otherwise noted:


	(in millions, except per share data)
Remaining authorization at December 31, 2024	$	15,188
Dollar-value of shares repurchased during the three months ended March 31, 2025	$	2,549
Remaining authorization at March 31, 2025	$	12,639
Shares repurchased during the three months ended March 31, 2025	4.7
Average price paid per share during the three months ended March 31, 2025	$	541.38
Dollar-value of shares repurchased April 1, 2025 through April 28, 2025	$	884

Note: Table may not sum due to rounding.

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.

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