01—Abstract
Summary
Summary of the 10-K filed February 14, 2020. Cited figures are marked; the original filing is the authoritative source.
Mastercard Inc.'s 2019 Form 10-K highlights a strong financial year with significant growth in net revenue and net income.
The company reported a 13%a increase in GAAP net revenue and a 39% increase in GAAP net income, driven by robust growth in gross dollar volume (GDV), cross-border transactions, and a notable 23% increase in "other revenues," which includes their expanding cyber and intelligence solutions. This performance underscores Mastercard's continued success in driving the transition from cash to electronic payments and expanding its service offerings beyond core transaction processing. Looking ahead, Mastercard continues to focus on its "Grow, Diversify, Build" strategy.
The company is actively investing in new payment flows, digital enablement, and value-added services such as cyber and intelligence solutions. Despite facing a dynamic regulatory environment and competitive landscape, Mastercard demonstrated resilience, with significant investment in technology and acquisitions to enhance its capabilities. The company also returned substantial capital to shareholders through dividends and share repurchases, signaling confidence in its future financial health and strategic direction.
02—Key points
Key Highlights
- Mastercard reported a 13% year-over-year increase in GAAP net revenue to $16.9 billion and a 39% increase in GAAP net income to $8.1 billion for the fiscal year 2019.
- Key drivers of revenue growth included a 13% increase in Gross Dollar Volume (GDV) on a local currency basis and a 16% increase in cross-border volume on a local currency basis.
- Transaction processing revenue saw a 15% increase, and "Other Revenues" grew by 23% (24% on a currency-neutral basis), driven by cyber and intelligence solutions and data analytics services.
- The company returned $8.2 billion to stockholders in capital, comprising $1.3 billion in dividends and $6.5 billion in share repurchases.
- Mastercard is actively executing its "Grow, Diversify, Build" strategy, investing in new payment flows (B2B, P2P), digital payments, and value-added services, evidenced by strategic acquisitions throughout the year.
- The company reported strong operational cash flow of $8.2 billion.
- Mastercard's effective income tax rate decreased to 16.6% in 2019 from 18.7% in 2018, partly due to a favorable court ruling and a reduction in prior year tax provisions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 14, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $16.88B$14.95B | +12.9% |
| Operating Expenses | $7.22B$7.67B | −5.9% |
| Operating Income | $9.66B$7.28B | +32.7% |
| Interest Expense | $224.00M$186.00M | +20.4% |
| Net Income | $8.12B$5.86B | +38.6% |
| EPS (Basic) | $7.98$5.63 | +41.7% |
| EPS (Diluted) | $7.94$5.60 | +41.8% |
| Shares Outstanding (Basic) | 1.02B1.04B | −2.3% |
| Shares Outstanding (Diluted) | 1.02B1.05B | −2.4% |
05—Questions
Frequently Asked Questions
What were Mastercard's primary revenue drivers in 2019?
Mastercard's revenue growth in 2019 was primarily driven by an increase in transaction volumes, a rise in the dollar volume of activity on cards (both domestic and cross-border), and growth in "other revenues," which include value-added services like cyber and intelligence solutions, data analytics, and consulting.
How did Mastercard return capital to shareholders in 2019?
In 2019, Mastercard returned $8.2 billion to stockholders. This included $1.3 billion in dividends paid and $6.5 billion used for share repurchases under its authorized share repurchase programs.
What is Mastercard's strategy for future growth?
Mastercard's strategy is centered around 'Grow, Diversify, and Build.' This involves growing its core payments business, diversifying into new payment flows (such as business-to-business and person-to-person payments), expanding its digital payment capabilities, and building its suite of value-added services, including cyber security, data analytics, and consulting.
What are the key risks highlighted in the filing for Mastercard?
Key risks highlighted include increased government regulation in the payments industry (affecting interchange fees and operating rules), intense competition, technological changes, risks related to information security and data breaches, disruptions to services, challenges in managing stakeholder relationships (especially with large financial institutions), and potential adverse impacts from global economic and political events. Specific to the filing period, there were ongoing legal and regulatory proceedings concerning interchange fees and other business practices.
06—Continue