10-KPeriod: FY2019

Mastercard Inc Annual Report, Year Ended Dec 31, 2019

Filed February 14, 2020For Securities:MA

Summary

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% 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.

Financial Highlights

55 data points
Beta

Revenue

$16.88B

Net Income

$8.12B

48.1% Net Margin

EPS (Diluted)

$7.94

Total Assets

$29.24B

Cash & Equivalents

$6.99B

Free Cash Flow

$7.76B

Financial Statements
Beta
Revenue$16.88B
Operating Expenses$7.22B
Operating Income$9.66B
Interest Expense$224.00M
Net Income$8.12B
EPS (Basic)$7.98
EPS (Diluted)$7.94
Shares Outstanding (Basic)1.02B
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Mastercard 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.
  • 2Key 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.
  • 3Transaction 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.
  • 4The company returned $8.2 billion to stockholders in capital, comprising $1.3 billion in dividends and $6.5 billion in share repurchases.
  • 5Mastercard 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.
  • 6The company reported strong operational cash flow of $8.2 billion.
  • 7Mastercard'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.

Frequently Asked Questions

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.

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.

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.

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.