MasterCard Incorporated 3 rd Quar ter 2008 Financial Results Conference Call November 3, 2008 Exhibit 99.2 |
2 Business Update • Economic Overview • Business Overview • Recent Litigation Settlement |
3 Items for Consideration • Initial thoughts for 2009: – Net revenue growth will be lower than longer-term objective range – Operating expenses will be essentially flat over 2008 levels • Longer-term objectives remain in place – Objectives assume constant FX – Recent global economic and financial environments lead to ongoing evaluation |
4 $ 2.47 $ 322 548 41.0% 790 $ 1,338 3Q 2008 adjusted for special items* 2.31 314 353 32.6% 730 $ 1,083 3Q 2007 adjusted for special items* $ (1.49) $ (194) (279) (20.9%) 1,617 $ 1,338 3Q 2008 Actual 6.9 Diluted EPS 2.3 Net income (loss) 8.3 Total operating expenses 55.2 8.4 ppts Operating income (loss) Operating margin 23.6 Net revenue YOY adjusted Growth % 3rd Quarter Selected Financial Performance ($ in millions, except percentages and per share data) Note: Figures may not sum due to rounding *See Appendix A for a GAAP reconciliation of special items for the three months ended September 30, 2007 and 2008 $ $ |
5 MasterCard Branded Volume (GDV) 3rd Quarter 2008 Note: Figures may not sum due to rounding 4.7 4.7 268 United States 12.3 14.8 662 Worldwide 16.0 16.5 27 Canada 32.9 27.2 14 South Asia/Middle East/Africa 21.3 23.6 95 Asia Pacific 15.5 24.0 48 Latin America 16.8 23.0 209 Europe Local Currency U.S. Dollar GDV ($ billions) YOY Growth Rate % (SAMEA) |
6 3rd Quarter Revenue - Operations Fees ($ in millions) • Net operations fees increased 25.8%, or $204, to $996 • Gross operations fees increased 24.8%, or $218, to $1,097. Key drivers included: – Processed transactions growth of 13.0% – GDV growth of 14.8% * – Cross-border fee increases and 18.0% volume growth • Net operations fees as a % of gross improved slightly * On a U.S. dollar basis $996 $792 $0 $150 $300 $450 $600 $750 $900 $1,050 3Q07 3Q08 85% 88% 91% 94% 97% 100% Net Operations Fees Net Operations Fees as a % of Gross Operations Fees |
7 3rd Quarter Revenue - Assessments ($ in millions) • Net assessments increased 17.5%, or $51, to $342 • Gross assessments increased 15.0%, or $79, to $604 due to strong GDV growth of 14.8% * • Net assessments as a % of gross assessments improved slightly * On a U.S. dollar basis $291 $342 $0 $50 $100 $150 $200 $250 $300 $350 $400 3Q07 3Q08 20% 30% 40% 50% 60% 70% 80% Net Assessment Fees Net Assessment Fees as a % of Gross Assessment Fees |
8 3rd Quarter Operating Expenses ($ in Millions) *See Appendix A for a GAAP reconciliation of special items for the three months ended September 30, 2007 and 2008 Excluding special items * : • Total operating expenses increased 8.3%, or $60, to $790 • G&A increased 14.1%, or $61, to $494 primarily due to: – Higher personnel costs for new hires and contractors – Foreign currency losses – Litigation expenses • A&M increased 1.1%, or $3, to $267 primarily due to currency fluctuations $433 $494 $264 $267 $22 $29 $0 $100 $200 $300 $400 $500 3Q07 3Q08 General & Administrative Advertising & Marketing Depreciation & Amortization Full-year 2008 outlook: • G&A growth rate will approximate the 13.6% year-to-date growth • Total A&M spend will be lower than full-year 2007 |
9 Cash Flow Statement and Balance Sheet Highlights • Generated $388 million in cash flow from operations during the third quar ter; and $931 million during the nine months ended September 30, 2008 • Cash, cash equivalents and current available-for-sale securities of $2.8 billion at September 30, 2008 • Litigation settlement impacts • Reclassification from long-term to shor t-term debt and related assets |
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11 Appendix A: GAAP Reconciliation a Discover litigation settlement NM = Not meaningful Figures may not sum due to rounding ($ million) YOY Growth Actual Special Items As Adjusted Actual Special Items As Adjusted As Adjusted Revenues, net $ 1,338 $ - $ 1,338 $ 1,083 $ - $ 1,083 23.6% Operating Expenses General and administrative 494 - 494 433 - 433 14.1% Advertising and marketing 267 - 267 264 - 264 1.1% Litigation settlements 828 828 a - - - - - Charitable contributions to the MasterCard Foundation - - - 10 - 10 NM Depreciation and amortization 29 - 29 22 - 22 29.0% Total operating expenses 1,617 828 790 730 - 730 8.3% Operating income (loss) (279) 828 548 353 - 353 55.2% Operating Margin (20.9%) - 41.0% 32.6% - 32.6% 8.4 ppt. Other Income (Expense) Investment income, net 23 23 146 - 146 (84.5%) Interest expense (36) - (36) (16) - (16) 120.9% Other income, net (1) - (1) (1) (1) (18.7%) Total other income (expense) (14) - (14) 129 - 129 (111.2%) Income (loss) before income taxes (294) 828 534 482 - 482 10.7% Income tax expense (benefit) (100) 312 212 168 - 168 26.3% Net Income (Loss) $ (194) $ 516 $ 322 $ 314 $ - $314 2.3% Basic Net Income (Loss) per Share $ (1.49) $ 3.97 $ 2.48 $ 2.32 $ - $ 2.32 6.9% Diluted Net Income (Loss) per Share $ (1.49) $ 3.96 $ 2.47 $ 2.31 $ - $ 2.31 6.9% For the three months ended 9/30/08 For the three months ended 9/30/07 |