MA - Earnings call transcript Q1 2019 | Mastercard Incorporated

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Operator

Good morning. My name is Tasha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Q1 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator instructions]. you. Thank to of over ahead. Investor like Warren your the Head Kneeshaw, Relations, turn now to call host, I’d Please go

Warren Kneeshaw

you, and quarter everyone. us morning, Banga, our me Tasha. you Chief Ajay our Thank joining Executive Chief and for Officer. Officer today And are for Mehra, earnings XXXX thank first President call. Sachin With our Good Financial

only get Q&A Sachin, from operator will is to Ajay session. opportunity the for and the that will into comments queue queue Following your the questions. the open then It announce for

and can slide in earnings You of our release, access Relations Investor that supplemental our call performance this data site, mastercard.com. the accompany Web section deck the

release SEC with the was earlier the furnished morning. Additionally, this

a But and otherwise note rates of equivalents. comments for items unless that release special the non-GAAP currency-neutral GAAP growth basis deck Our our measures be regarding today include noted. exclude Please the the financial transactions have switched and you slide results and their switching reconciliations volume, underlying These provided switched information provide that volume to periods. on we being normalize understand to better these current between days of adjusted adjustments the is been effects growth made prior for rates quarters. different in so and metrics. This cross the of operating can been have ordered will

We Our comments rates. GDP of not do on growth the call adjusted normalize today rates. will basis be on these the growth

forward-looking A that, and Ajay recent this earnings in will our President replay will With now release, Banga. posted days. the our could the website affect for call Chief Finally, of performance Mastercard's release are end would as be from performance. to I Executive our over will our SEC regarding the set about statements factors future earnings to materially I forward-looking our at future remind differ Information could on of turn forth in call detail summarized that performance, these include more like XX call that everyone today's in and statements. filings. Actual Officer,

Ajay Banga

morning you, Warren good Thank and everybody.

up We’re XX%, on off to excluding revenues the versus XX% a year; as special said, basis, items. up year-ago, EPS neutral and currency a solid start this Warren

I operation we in of continuing focus recent acquisition growth at strong long regions. each the continued some are for across our with think time, probably the our the you And and to of reflect these and same term business results our our related announcements. product noticed invest as

me Let with as the start usual. macroeconomic environment

we grew ex-auto, year. from view continue the the monitoring factors And with confidence, some that healthy growth said You sales growth as well and ago long medium to and may that. expected according from expected, trade term. economic unemployment, shift retail as Low of versus growth to year timing reflects changed consumer over moderation spending to negotiations of that in some could our ex-gas XXXX that solid items quarter a strong. said, has longer in remains not impact we're U.S. the Easter X.X% That recall going this our cost estimates. as as political other and economic moderation, that overall number still last we affect some a

Europe, Brexit, and we uncertainty what Ireland in the UK, Netherlands. to mixed see despite Now according like places Consumer healthy confidence SpendingPulse. the moderate the with declines remains see again we surrounding remains retail in continue But to spending growth. UK in

been uncertainty. impacted trade has Pacific by Asia policy

generally by strategy. monetary the Middle in of Latin Mexico. softness policies as seen said seen some continues but Egypt, In strength America, region, healthy markets transaction having Similarly, our mixed and with as Chile growth across Africa drive is markets. the to the economy. monitor tempered the our and of against diversifying and in some double in building by Brazil oil positive conditions. business. What are outlook we've and market that's is such Meanwhile, you volume modest underpinned in labor Chinese by region customer new base areas overall our and the do growth we East our to to signs that, favorable going weakness continue for they're most GDP our stable But executing in digit business We producing countries and examples give growing I'm co-products, successfully of a how healthy our in growth we've few

in not one our simple with credit, me start a safe with co-products, ways as we and the with in past. just to prepaid make card to where physical The progress growing debit, factor card. and products. I form is And me Let believe heard it's say providing continue good pay people commercial you've

of month, We that the also leverages is card MasterCard's our can tokenization card. with this They Apple fraud delivering card APIs. the extensive this announced physical Goldman summer. Sachs, Apple is products the their access product for features, are tool a charge MasterCard seamlessly equally the experience immediately and rewards get user our in version that's our the Customers credit back iPhone frictionless. companion Apple focused With and digital This Earlier designed attractive digitally. wallet. available on and can a technology security

services partnership again, T-Mobile's to Money, portfolios funds In MasterCard market to of Also, of T-Mobile consumer make progress. favored share open checking in to markets debit debit commercial and the pleased of announce the the and addition, can can new consumers outside manage be collaborating smartphones, our online to the on their customer. with card. the Santander U.S., for which Goldman's mobile-first further vendor account, credit, fast growing significant Coming we We're using pleased products look business to over an markers of app expand forward bring they and a we Brazil and continue our to withdraw with all to expansion to new with time.

portfolios. France, efforts market on we in We with our services, a for and mobile increase controls in than credit we accompanied which cards alerts, more And full card Paribas further also security be advancing as services term million features. agreement strategic X their partner well Canada, with our extended us long-term spending Bank, is in clipping Europe identity share that including check the key as Rogers deal a long suite will are in expanding by provide a BNP to of

examples capabilities. customers MasterCard have addition, loop who value of with some closed broader loop In continue because in good open digital cards, systems we to acceptance see of in

cards X private acceptance up One is of in these to open contactless million international system their to which card an example to Brazil, is credit cards co-branded MasterCard converting holders.

enabling agencies cross-border to to that customers side, And in has and of China. greater security And China. aggregators hotels, program and card make online pleased commercial to border Citibank's airlines BXB our provide we're the the Chinese hotel exclusive travel vein virtual to cross payments help for focus in there its transparency payments. been network Now be same outside initial

very a on money update. As give tools. strong our acquire and work transfer of forward our By look robust network. cross-border we with while currently through just exchange you with BXB with you Send. compliance technology know, solutions Send, enhancing account-to-account capabilities, foreign agreement and an We to their the PXP And we a Transfast, to Transfast global MasterCard capabilities MasterCard quick way, some t and their flexible in support have announced complementing reach, network

to healthy we base. in mobile of the to to powered seven of growth PXP States, the and continue are number a programs continuing cases. grow currently and we're United different see our major We working develop Send’s use customer

focus it latest On the our is Send wallets and their leveraging and transfers. there its initial to commercial And of in to business faster the payments bank account is will there cost additional implement for are are from Bank Montreal clients, announce mobile for transparent and the plans cross-border Send number to front, cards internationally. a Canadian and banking effective cross-border of customers. provide that issuers and more payments

customer So the code, base from doing strategy, some now our on work the in of footprint diversifying turning of to and these second geographies. strengthening the we're growing new pillar our our

are relationships of their to merchants, drive and We other number digital help forward. with processors, businesses partners building players a

highlight program I'm Airlines Target is Falabella, with specific a U.S., retailer to few with Japan including the with and the area, the a examples So Chile. on in new our renewal in going largest co-brand which

to At merchants cardholder chargeback can the key to from dispute intelligence focus. With forward a to services shift of brands, for payments in more time as with with improve ACH we card the already improve safer from include experiences, result, International's to that’s We fraudulent in and as preferred reduced base X,XXX like We're lenders, platform Jumia contactless our is they financing particularly including partnerships to these our avoid solutions. value sent these Home scale as Middle payment a a connects Whenever data in network. Vyze, local International, And card and an e-commerce safety including markets. accelerate sales. that the relationship East added or deliver installments platform Africa. presence, acceptance partner largest wide security try acquisition to transaction services network. refund help a so taking fraud which help Samsung analytics. Network spanning decrease such into stop and Safety Jumia, is also authentication a consumers, time, and processing, also to Brazil, issuers And global card and the remain user to no look so sustained costs. will with few online this to and issuers will over consumers lenders disputed opens in credit to will rates, make the multiple countries and complements Depot, local access and to continuing think ways and their payment card electronic Africa time them, be merchants, and merchants the where model to we customers' in all security our management recently a XX commercial through with penetration. does acquired is We is Mexico. our of seamless find existing MasterCard's third products they to also cash MasterCard top a we investments of e-commerce approval and way And Microsoft, information customers why a our benefit processor abandonment multiple same this there tokenization, across methods be financing for to Google the And platform X,XXX and we providing and And sharing electronic with is ways XX region, preeminent core near That's and check merchants efforts real customers changing Ethoca, gateway. areas increase participating, and and our merchant enable all strategy to we're a of program also benefit for for with issuance and delivery with Network use and payments well and tools the in our countries. risk. and new customer America prepaid these on you. merchants agreement options, We that process. our than ultimately, Latin in our clear, particular and looking programs and for of is of and differentiates offerings, areas announced building between platform convenient Mercadolibre, in-store an do by more channels. Argentina range business. for identified, partners issuers a their area leverages payment Vyze's the pillar this, our new as And What the e-commerce the doing marketplace flows, why over the the the finally, their of in Walmart examples Ethoca's lenders just both and up increase entered new not e-commerce while look in and and therefore,

are platform connecting the We retailers here lenders. merely multiple and provider

quarter relationship will wallets processing consolidated payments these them gateways capabilities single moving to a our accept number are real flows reached services, with view Citibank be support using will merchants the time for to our on significant Citibank beyond with have connection Now a who it expanding to with for capture gateway we card-rails, a simpler and to payments traditional to institutional we And VocaLink acquirers enablement payment to our of clients. make And assets. and doing new this provide digital respect that large global a commerce their scale. digital our milestones payments our have existing for numerous on account-to-account in pleased work

called anti-money BancNet, must have have in laundering recently in to payment institution tools chosen you been clearing Philippines. providing heard the And switch operating the infrastructure which an the to this enhance First, real-time that system and Philippines. national InstaPay includes we is for retail the the

leading which We payments edge streamlines will Pacific, and ISO in enhanced messaging, provides Asia using data. do communications a transaction XXX hub regional this through

wins Monetary we providing upgrade we These Second, to our have are in software Authority, the similar United payment SAMA, to time to and what capabilities Singapore. we in about globe. Peru build number Arabian year Thailand similar real RFPs remain the the Saudi our last licensing a already upon And announcement partnership place made system, of their Peruvian States, and around to operate we late infrastructure. modernize electronic in the payments the involved in

So help to you for Middle adding while Asia, and in citizens their America, real progress in banks real payments our see, footprint can Latin as in we're their and making time East value the central economies. geographic to expanding governments and

ensuring a good call, in to hands Martina it's pleasure upon and probably with Sachin, both years her prepared I'd successor. to this I Officer. who's growth a Sachin? for on before to somewhere, introduce Chief very but retirement beach And So MasterCard's to my Mehra, on we for over the our Financial now of were who's well turn like chosen not her call left also thank dedication Sachin

Sachin Mehra

everyone. and Ajay, Thanks morning, good

forward have I First, you you very And not of to ahead. to I about of yet. look excited opportunity those each meeting met the am say I working would that and with I like to

certain growth. a are share. XX%, XX% the basis income year-over-year and Page of and revenue solid a was and purchases had per grew services slightly by income net our share grew reflecting related momentum X, to Operating on contributing driven by Net solid $X.XX ahead XX%, Turning few with core due to year. our we strong matters. excluding legal neutral start highlights expectations up our XX% $X.XX performance. was repurchases was special a up EPS operating items to to There and currency in a tax

through the worth repurchase stock XX, April we quarter, billion million During XXXX. $X.X and an of additional $XXX

Page X, can see now operational the turn So metrics first to let's the for where you quarter.

much volume last as grew Worldwide as from with ppt said, number ppt of processing rates. as down quarter and X% a X approximately don't was expected. as we grew credit due quarter, impact factors of well or a Just due in reminder, gross year between U.S. differing and to as difficult this This the double driven X%, was the local a respectively. XX% down growth with basis, XX%, dollar growth Outside currency down was in growth Cross delay growth ppt at of days digit was This line XX% of from periods, other last several X% GDV the some X growth timing the debit volume X from as Easter border such and part expectations year. by growth Warren GDP on regions. of the quarter. volume comps. last on normalize GDV down and local currency sequentially to ago QX in primarily basis, U.S.,

globally. at Europe regions to transactions saw U.S. transactions X, switch all continue and growth led strong in healthy Page We across by switch the XX% growth show to Turning

and there card billion addition, cards X.X group branded are In was Maestro Globally, X%. issued. MasterCard

our and let's X primarily few strong transaction basis highlights of revenue noted. volume to offset was line well Now, driven neutral a rebates revenue in items, Page as net for XX% services currency on growth partially and a turn increase The again, by by unless as the described otherwise on incentives. growth, offerings,

difference domestic The partially by mainly grew at line differing pricing XX%. days and The the Transaction mix. offset two grew individual ppt processing transactions. while difference volume of by partly driven mix. worldwide mainly fees is quickly with Looking due switch XX%, is by pricing, border XX%, while in cross fees in Cross offset assessments the between, items, grew number line to processing XX% growth border grew the XX%. GDV grew XX%

and were driven revenues other services Finally, our growth solutions. in and XX%, data intelligence and up cyber by

on to expected special that on occur see lower can will operating This initiatives. continued total to you which and the than currency X, now timing related basis investments quarter. due the increased in the X%, mostly neutral primarily marketing expect we was initiatives, expenses and Page certain to strategic Moving items, a excluding second company's

what Europe credit Europe. four a increase April grew Slide X April Please QX. debit. driven all of the first the remember volumes of in the three-weeks grew that our seen sequential of ppt The Easter saw timing volume year-ago to as our where both tougher comps X, first in cross-border, global increase in in aided an outside In U.S. by ppt the timing are we've weeks increase ppt quarter. a a XX% a the saw transaction the was across due are April XX%, up expectations. are switch was this quarter. of XXst numbers not X Switch as discuss we by X in quarter, With switch volume the first Globally, Starting of part primarily strengths does with to let's through follows. U.S. year, This of we U.S., the ppt XX%, increase of ppt, of sequential Turning up consistent Easter, grew of to growth driven fell growth versus X and with primarily as and through respect comparisons with three volume, when that and QX. the XX%, year-over-year from our to saw XX%, drivers drivers sequential globally, well switch all what make by our we

the for year. growth we be cross-border mid-teens what revenue thoughts this in contemplated is expect volume to continue is the about growth For and year, for to our

in year currency I solid basis, changed. with has We and separately on will versus Turning economy and neutral on will acquisitions much growth, albeit our special a similar thoughts continued moment. excluding items first quarter Overall, some had our acquisitions, moderation a comment with is to not on I broadly the view a that describe overall for XXXX. the

continue In what quarter terms revenue, second expect growth net slightly in to with or better consistent growth than for we at we year low-teens of QX. the rate a with saw

expect revenue planning at We about ppt expenses, quarter. headwind high X of end rates grow a to ppt high and year. FX X the a operating we're for year still a to the to for for the On headwind digits single be

growth at and annual marketing ago year grow to of QX operating Year-over-year, rate a significant year both to a for FX tailwind QX. twice the increased OpEx gain We the of to a will hedging expenses expect approximately ppt the lapping spend. about due X be and

terms In than the QX. end of for higher of the bottom benefits XX% tax the we be to anticipated to the now saw in we due expect XX to to discrete tax rate, the closer range year

to acquisitions. impact Now, the moving on of

the building equity this As of certain closed of driven Ajay there we reminder item, on purchase year, acquisitions January or be We year. mentioned, primarily related and year announced are XXXX, impact in One accounting a starting either as throughout investments that by expected to estimate are and mark-to-market movements. close observable $X.XX based dilutive costs. for have the integration price will to further a as to progressively about the be $X.XX QX number required with

a equity market two on mentioned of become unpredictable be non-GAAP investments. public, following companies the and fair methodology has investments in nature and increase impact a results have our been exclude valuation since updating new we to markets. inception. of our result Accordingly, gains impact that in as on had QX, as equity therefore In Ajay losses value have starting public we volatility relatively made the We of our will will since April, minor this it standard

comparison understanding and performance long-term such these will our Please meaningful better excluding losses. our or and thoughts that exclude periods. items this a between results believe we operating are of performance provide a facilitate as of We our note more objectives for XXXX gains our

me from you market to of special the will investments equity our non-GAAP to to on turn impact impact foreign value exclude currency, and gains that, let We session. with losses will the continue our the which With call measures. visibility items Warren back fair provide the as of begin do we and to Q&A full we

Warren Kneeshaw

Sachin. the for Thanks, we're ready session. Tasha, question-and-answer

Operator

of Thank you from question Sakhrani comes KBW. the from [Operator first instructions]. line And Sanjay our

is open. line Your

Sanjay Sakhrani

to about, guess stick I some was you after which you just observations question related I Could you to a about there? guys. to TSB the stuff Thanks. talked of talk with had decision banks the on Visa committing

Ajay Banga

TSB credit it reason is and and and simple. staying on us currently Debit with Visa the in is very

have to on migration meeting And circumstances reputational And on think had And focused risk added to getting I have unnecessary on of on add focus they they their in their is about front. the debit their In that we'll were migration of they're do I them a the their well the issues they was them. is, platform. know, right. later. when their thought their as technology as bank book customer done that that's place you doing therefore, and that And thing decision. to of respect and would hold if and very responsibilities attention their As looking after right customer I to technology actually midst see the

Operator

Our Tien-Tsin next line Huang the from from Morgan. JP question comes of

open. is line Your

Tien-Tsin Huang

et maybe couple modernizing in just systems Peru, the and quick and Just on payment cetera. Philippines the ones

in then TSB period. then the Fintech an advantage the coming Do Sachin, these incentives and understand What's phase? become you position like an asked. Sanjay once MasterCard? the Just for of trying three intermediaries? maybe build build curious, Any deals just two, the to considerations to these beyond next happens Apple quarters? opportunity beyond some And as throughout line for run with or Just what you're power you're intermediary

Ajay Banga

the on So Philippines. Sachin Go give and that later will answer incentive I’ll you the answer ahead.

Sachin Mehra

continue much incentives our line with be expectations. our incentives, in to relates it to as question your on So very

of to deal as for other in than the our relates QX. changes that on it pick nature much expectations in But activity to up expect We not incentives.

Ajay Banga

the on platforms. Sachin And ACH

kind only or do having in Clearing United is in software form flow. software of the be complete infrastructure Philippines the and In could it. becomes to in ability we're operations the deal of a only the trying what that others, bit in and in what deal more the payment RSP also it it's is in is as a the it different Even to If So in depends it in House Singapore. included what the then Saudi, Peru, States, it intervene on or of constructed. kind

we're other it's build only which software, if what build also analytics trying which markets like do so the them on, laundering we data was can we stuff. charge to and to software we've Also, tools around built management software. kind So anti-money bring backs, disputes, in is to apps, provide that fraud these countries that have that value added to thinking related so but of tools off skilled

different. a software little idea. can the bit scheme of And basic more infrastructure. well. we UK run like where It'll a So a in rules we infrastructure, as some Whereas little then actually build be the products that's and ways it's top on that

from country wants these instant two deeply what open with. each So if more sometimes on as there's there What it the parts. their divergent RFPs there coming, next that they trying get up is RFP RFPs as been ACH was well payment for And the local And than was I to negotiation others years. are depends these slower today in say this usual past quarter these that the because were we're processes two, this but done. has are process in over and two slightly system

Operator

the Togut ISI. of David question from comes from Evercore next Our line

Your line is open.

David Togut

with how Fiserv First from I'm see growth big opportunities or Data work and curious BXB? a announced, recently then on merger addressing both out you MasterCard in can situations both do FIS in and And mergers BXB. called two just opportunities. in it the you companies growth impact then as question, Worldpay, related them What

Ajay Banga

our personally. very including of closely markets. in change of the credit more a to and We've especially part with looked them, with ecosystem really doesn't determine a I ecosystem to distribute we've unions of working fully them in talked Remember teams of the than all folks. issue to can imagine, mostly our where also products how you to services. play while States, and fragmented all The collaborate And work expect and processes partner they other M&A payments these as have to best of banks which important they got them win in getting continue to to done. has for me markets number many sizes. We've And make a United

both that new entities do so need lots finish that's their involved the entities together mergers to with also first feel separate do down. partnerships preference. with they opportunity what a you can They're independent game could consumer early got to that of as I And imagine. continue, side like really And to any entity. well, then busy the just the the we we BXB came, in to transactions, very can in but payment their be them with before of whole clear. And else and there's cement can own that. get merged deeply the because Meanwhile, side, The merged will it's done both you but too get have

Operator

Bob of next question Our William line comes Napoli from Blair. the from

open. line is Your

Bob Napoli

Ajay, MasterCard I just a pipeline? to the M&A. the potential strategy, update very additional get M&A clarity hoping, you're up very on on that maybe has on areas the active the more strategy is looking little was healthy front. and build And And the through a there M&A been pipeline, still to an

Ajay Banga

in and on little this to won't that happy M&A him do that shoes. by follow Martina's the large just baptism to a we in fire delivered needs be thing somewhat make keep to he extra of first of him a realize him, to think deals work. is couple It bit quarter, I fact easy Sachin's this an

much deal. deeper question I a your that. So not she's is hope here's listening But to the one,

decade the cross think next spaces We the give BXB this. information the and systems; border growth data areas identity I've payments. two; that years We're talking or and we hence security; not for in inorganic and to us hence possible use hence changed ways strategy grow trying and safety digital have to that to our both organic hence been analytics revenue about systems;

available intertwined that's are in spaces pretty build these in the grow, the the rails. neatly of of trying third built to to in now the the not strategy, on. the build XX% and and objective. these be and across block out the deliver placed of those, capabilities time, XX%, going revenue, the capability space. which the less new that's all new rails in that these of usage in AI, services what's more so building are just also these of results that. to in of All cards BXB present Most Nothing's our organically also or I'm of on build. against inorganically our VocaLink but we've how diversify, same that's is changed hence services, And At going non-card payment, acquisitions And all to are and acquisition idea

find participants loyalty us few active and and rewards, these the those will spaces spaces over in in next periods You well. as

know, Sachin pipeline, a active you to -- have relatively We his that tell could XX doing such don’t a deals. Sachin team I and has year XX

Sachin Mehra

one way starts build, to diligence. thereon is Ajay deals between broader with scope buy we not reiterate list strategy be to of due and of but partner, the only that. strategy And and would as we the the then what said, figure it much piece correct, component be one. out achieve That'll best with M&A XX all out such what's the from big that would than the The we to deals could actually XX actively be just

Ajay Banga

But a example the partnering a for this commercial actually an as of these of them case We we deal in the having recently. numbers on of an with has been the a up these deals into then of as people from of Transfast past us, acquisition. theirs, M&A -- Some us end well a -- time number changes being transactions Brighterion, partner the it with a possibility up that like and constructive commercial of relationship done. over have ended we

we're So well a use to of stakes. minority these as as trying outside mix acquisitions,

the of a series we fintechs which exposed thinking business as early believe company investments only all well the the that's ones the and of its start of right be have have in we As new case ups layer new making of don't XXX% of exciting, a full and as always to way a to ideas. a

thinking, product And that not external get some to a strength maybe distribution quality of good get so may this people, and external or external is have. quality we some way

compliance software of Ethoca, whom but tied distribution up for and Transfast those in licenses products issuers has but X,XXX a number to in both through has countries. FX with. X,XXX, distribution capabilities, also of we're operate So a also and number capabilities X,XXX example merchants countries

look So come out in will a make we is one pipeline do be good things the XX ones happen we at just if can of of transactions XX that different but the transaction, robust. this It or And through. extra year how in that year. a the a came two together couple or we quarter

Operator

of comes from Tom the Mizuho. line McCrohan next Our question from

is open. line Your

Tom McCrohan

remind first seasonality. I us Can occurs in you the quarter? of think how much volume cross there’s border some your

want Just to confirm that. Thanks.

Sachin Mehra

just I much border I to heard question sure cross our Tom, want of How make volume? that correctly.

Tom McCrohan

the occurs in first Yes, quarter.

weaker I think you of I -- one think that’s quarters. the

seasonality. the want to Just confirm

Sachin Mehra

is little in you quarters pretty part tell remaining bit seasonality but the most it's in stable. standpoint of used the it for cross on more the what I'd to a be a volume typically border, from nature Yes,

Operator

next comes from the Our question from Ramsey El-Assal Barclays. of line

is Your line open.

Ramsey El-Assal

I had a question on some items. regulatory two part

later that constitute having also rules two whether will pressure? had on can year. incremental different operating to the capabilities type leverage, Europe about If anything coming year, those of you type build think data to any the comment like appreciate it. broader out volumes you or be national localization redundant out a First customer in is pressure Overtime things I'd constitutes more requirements European processing any and jurisdictions. secure And on whether on in type of this second then later on authentication is a question any that in -- of headwind

Ajay Banga

an imagine, So the authentication the secure like as opportunity to PSDX system, entire as is I safe for need we've looking capabilities, you to kept the the merchants will these company ours will it, can and all ensure has that need will it, PSCs the the and entire the a to connect properly secure. payments that toolset there, entering into as been rules, entrant the for well secure PSDs customer ISDs need both that new this and at the payment us, merchants new in system players authentication is into banks provide and European think ecosystem to banks the AISPs system. skills actually and implications

payments as actually for do And So thing not right talked for to about competitively to is of the as the an our This for we've the advantaged. that’s opportunity building trying PSDX value too. part be see about deliver of new strategy. trying I'm other meetings, one plans services. This this sure to ecosystem. networks in I is us out added about past are how what we're

soil. second that's what they The challenge say second case. India data earnings to explain question. in And India is the real with is of in that many like that interesting their the a just in data part not world putting the ramifications. on data across the of India, so, few in transactions, types the of interesting much combined data doing when an end with And big with type, honest as not in to bigger the compared deal. storing but is that The and India higher power you a more predictive over countries, to servers cases, is data got on not came may base deal some as large engaged which And other by with before for be up mostly a up countries us of expense, servers our part, couple do many question that it's benefit. I'd generates volumes that tend the with me that around actually The localization our loses In more question And of of wealth It's even predictive types It expense more some localization your with country, to first. putting more spot that many well. localization let a calls many realized consumers, really customers. has more up a you the localization, an types of fact data comes its not of more from. that power data policy be

data may The for If is they you say more not the moment doing on or tell in data, and it better data you and countries old data, security balkanize they than widely of variety ubiquitous shared. are predictive to data actual reasons, for completely will that they of that AI, fact fraud more that more capabilities clear the learning, laundering predicting the you'll front the which me analysts, good widespread better the anybody the that and fashioned machine data, on that get, in that the anti-money find more you is to gives them space power. security talk the or

to country rules are we we Now, will comply but we because are. will chooses, what we there for we've and them whatever educate rules decide because And in job job do a try And that. compliant right got the what to we and our India. to what's think their finally do it's comply operate to what after But to we then them. that's elsewhere

I that's in it. gave. way we've just that done to thinking back logic turn we've what comply that In So from India, countries, we other managed this

Operator

Keane from from the Deutsche question Bryan line of comes next Our Bank.

Your open. line is

Bryan Keane

the expenses QX. about wanted in Just to higher ask expected

acquisitions. is that is maybe that from Sounds marketing be spend, going to some like most of of

versus going, anything marketing on April et Is from Just the especially trying gains, just versus cetera? the easier strong in where there data side, And that are through expenses higher on Thanks. is how Easter the think better understand to particular? way XXst. of a about maybe secondly, so then share comps economy, far to much

Sachin Mehra

by is me sizable our which expenses comment driven, gain. in hedging mentioned prepared let the that had my benefit expecting that the as in differential the QX double the very here, out rate we relative make last FX fully fact year being is to remarks, growth I year our in And QX. operating of a sure growth rate thoughts Bryan, on I'm we're clarifying OpEx

if So marketing as rather or think about the I expenses you take the for into operating expenses consideration QX. that you think

we'll marketing in QX. to that, In spend addition we increase also expect

the on. when's part As goes run on. is I expenses than marketing our relation business, tell data given And your got impacted there's I especially And us which sponsorship unusual as days that that the you expected. presenting for in just and consideration flag. is going lower optimal just make nothing to of fact mentioned in April put by that to not look, it just quarter. of mean, into process, we're that marketing evaluations are will our to to which is weeks so came XX, second you question This we've in I the would assets to time XX take think this to the and course worth make it initiatives, XX what we part data, of on data, On April three QX, going relates And other as part timing out as need of of Easter. I you we various

our going as you tell that plays April seeing So growth solid of trends part as timing see look we we've of enlarge But and continue a in we're well. what big I in that QX will by terms the Easter forward to XX for mentioned metrics.

Operator

Our next Research. the Autonomous question comes Craig from of Moore from line

open. is line Your

Craig Moore

anywhere fee income European world? the that yesterday Two cross-border, on will in was uptick interregional competition settlement the secondly with network used an seemingly the around that cards local are any questions. that on And Commission Europe. effect have have seen you One, issuing in banks being the obviously, of announced

-- So you thinking on are Citi if Thanks. an that offering rewards in the see can you're net to a on foresee for cross-border you those fee impact cards going you reduction guys. significant business those income? Do banks

Ajay Banga

answer Murphy, question. GC sitting was dying First, the call. could you you the earnings we it the -- second in But one. discussed Commission, maybe Tim? fourth have Tim That I European settlement my He's quarter know, the to in QX, here. it with as

TimMurphy

December Yes, process we a just update. the so It's briefed and in shared really year, December. what of we change last in investors no following

So that's new. December, you've seen since nothing

Ajay Banga

impacts Australians, banks that travelling the for not soon. all everybody in whether different banks but if into and this that perhaps about peoples rewards European it Chinese, fact have A -- big would Union offer, part anybody, else just territory and and and Americans Citi

small a on the So their generate. of proportion that my most comes therefore, total small the also other out fact it proportion interchange total interchange of revenue, And relatively assessment of P&L. be not these there It's revolving not banks the relatively of will is an that and is revenue just which but impact it's that there fees. big a

rates the e-commerce XX and not card present to present, whereas transactions, basis remember a for are XXX the is Now, debit physical XXX points points. that of rate credit for reduced XX basis a and rate for apply card the

am it you about And not marketing it's for so to, in I It's not relevant. their directly this think, that giving into is relevant, that's I the banking It’s form. enough the commentary it's change factored that institutions. impact practices just not

China's a and had one EU since had had Argentina them; Canada's had network before, the to has Columbia seen a here. in local year. well across any had uptick and networks Mexico's over in downtick used strong haven't this I last a six the or strong forms since mean, I Brazil Korea's every is networks an long the years the relevant example time; Local country way months over local to world been mean, them. XX-XX I have in about years. them; question it the in different them; not EU There's Your have ago;

it the you was look transactions at today through pass we rails it's back total, of our XX actually our years of joined, percent. transactions. of own if XX% something the I our that fact, In number when XX

taken XX even activity other the some being by had local our revenue transaction. networks majority transactions from of for were ways actual years that raise processing transaction. ago, around form the in We of that So the to

So the processing rails often. through local going was very

of has inroads the in number years over a as the actually Now, we’ve number reduced made marketplaces.

Operator

of comes line with next question MoffettNathanson. Our from Ellis Lisa the

is open. Your line

Lisa Ellis

point there? to news around Ajay, first related venture Nets joint me, of is announcement And of reports with sale. on comment extension at from Union and then doing about China the one specifically Couple the credit the Vyze and second you acquisition potential can transactionly enabling

and this perspective, exactly about thinking over you we MasterCard as like differentiation and it? look going with MasterCard's almost or next how you. rail comment it there? vision What you from out should can another a look role Is capability like be this years? out Just to that's the building out, what's few Thank

Ajay Banga

that asked I'm does. doesn't in locally. really give newspaper So comments newspaper for me wrote on This who pressures. what one wish to pressure, somebody based going just there a not article. mean on comment I up give they've nobody I me the It's China, was but what articles blood I picked blood

right much to are company this sensible domestic the the get I place across to We Chinese market. very tell and enter to -- every And appropriate committed I'm an you. will way and requisite to possible getting the making finding effort something the real out licenses got I'm to we've to We have as be soon this movie anything substantial yet. or because real I tell that. able to And you, don't or do me. just substantial played we hasn't think today, will, trust

we that play approval, domestically terms get So operating before start a of after after even out ground it some clearances the of you on actually national say plays process of, can And even take form an some in out. in there's to China. security it let's time will year-long do

on really because to question that businesses sales back how know long to for you, into is going like idea a interesting I going a this Citibank, where something in of well like interesting spread aspect. for middle different business time answer what everywhere, point yet this places the the it's long lending in me in first. Installment at consumer a a couple you around know Installment everyone have ways it's finance been But ways loan, That's don't a of U.S., it be the me plan or didn’t to it's But point instance sale is see away Australia, an point the by It's Brazil, the those where here, of merchants, a into in how the used it's because consumer there built yet years don't desires, or space. at just class for are opt it upper more that's seems at the had interesting. U.S., big we of been or was some by of launched has allowing Installment could the that's to you mostly. In consumer. used a for spreading the it can being interested players is and of clearly yet this. installment as really this kind will I a On be don't could doing on In into banks, spread on in in locally transaction the I to of time. So be. for lending one was yet automatic it installment happening the years sale card payment a -- spread installment how I them to tell class go, how where two But lending. other are the there. didn't at finance know it Vyze, the consumer. It to years through how well bank sale. Vyze least couple in lending the we could players, know don't catch with who ways. know of are before to coming fintechs, world than big some the give that

bank, bank extending which a Finfech, doing. putting credit, institution, turn us the what we're the platform in this may Remember that's on certainly the that’s the loan our the not the in water really the merchant it's creating just the are foot to we're between We or pass acquisition. with and

the the tools with services overtime do we into also can could people the we things form help loyalty could I differentiated Remember data system. which a do connected value our lot to underwrite. of help and business. analytics I of things There'is of better that a with to add information form of could be think lot AI, and of rewards, consumers and lot in identify loan in our installment a

don't It's four, entered the we from see, it's services foot foot and got different where in water know five water the I go. will took So this our the my put not the other ago, yet interesting. in plunge. you'll full we I've way before years

Operator

the of from UBS. comes question Wasserstrom Eric next Our from line

is line open. Your

Eric Wasserstrom

help have of figure? Can think all attribute that wins the border? conversions. just cross remind about the us factors us of I support Could you Maestro strength year-over-year you Sachin. wondering, in you was maybe some to components all your some that I that be should portfolio that remind helping or

Sachin Mehra

on this on can as go there's we're Center after border just sharing what MasterCard earnings sure good of And the portfolios cross we across right have cross on incredibly drive for calls, previous truly how the to within company. Really, we focus company, volumes drivers. a all As the setup can has focused a said standpoint. starts border basically from tremendous identified that do company knowledge cross-border Excellence MasterCard it making in with one we where actually of

right So analytics border. we a business to services and the about the their cross of with where as identify sit are propensity those we to it, we what after. think back data are larger leverage capabilities And our there's portfolios go ones

possible. way the Thereafter, go best optimize we Frank after portfolios to in those

of in beyond we our and practice focusing our extent there. business, be might try advisors the identify portfolios we the managed to with But customers, on vertical. which focus them through better it's more and practice cross-border that, optimized services and about So underperforming, drive you more our our work actually right even consulting

contributes travel wholesale on has the that leader, finally in and border. has a to then where very would example, an much focused I for this And historically cross similar been and So MasterCard is basis. space, been area say actually

through that to where you of to and would areas would about right these after and of things really it's you that that's you what like what Again, the focus. But sort, it path back do to down and portfolios doing. theme If optimize banks basic we're think what have really actually and tackling. to those. we blocking go make be sometimes That's actually digital the going are how we're doing and go sounds come

Ajay Banga

other sure last I that stuff, the think it's do said some I not of so science. I'm networks time rocket that

challenging. utilization Maestro that yes haven't Maestro the completed every clearly a And in a So to will and it's better some because those us for while, location tailwind, convergence in is getting e-commerce that to. MasterCard utilization. continue And to it's allows migrations debit MasterCard in and done. give we'd execution the you because like it

Eric Wasserstrom

domestic international you if any on I hub? quarter And that I And think the Australia advancement? just update I launched BXB a it in or any update know its ago. can follow-up, Ajay, on

Ajay Banga

No, not really.

The it happening early In you're physical that's has the actually of in as to on. days. hub launch getting it. speak. The And is quarter's discussed we're whole Its last right. the space we fact, way one But one call, BXB we opportunities. is it's very focused

directory to built it. well. right Send. you We're along, things. one. and into the be know that track even as series world the doing As of doing enable Payments will help directory to out Transfast to the its talked trying commercial more. fully do It's what And is are getting a and way built clients it’s us I and Montreal and across and Bank business chug banking just why for it that's hopefully, enabling about with Sense Meanwhile, continues optimization of another engines

being So space. the series of tools are BXB there's a in that played

Operator

from from comes question next the Our of Fargo. Fandetti line Don Wells

open. is Your line

Don Fandetti

from digest market And record a then any Ajay, the seen a flip. some next part time opportunity? we've button wins. portfolio it's guys in e-commerce there? question. bank How track so you see been co-brand these pay feeling that two over MasterCard's the or guess any on good share separately two update the year on to it? the about you to the But any penetration had I common since had U.S., pretty industry Do major a expect are change while

Ajay Banga

are portfolios. we've bank helping two of to that One like. parts won about, still So, from the on or of us over Capital and big talked There've on grow of first, year we've and share. on And been Bank those America the some last parts the

Kroger happens. part In is bank growing co-brand, huge around we're moving like, way books and the swings we numbers been as switching over portfolios these fact, Cabela's of the huge any U.S., our right it I part is speak and as bank that in in but also look have don't the of to see every you that us. But around actively But I in moving transition if now. ones credit that's are at don't of that see every now. and transaction

pretty we issuers to the feedback the merchants feedback is you'll end in and It’s half six the through next in to SRC up and And find the EMVCo. the to we're to that's trying to to happening, looking we're think brands, have connection the digital XXXX. and U.S. get is we probably to easier get button second manage to convert getting We're a terminal we're trying launched progress, to as I about work of -- very industries get first the markets consumer, the from over the constructive On consumer, said experience for all of experience as idea, for to. XX it physical that going the a branding rolled months. and and I additional simpler us the SRC trying that adapt out, technology to to that and a for the then all one build one replicate of merchant what that to speak. physical issuer, and what could one remain optimistic do industry, for still for connect

Operator

of from comes from question line Research. Darrin the Wolfe next Our Peller

Your line is open.

Darrin Peller

You in I tough had FX. the clearly like looks growing currency. It basis had the -- XX% think around you constant points a quarter, quarter this compare XXX and you outperformed

about the you of perhaps this think more better whether at fourth outside early first first feel And when guys. the -- your to was the you quarter spot point, that versus initially then talked guidance quarter what from you're do it's you an or saw soft about in Thanks what drove I for first quarter cross-border, the you seeing? quarter So think anomaly last just surprise it trends the thought trends. we

Sachin Mehra

So question. Darren, I'll that take

relates it So I the performance a services as the exceeded were business. as relates in from standpoint, by slightly to expectations prepared first our it to mentioned we've in revenue quarter, what like strength my our remarks, driven our

quarter we FX FX standpoint, an also the lower first to in we relative thought. from slightly impact on what originally saw, So

are year couple it. what in might large a to want growth comps in factors, part XX% in you you’ve seeing a about On take the tough we're those And into cross-border, consideration a year. you're of last question were remember results thinking cross-border your which QX of of got QX rate as those of that other So for we cross-border. had this in terms to

saw You talked that remember our were what cross-border like the run we we last of fairly year. first be to actually about normal about we when We don't explicit performance rates last expect saying half year. in

our our So see as as normally think continue we that would you performing. is performing about to actually it, business, trending believe we and cross-border

swings of you're quarters, comparisons much too make between always between wouldn't year-over-year comps. I because So doing tough

Our we of We business our well. terms go portfolio. to grow see what in like continues

Just U.S. digits, pretty from cross-border cross-border seen bit up more continues historically. And volumes like little color single The the from much a continue helpful to to it's our standpoint a China nicely. a we've grow hold outbound standpoint. high business if also in

So carries we be. all-in-all, to have expected on business as

Warren Kneeshaw

any do comments? Thanks have Ajay, you final Sachin.

Ajay Banga

all questions. closing going to a you with I'm your few thank wrap And Gentlemen, thoughts. up for

are strategy year, the focus a operational continued had And solid potentially across against executing couple and milestones executional each reflecting we quarter. strong noteworthy growth focus our this of with we regions. of start this First, our and to

expanding And in products these payments existing progress being we Latin as will our America services Middle complement East. well. we in the one in decade secondly, next of or and think strategic real time partnerships the first the and acquisitions The growth position company capabilities in announced the two Asia, well and our in for

you So continued support for to joining I'd and with for today. like for your that, thank us the company

Operator

This concludes conference. today’s

You may now disconnect.

Mastercard (MA) 30 Apr 192019 Q1 Earnings call transcript