Mastercard Incorporated (MA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A session indicate a strong financial performance with optimistic guidance, particularly in digital payments and value-added services. Despite some uncertainties, such as FX volatility and geopolitical risks, the company shows resilience and strategic growth plans. Positive factors like record high revenue, a new partnership with Capital One, and healthy consumer spending support a positive sentiment. However, the lack of specific details in some areas slightly tempers the outlook, resulting in a 'Positive' sentiment rating.
Key Financial Performance
Net Revenue (Q4 2025) Net revenues were up 15% overall with value-added services and solutions net revenue up 22% versus a year ago on a non-GAAP currency-neutral basis. The growth was driven by continued growth in the payment network and value-added services, with acquisitions contributing 1 percentage point to this growth.
Operating Expenses (Q4 2025) Operating expenses increased 12%, including a 5 percentage point increase from acquisitions. The growth was primarily driven by increased spending to support various strategic initiatives, including investments in infrastructure, geographic expansion, and enhancing products and services. This was partially offset by the benefit of government grants.
Operating Income (Q4 2025) Operating income was up 17%, which includes a 1 percentage point headwind from acquisitions. The increase was driven by strong operating income growth and a positive discrete tax item.
Net Income and EPS (Q4 2025) Net income and EPS increased 17% and 20%, respectively, driven primarily by strong operating income growth and a positive discrete tax item. EPS was $4.76, which includes a $0.10 contribution from share repurchases.
Gross Dollar Volume (GDV) (Q4 2025) Worldwide GDV increased by 7% year-over-year. In the U.S., GDV increased by 4% with credit growth of 6% and debit growth of 2%. Outside of the U.S., volume increased 9% with credit growth of 9% and debit growth of 9%. The growth of the debit portfolio in the U.S. was impacted by the Capital One debit migration.
Cross-Border Volume (Q4 2025) Cross-border volume increased 14% globally for the quarter, reflecting continued growth in both travel and non-travel-related cross-border spending.
Switched Transactions (Q4 2025) Switched transactions grew 10% year-over-year in Q4. Contactless penetration stood at 77% of all in-person switched purchase transactions, up 5 percentage points since the same period last year.
Cards Issued (Q4 2025) Globally, there are 3.7 billion Mastercard and Maestro-branded cards issued, representing a 6% growth year-over-year.
Value-Added Services & Solutions Net Revenue (Full Year 2025) Value-added services and solutions net revenue increased 21% year-over-year on a currency-neutral basis, or 18% excluding acquisitions. The growth was broad-based across regions and product groups, driven by strong demand for digital and authentication, security solutions, consumer acquisition and engagement, and business and market insights.
Commercial Credit and Debit Volumes (Full Year 2025) Commercial credit and debit volumes represented 13% of total GDV and grew at 11% year-over-year on a local currency basis. The growth was driven by differentiated value propositions and broad-based partnerships.
Mastercard Move Transaction Growth (Q4 and Full Year 2025) Mastercard Move capability demonstrated consistently strong transaction growth, exceeding 35% versus a year ago. The growth was driven by expanded reach and endpoint options, including partnerships with Banco Ripley and Capital Bank.
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Operating Highlights
Value-added services and solutions: Net revenue increased by 22% year-over-year in Q4 2025, driven by strong demand across digital and authentication, security solutions, consumer acquisition, and engagement.
Agentic Commerce: Mastercard is enabling AI-powered agents to assist consumers in commerce journeys. The company launched Mastercard Agent Pay and is working with global issuers to expand this capability.
Digital asset and stablecoin support: Mastercard is expanding its settlement capabilities with stablecoins and digital assets, partnering with Ripple and others.
Mastercard Credit Intelligence: Launched to deliver faster credit assessments using proprietary data, benefiting individuals and banks.
Global issuing deals: Mastercard won hundreds of new issuing deals globally in 2025, including partnerships with Capital One, Yapi Kredi, Scotiabank, and others.
Co-brand partnerships: Secured deals with Apple Card, Walmart, Amazon, and Emirates Islamic, among others, to expand market presence.
Small business segment: Extended partnerships with Intesa Sanpaolo and L'Oreal to issue small business cards in Italy and Latin America.
Switched transactions: Increased by 10% year-over-year in Q4 2025, with 77% of in-person transactions being contactless.
Tokenization: Nearly 40% of all transactions are tokenized, improving approval rates and security.
Mastercard Move: Expanded reach to 17 billion endpoints, enabling cross-border services and partnerships with Banco Ripley and Capital Bank.
Strategic review and restructuring: Conducted a strategic review leading to a 4% reduction in full-time employees globally, reallocating resources to strategic priorities.
Geographic expansion: Invested in infrastructure and partnerships to enhance presence in key markets like South Africa, UAE, and Latin America.
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Risk or Challenges
Geopolitical and Macroeconomic Uncertainty: The company acknowledges ongoing geopolitical and macroeconomic uncertainty as a risk factor that could impact its operations and financial performance in 2026.
Strategic Restructuring: A strategic review of the business will result in reductions in some areas and roles, impacting approximately 4% of full-time employees globally. This restructuring could pose risks related to employee morale, operational disruptions, and execution of strategic priorities.
Capital One Debit Portfolio Migration: The migration of the Capital One debit portfolio has impacted debit growth in the U.S., which could affect overall revenue growth.
Cross-Border Volume Decline: Sequential declines in cross-border card-not-present volumes, particularly due to tougher comparisons and reduced crypto purchases, could impact revenue growth.
FX Volatility: Declines in revenue from FX volatility, particularly towards the end of Q4 2025, could continue to affect financial performance.
Restructuring Charge: A one-time restructuring charge of approximately $200 million in Q1 2026 could impact short-term financial results.
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Guidance & Outlook
Net Revenue Growth for 2026: Expected to grow at the high end of a low double-digit range on a currency-neutral basis, excluding inorganic activity. A tailwind of approximately 1 to 1.5 ppt from foreign exchange is estimated.
Operating Expense Growth for 2026: Expected to grow at the low end of a low double-digit range on a currency-neutral basis, excluding inorganic activity and special items. A headwind of 0.5 to 1 ppt from foreign exchange is anticipated.
Q1 2026 Net Revenue Growth: Year-over-year growth expected to be at the low end of a low double-digit range on a currency-neutral basis, excluding inorganic activity. A tailwind of approximately 3.5 to 4 ppt from foreign exchange is estimated.
Q1 2026 Operating Expense Growth: Expected to be in the high end of high single-digit range versus a year ago on a currency-neutral basis, excluding inorganic activity and special items. Foreign exchange is forecasted to be a headwind of approximately 2.5 ppt.
Restructuring Charge in Q1 2026: A onetime restructuring charge of approximately $200 million is expected, impacting approximately 4% of full-time employees globally. This will free up capacity to invest in strategic priorities.
Tax Rate for 2026: Non-GAAP tax rate expected to be in the range of 20% to 21% for the full year and approximately 19% to 20% for Q1.
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Shareholder Return Plan
Dividend Program: No specific mention of a dividend program or changes to dividend payouts was made during the call.
Share Buyback Program: The company repurchased $3.6 billion worth of stock during the quarter and an additional $715 million through January 26, 2026.
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Key Q&A
Q:Can you provide more details about the Capital One renegotiation, including the impact on existing Capital One cards, expected share of credit volumes, and the duration of the extension?
A:Michael Miebach expressed excitement about the extension of the credit portfolio agreement with Capital One, emphasizing the value of the Mastercard network and the partnership's importance. He highlighted ongoing investments in the network and acceptance to maintain a differentiated proposition for Capital One. However, specific details about the duration of the extension and the share of credit volumes were not disclosed.
Q:What are your thoughts on the implications of the Credit Card Competition Act (CCCA) and its probability of passing?
A:Michael Miebach stated that the CCCA has seen little progress since its introduction in 2023 and faces united opposition due to risks like reduced consumer choice and cybersecurity concerns. He emphasized the competitive nature of the payments ecosystem and noted that recent attempts to advance the bill have not succeeded. He refrained from speculating on its probability of passing.
Q:Is there any volume migrating to Mastercard from Capital One as part of the new agreement?
A:Sachin Mehra reiterated excitement about the new agreement with Capital One but did not provide specific details about volume migration. He emphasized the value Mastercard brings to its customers.
Q:What are your views on the proposed 10% rate cap on credit and the industry's discussions with the administration?
A:Michael Miebach highlighted the potential consequences of a 10% rate cap, such as reduced credit access for vulnerable populations. He mentioned ongoing constructive dialogues with banks and issuers to address affordability concerns and explore alternatives. He noted that Mastercard does not set rates but actively engages as an industry custodian.
Q:What is your perspective on the health of the consumer and any changing spending patterns?
A:Michael Miebach observed that consumer spending remained healthy and consistent throughout 2025, despite mixed signals from media and surveys. He described consumers as savvy and intentional, leveraging digital tools and loyalty programs to optimize spending. He noted no significant impact from tariff changes or other economic factors.
Q:How sensitive is the business to FX volatility, and how do you account for it in guidance?
A:Sachin Mehra acknowledged the difficulty of predicting FX volatility and its impact on transaction processing assessments. He explained that Mastercard uses long-term averages and current trends to estimate FX effects and adjusts guidance accordingly. He emphasized the value Mastercard provides through currency conversion services.
Q:Should we expect VASS (Value-Added Services and Solutions) growth to continue outpacing other business segments?
A:Sachin Mehra expressed confidence in VASS growth, citing its integration with the payment network and broad-based growth across regions and service categories. He highlighted innovation, new solutions, and increased penetration as key drivers. Michael Miebach added that Mastercard's differentiated services and global distribution network support sustained VASS growth.
Q:What is the outlook for Capital One and other issuing wins in 2026, including the competitive environment and renewal pipeline?
A:Sachin Mehra described the 2026 pipeline as active and competitive, with a focus on high-growth, cross-border-heavy deals and value-added services. He emphasized the importance of winning the right deals and maintaining a differentiated proposition. Michael Miebach highlighted the focus on affluent and secular opportunities, such as small business and B2B.
Q:What are the assumptions behind the guidance for 2026, particularly regarding consumer spending and stimulus?
A:Sachin Mehra stated that the guidance assumes healthy consumer and business spending, supported by factors like a strong job market and tax refunds. He noted that the first half of 2026 is expected to show lower growth due to tougher FX volatility comps, with acceleration in the second half.
Q:How durable is the pricing tailwind across revenue lines, and what is the pricing outlook for 2026?
A:Sachin Mehra explained that pricing is driven by new and improved products and services that deliver value to customers. He noted the lapping effect of prior pricing actions and the potential for new capabilities to contribute to 2026 growth. He did not provide specific guidance on pricing magnitude.
Q:What is Mastercard's approach to Agentic Commerce, and how does it plan to thrive in this space?
A:Michael Miebach expressed excitement about Agentic Commerce, emphasizing Mastercard's focus on consumer protection, safety, and security. He highlighted partnerships with companies like Google and the importance of standards and protocols. He noted opportunities in transaction processing, tokenization, and services, while acknowledging the early stage of this space.
Q:What levers does Mastercard have to mitigate geopolitical risks and their impact on the business?
A:Michael Miebach emphasized Mastercard's global presence and alignment with local needs, supported by investments in technology and public policy engagement. Sachin Mehra mentioned levers like expense management and prioritization of long-term growth investments. Both highlighted the importance of maintaining flexibility and resilience in uncertain environments.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details about the duration of the Capital One agreement extension, the share of credit volumes, and volume migration from Capital One to Mastercard. Additionally, they did not offer precise guidance on pricing magnitude for 2026.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Agentic Commerce
Capital
Investor
Mexico
Move
Page
acquisition
approval rate
assessment
asset
bank
basis activity
brand
card
co
commerce
consulting
consumer
currency basis
debit
endpoint
expense benefit
government grant
item
merchant player
offering
partner
payment network
platform
portfolio
ppt
reach
security
service solution
spending
transaction
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wallet
win
MA Transcript
Mastercard Incorporated (MA) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call summary and Q&A session indicate a strong financial performance with optimistic guidance, particularly in digital payments and value-added services. Despite some uncertainties, such as FX volatility and geopolitical risks, the company shows resilience and strategic growth plans. Positive factors like record high revenue, a new partnership with Capital One, and healthy consumer spending support a positive sentiment. However, the lack of specific details in some areas slightly tempers the outlook, resulting in a 'Positive' sentiment rating.
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