UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 20, 2012
MasterCard Incorporated
(Exact name of registrant as specified in its charter)
Delaware | 001-32877 | 13-4172551 | ||||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||||
2000 Purchase Street Purchase, New York |
10577 | |||||
(Address of principal executive offices) | (Zip Code) |
(914) 249-2000
(Registrants telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
7.01 Regulation FD Disclosure
On September 20, 2012, MasterCard Incorporated (the Company) will host a meeting for members of the investment community. As part of discussions at the meeting, the Company is providing the following 2013-2015 longer-term performance objectives (on a constant currency basis and excluding future acquisitions):
| Net revenue compound annual growth rate (CAGR) of 11-14%; |
| Annual operating margin of a minimum of 50%; and |
| Earnings per share CAGR of at least 20%. |
At the meeting, the Company will provide additional context with respect to the above performance objectives, including its expectations around the currently weak global economic environment. The Company also assumes that there will not be any further deterioration in the U.S. economy or more significant problems within the Eurozone. Based on these expectations, the Company expects that net revenue growth in the early part of the 2013-2015 period may be slightly below the 11-14% range and, in later years, net revenue growth could be at the higher end of this range, assuming that the global economy could return to a more stable environment.
Presentation materials for the meeting are attached hereto as Exhibit 99.1. The descriptions of longer-term performance objectives set forth above and all information set forth in the attached presentation materials is furnished but not filed.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit |
Exhibit Description | |
99.1 |
MasterCard Incorporated Investor Presentations, dated September 20, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MASTERCARD INCORPORATED | ||||||
Date: September 20, 2012 |
By | /s/ Bart S. Goldstein | ||||
Bart S. Goldstein Corporate Secretary |
EXHIBIT INDEX
Exhibit |
Exhibit Description | |
99.1 | MasterCard Incorporated Investor Presentations, dated September 20, 2012. |
Exhibit 99.1
Exhibit 99.1
September 20, 2012
MasterCard Incorporated
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
Agenda
8:30 a.m.
Welcome
Strategic Discussion Global Products & Solutions GP&S Panel
Barbara Gasper Ajay Banga Gary Flood
Alfredo Gangotena, Tim Murphy, Kevin Stanton and Ed McLaughlin
9:45 a.m.
Break
10:10 a.m.
U.S. Markets International Markets IMK Panel
Chris McWilton Ann Cairns
Michael Miebach, Hai Ling and Gilberto Caldart
Financial Perspective Q&A Session Product Demo Overview Closing Remarks
Martina Hund-Mejean Management Ed McLaughlin Ajay Banga
12:30 p.m.
Lunch, Mingle & Demos
Management & Staff
3:00 p.m.
Event Adjourns
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
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Forward-Looking Statements
Todays presentation may contain, in addition to historical information, forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on our current assumptions, expectations and projections about future events which reflect the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by our comments today. You should review and consider the information contained in our filings with the SEC regarding these risks and uncertainties.
MasterCard disclaims any obligation to publicly update or revise any forward-looking statements or information provided during todays presentations.
Any non-GAAP information contained in todays presentations is reconciled to its GAAP equivalent in the Companys periodic SEC filings.
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
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Ajay Banga
President and Chief Executive Officer September 20, 2012
Executing on the Strategy
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Recent Performance vs.
Long-Term Objectives
Net Revenue
Growth
Operating
Margin
Earnings Per
Share Growth
2011
Performance*
19%
52%
31%
2012-2013
Objectives*
12-14%
CAGR
Minimum
50%
annually
20%+
CAGR
First Half 2012
Performance*
16%
56%
26%
* On a constant currency basis and excluding special items
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
Page 2
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Three Drivers of Growth
Personal Consumption Expenditure
Cash & Check vs. Electronic Payments
MasterCard Share of Electronic Payments
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
Page 3
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Stakeholders
Consumers B2B2C
Merchants Value-added partner
Issuers Complementary value propositions
Governments & Opinion Leaders Local engagement
Solutions Driven by Data and Technology
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
Page 4
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Executing on the Strategy
GROW
Core Business
Invest in Credit, Debit, Commercial and Prepaid products
Win key deals
Grow share
DIVERSIFY
Geographies & Customers
Engage with non-traditional customers and governments
Increase focus on emerging markets
BUILD
New Businesses
Invest in e-Commerce and Mobile channels
Invest in Information Services
Execute on Grow, Diversify, Build initiatives to gain share and grow the pie
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 5
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Company Evolution
Recent Past
Customers primarily
large Financial Institutions
Growth driven by consumer credit
Conventional product development
Traditional role in value chain
Questions about mobile disintermediation threat
Current Direction
Engagement with small FIs, telcos, merchants, governments
Debit and commercial credit contributing to growth
Increased focus on innovation
Expanding value-added services
Deeply engaged with multiple partners
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 6
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Gary Flood
President, Global Products & Solutions
September 20, 2012
Driving Growth through Products & Solutions
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Driving Growth
GROW
Core Businesses Faster than Market
DIVERSIFY
Customers and Geographies
BUILD
New, High-Growth Scalable Businesses
capitalizing on:
Enormous Cash Conversion Opportunity
Evolving Industry Landscape
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 2
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Progress on Cash Penetration
Developed Markets
Emerging Markets
2.4 ppt
58.2%
56.7%
55.8%
2008
2009
2010
1.0 ppt
94.0%
94.0%
93.0%
2008
2009
2010
2008-2010 CAGR for Total Transactions
0.7% *
6.9%
Cash usage has declined in both markets, but global figure remains at 85% due to greater growth in emerging markets
Secular growth opportunity high
* Total Transactions include cash, check, credit, debit, credit transfer, debit transfer and miscellaneous payments instruments Source: BIS statistics, McKinsey global payment data, Euromonitor and MasterCard Advisors analysis
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 3
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Levers to Continue Displacing Cash
More Merchants
Acceptance Growth
More Consumers
Financial Inclusion
More Volume
Product Penetration
More Transactions
Small Ticket Transactions
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 4
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Driving Market Advantage in an Evolving Industry
Drive consumer preference
Accelerate the Core business
Leverage differentiated assets
Drive convergence of physical / digital
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 5
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Asset Breadth and Integration
Creates Competitive Advantage
Products and Channels
Core Business
(Credit, Debit, Prepaid, Commercial)
Emerging Payments (e-Commerce, Mobile)
New Businesses (Information Services)
Value Chain Extenders (IPS, Access, DataCash, Truaxis)
Capabilities
Network Scale and Speed
Secure Payments
Data & Analytics
Advisors
Acceptance
Brand
Competitive Advantage
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 6
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Alfredo Gangotena
Chief Marketing Officer
September 20, 2012
Brand Preference:
The Key to Business Growth
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Marketing Strategic Focus
Transforming Consumer Insight Into Growth
From brand awareness to brand preference
Delivering a unique shopping experience
Return on investment
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 2
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Consumer Engagement to Build Brand Preference
Consumer-led Virtuous Cycle
Merchants
Consumers
Issuers
Internal data and MasterCard SpendingPulse for Restaurants category, July-August 2012
Dine and Be Generous Campaign
Engagement
Restaurants 30 national associations
Issuers 38 participating banks 16 million inserts
MasterCard Results
Efficient consumer reach
1 |
|
billion media impressions |
1 |
|
million engaged fans: 3x social base growth in 8 months |
Financial impact
11% category growth, outpacing category by 2x*
Corporate Citizenship
$4 million raised for Stand Up 2 Cancer
Telethon broadcast: $81 million raised
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 3
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MasterCards Consumer Experience
Reward and Delight
Affluent & Mass Affluent Segments
Affluent & Mass Affluent represent a significant portion of our GDV
Enhance consumer experience across the entire buying cycle
Rewards as foundation; Enriched through Priceless Experiences
Both Home and Away
Experiences
Privileged Access
Priceless Cities
Rewards and Offers
Global Acceptance, Travel and Concierge Services
Loyalty
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Priceless Cities Global Expansion
Affluent & Mass Segments Home and Away
Connecting People to Their Passions
Shopping Dining Sports Travel
Attractions Arts & Culture Theater Music & Movies
Toronto
Chicago
New York
London
Beijing
Sydney
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Priceless Cities Global Expansion
Affluent & Mass Segments Home and Away
Connecting People to Their Passions
Shopping
Dining
Sports
Travel
Attractions
Arts & Culture
Theater
Music & Movies
Toronto
Chicago
Los Angeles
Mexico City
London
New York
Miami
Paris
Rio de Janeiro
Moscow
Istanbul
Singapore
Beijing
Sydney
A few of our participating partners
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 6
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Priceless Cities Business Results
Brand Awareness*
66% ® 71%
Brand Opinion*
64% ® 68%
Card Spending**
+ 15% (early results / key segments)
Digital Audience
Growth + Engagement
Consumers
Merchants
Issuers
100+ participating merchants
40 issuers globally
31 million consumers reached
Key portfolios engagement
Brand Preference among consumers, merchants and issuers
* Results for New York, London and Toronto
** Results for New York
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Advertising and Marketing
Investment Efficiencies
Global A&M Investment and Overall Brand Opinion Among Owners
Brand Performance and Opinion improvement
Advertising and Marketing (A&M) spending efficiencies
Best practice execution
Rewards platform
Priceless Cities network expansion
Digital / Social Media activation
Media efficiencies
$ Millions
$1,000
$750
$500
$250
$0
2008
2009
2010
2011
74%
73%
72%
71%
70%
Global A&M Investment
Overall Brand Opinion
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 8
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Tim Murphy
Chief Product Officer
September 20, 2012
Accelerating Growth Faster than Market: Commercial
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Core Products
Consumer Credit 13%
Core Products 1H 2012 GDV Growth
Debit 20%
Prepaid 40%
Commercial 19%
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Commercial is a Big Untapped Opportunity
$93T
Commercial and Govt Spend
Estimate1
Available to Capture1
$17T
Total Commercial Card Spend1
$1.6T
Who We Serve2
Large Market & Govt
48%
52%
Small Business
Less than 10% of cardable spend currently captured
Sources:
1. Kaiser Associates and Glenbrook Partners
2. Kaiser Associates, B2B International and internal analysis
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 3
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Investments in People
Deepen Relationships
and with leading corporations around the world
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 4
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Investments in Small Business
Drive Differentiation
Services for emerging entrepreneurs
Market-leading automatic savings program
Purchasing platform that enhances small business buying power
Partners
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Investments in Large Market
Increase Penetration
Key Wins
Customized vertical payment products
Specialized industry travel solutions
Check & Wire Displacement
Global expense management and reporting system
Advanced analytic reporting capabilities
Cross-border tool to manage employee per diems
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Commercial Outperforms the Market, Delivering Supercharged Results
Growth
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
2009
2010
2011
Q1-Q2 2012
Market
MasterCard
126% higher ticket size
47% higher cross-border mix
13% greater revenue yield
Products + People + Advisors = Advantage
Source: Glenbrook Partners, internal data and estimates
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 7
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Kevin Stanton
President, MasterCard Advisors September 20, 2012
MasterCard Advisors:
Proven Currency, Force Multiplier, Game Changer
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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A Proven Currency
INFORMATION
Market Vision reports
MasterCard Audiences
SpendingPulse reports
CONSULTING
Payment strategy
Product development
Customer segmentation
IMPLEMENTATION
Acquisition & Conversion
Digital Channel optimization
Customer reactivation
for reaching consumers, merchants, issuers and governments
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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A Force Multiplier
DEAL
Credit Agreement
Debit Agreement
PRODUCT
Debit Five Steps
U.S. EMV Migration
MARKET
Sub-Saharan Programs
SEGMENT
Small Merchant
e-Commerce Authorization
Deutsche Telekom Mobile
U.S. Affluent Credit Reactivation
to drive growth at the deal, product, market and segment level
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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A Game Changer
to drive new value and reach new customers
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 4
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Ed McLaughlin
Chief Emerging Payments Officer
September 20, 2012
Convergence
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Emerging Payments Growth Opportunity
Transforming the shopping experience
Expanding our reach to new consumers
Extending our network to new merchants
Leading the transition to digital
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 2
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Physical and Digital Worlds are Converging
Every connected device will become a commerce device
Shop online
Shop in-store
Enhanced experiences
Receive payments
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Consumers are Transacting Anywhere
Online, Offline, Physical, Digital
Receiving payroll and social benefits on mobile phone or card
Paying bills or merchants via SMS on a mobile phone
Accessing ATMs and merchants
Consumer Experiences
Emerging Market
Developed Market
Shopping on a mobile phone
Commuting with a PayPass enabled mobile phone
Dining with a physical card
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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PayPass Wallet Brings it All Together
Connected Digital Wallets
Enabling Consumer Choice
Digital Acceptance
Network
Partner Wallet
Investment Community Meeting
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September 20, 2012
Page 5
Working with Partners
September 20, 2012
Investment Community Meeting
©2012 MasterCard. Proprietary.
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Chris McWilton
President, U.S. Markets
September 20, 2012
Path to Partnership and Value:
U.S. Markets
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
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Navigating the Regulatory and Legal Landscape
Maximizing market share/presence on debit cards
Enhancing debit value proposition
Continuing to solidify relationships and balance of ecosystem
Serving all stakeholders through an amicable resolution
Advocating on behalf of the consumer
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Focused on Our Core Business
Differentiated product suite
Proven success in optimizing portfolio growth and management
Strong platform to optimize consumer engagement
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Leading EMV Migration
Clear roadmap that addresses securing all channels
Creating the right dialogue as partners and counselors
Playing a key role in bringing the market together
Understanding product-specific implications to develop the right approach
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Growing Merchant Relationships for Shared Value
Insights and tools to optimize, streamline and grow operations
Focus on programs that increase consumer preference and stickiness
Open new acceptance channels
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Delivering Value and Growth to Governments
Strong programs and momentum
Government reduced costs; greater efficiency
Recipient greater access and empowerment
Investment Community Meeting
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September 20, 2012
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Staying True to Our Course
Investment Community Meeting
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September 20, 2012
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Ann Cairns
President, International Markets
September 20, 2012
International Markets:
Strength through Diversification
2012 Investment Community Meeting
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Regional Overview 1H 2012
4% of MA GDV
9% GDV growth
29% of MA GDV
17% GDV growth
55 countries
34 currencies
8% of MA GDV
21% GDV growth
47 countries
26 currencies
26% of MA GDV
23% GDV growth
112 countries
91 currencies
International Markets account for 60% of MasterCard revenue
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Market Dynamics
Opportunities
Personal Consumption Expenditure
Financial inclusion
Urbanization
Youth population
Consumer affluence
Mobile penetration
Consumer adoption
Challenges
Macro-economic environment
Regulation
Competitive landscape
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Executing on Our Strategy
Invest and gain share in emerging and mature markets
Drive increased acceptance
Diversify with non-traditional partners
Engage with governments
Develop global and local strategic partnerships
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Executing on Our Strategy
Acceptance
Enabling Partners
Merchants & Retailers
Small merchants
Telcos
Bill Payment aggregators
Mobile & e-Commerce
Maestro On-Line
PayPass
PayPass Wallet
Mobile POS
Newer Categories
Transit
Tuition
Parking
Everyday spend
Drive increased acceptance in the physical and digital worlds
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Executing on Our Strategy
Governments
Efficiency
Social benefits
T&E cards
Transit
Purchasing cards
ID cards
Financial Inclusion
Agricultural payments
Prepaid products
Mobile
Infrastructure
Education
Thought Leadership
Cost of Cash studies
Regulations
Tax collection
SpendingPulse
World Beyond Cash
South Africa
Brazil
India
Mexico
Partner to create a World Beyond Cash
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Executing on Our Strategy
Mobile
PayPass
Mobile PayPass
Strategic Partnerships
Global investment and commitment to develop seamless payment experiences
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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International Markets
Panel Discussion
Michael Miebach
President, Middle East & Africa
Expanding in Emerging Markets:
Partnering with Governments
Hai Ling
President, Greater China
China: Partnering with Major
Local Players
Gilberto Caldart
President, South Latin America
Brazil: Innovative Growth Engine
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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September 20, 2012
IMK Panel
2012 Investment Community Meeting
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Expanding in Emerging Markets
Partnering with Governments
to reach the next billion customers
Cashless Nigeria
Working with the Central Bank of Nigeria:
Encouraging a cashless environment
2,000% growth in acceptance, ~200,000 POS by end of 2012
Innovative South Africa
Engagement with South African Social Security Agency: ~10 million social grants biometric payment cards
PayPass in Transit Services: contactless taxis and buses in Cape Town, Johannesburg, Durban
Investment Community Meeting
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September 20, 2012
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China
Partnering with Major Local Players
MasterCard is special in Chinese: Everything is Attainable
Significant Market Opportunity
Worlds 2nd largest economy, expected to grow at 7% - 8% (2011 GDP = $7.3 trillion)
Rapid urbanization: 67% of population will be urban by 2020 (900 million)
Sizable emerging middle class:
Income US$10,000 US$60,000
Size ~ 300 million
2nd highest number of High Net Worth individuals in Asia
Local Strategic Partnerships
Investment Community Meeting
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September 20, 2012
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Brazil
Innovative Growth Engine
to reach preference
Expanding Beyond Core
Value chain expansion
IPS DataCash APW MPS inControl
Loyalty
Surpreenda 3 million consumers
MRS to issuers 14 million consumers
Processing ~ 4 billion transactions
Engagement to process local brands
Driving Innovation
Mobile PayPass / NFC
1 |
|
million NFC POS by 2014 |
JV with Telefonica for Mobile Money
Underserved Government social programs
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
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Martina Hund-Mejean
Chief Financial Officer
September 20, 2012
Financial Perspective
2012 Investment Community Meeting
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Topics for Today
2012 Outlook
Approach to FX Hedging
Capital Structure Considerations
Long-Term Growth Opportunity
Long-Term Performance Targets
Investment Community Meeting
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September 20, 2012
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Worldwide
Gross Dollar Volume (GDV) Growth
REPORTED PROCESSED
18.3% 18.3%
16.4% 15.2%
Local Growth %
12% Processed 11%
0% 5% 10% 15% 20%
Q311 Q411 Q112 Q212 Jul/Aug
September 20, 2012
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U.S.
Gross Dollar Volume Growth
REPORTED PROCESSED
13.7% 14.0%
12.1%
0% 5% 10% 15%
Growth % 8.7%
9% Processed 8%
Q311 Q411 Q112 Q212 Jul/Aug
September 20, 2012
Investment Community Meeting
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Rest of World
Gross Dollar Volume Growth
REPORTED PROCESSED
25% 20% 15% 10% 5% 0%
20.6% 20.6%
18.6% 18.6%
Local Growth % 15% Processed 14%
Q311 Q411 Q112 Q212 Jul/Aug
September 20, 2012
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Worldwide
Processed Transactions
30%
24%
18%
12%
6%
0%
20.5%
23.2%
29.2%
29.3%
24.9%
Q311 Q411 Q112 Q212 Jul/Aug
Growth %
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Worldwide
Cross-Border Volume Growth
Local Growth %
25%
20%
15%
10%
5%
0%
19.3%
17.5%
18.4%
16.8%
14.4%
Q311 Q411 Q112 Q212 Jul/Aug
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2012 Financial Outlook
Net Revenue
Operating Expenses
Tax Rate
FX Impact
Euro and Real
2nd Half revenue growth lower than 2Q12
Small operating margin expansion
Quarterly A&M cadence similar to 2011, but full-year spend lower
Less than 31%, including discrete items
Net headwind on Revenue, Net Income and EPS
3Q: 5-6 ppt
4Q: 3-4 ppt
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September 20, 2012
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Foreign Exchange
Exposure Types
Translation exposure: EUR, BRL and GBP
Transaction exposure: 150 currencies, but mainly due to CAD, EUR and GBP
Hedging Approach and the P&L
Only hedge cash flow (transaction) exposures on 12-month rolling basis:
Target hedge ratio of 50-75% for material exposures
Hedge net cash flow exposure
Mark-to-market impact of contracts recorded in P&L
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Capital Structure Considerations
Guiding Principles
Strong Balance Sheet
Preserve strong balance sheet, liquidity & credit ratings
$5 billion of cash* as of June 30, 2012 with no debt
Long-Term Business Growth
Investments in organic opportunities and M&A transactions
Grow core businesses, diversify geographies and customers, and build new businesses
Return Excess Cash
Continue to return excess cash with bias towards share repurchases:
Remain opportunistic in share repurchase execution
Returned ~$1 billion of capital in first half of 2012
* Includes cash, cash equivalents and investment securities available-for-sale
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Return of Capital Historical Perspective
Share Repurchase
Dividends
Cash conservation mode given financial crisis and capital markets freeze
$ billions
$2.0
$1.5
$1.2
$0.1
$1.0
$1.0
$0.1
$0.7
$0.7
$0.1
$0.1
$0.5
$1.1
$0.9
$0.6
$0.6
$0.1
$0.1
$0.0
2007 2008 2009 2010 2011 1H12
% of Period
Cash Flow*
59%
127%
13%
7%
65%
247%
* Period Cash Flow = Net change in cash before share repurchases and dividends
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 11
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Liquidity
$8
$2.8
($3.0)
$6
$5.0
$4 ($1.4)
$ billions
$2.2
Foreign Cash
($0.8) $2.6
$2
Foreign Cash
$2.0
$2.8
$0.6
$0
Cash Balance
(as of 6/30/12)
Available Revolver
Operational Settlement
Share Repurchase*
Litigation
Excess Liquidity
* Amount remaining to be executed under announced share repurchase program
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 12
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Execution against Business and Financial Objectives
$6,714
$5,538
$4,992
$5,099
$4,068
$3,326
Net Revenue
($ millions)
13%
19%
20%
4%
10%
19%
Constant Currency Growth
2006 2007 2008 2009 2010 2011
$18.70
$14.05
$9.45
$11.19
$7.58
$3.37
$ Earnings Per Share*
Constant Currency Growth
43% 121% 23% 21% 26% 31%
2006 2007 2008 2009 2010 2011
* Excluding special items
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 13
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Three Drivers of Growth
Personal Consumption Expenditure
Cash & Check vs. Electronic Payments
MasterCard Share of Electronic Payments
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 14
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Continued Penetration of Electronic Payments in PCE Offers Great Opportunity
Debit / Credit
EFT
Cash & Check
$53T
$42T
43%
33%
$30T
2011-2016E CAGR
Global PCE 5%
Card Purchase Volume 9%11%
Cash & Check ~0%
23%
15%
16%
13%
EFT
7%
64% 52% 41%
2006 2011 2016
Source: EIU, Euromonitor and internal analysis
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 15
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Long-Term Revenue Growth
2011-2016E CAGR (in %)
Strategic Growth 4-6%
Low-Mid Teens
Secular Investments
9-11%
(1%)
MA Mix
8-10%
5%
Global PCE
Industry Purchase Volume
MA Market Momentum
MasterCard Long-Term Revenue
Source: EIU, Euromonitor and internal estimates
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 16
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Longer-Term
2013 2015 Performance Objectives*
Net Revenue Growth
11-14% CAGR
Operating Margin
Minimum 50% annually
Earnings Per Share Growth Rate
At least 20% CAGR
* On a constant currency basis and excluding future acquisitions
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 17
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Investing in Our Strategy
GROW
Core Business
DIVERSIFY
Geographies & Customers
BUILD
New Businesses
Credit
Government sector
e-Commerce
Debit
Non-traditional customers
Mobile
Commercial
Information services
Emerging markets
Prepaid
Acquisitions and partnerships
Wide variety of investment opportunities to gain share and grow the pie
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 18
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September 20, 2012
Question & Answer Session
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
Ed McLaughlin
Chief Emerging Payments Officer
September 20, 2012
Product Demo Overview
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
|
Ajay Banga
President and Chief Executive Officer
September 20, 2012
Closing Comments
2012 Investment Community Meeting
©2012 MasterCard. Proprietary.
|
Final Thoughts
Execute through the Grow, Diversify, Build roadmap
Capitalize on opportunities and address challenges
Invest to drive growth through innovation
Deliver on our commitments
Investment Community Meeting
©2012 MasterCard. Proprietary.
September 20, 2012
Page 2
|
MasterCard
Worldwide
The Heart of Commerce
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