Mastercard(MA) - 2025 Q1 - Quarterly Report

Financial Performance - Net revenue for Q1 2025 was $7,250 million, a 14$6,348 million in Q1 2024[109] - Operating income rose to $4,149 million, reflecting a 15$3,604 million in the same period last year[109] - Adjusted net income for Q1 2025 was $3,406 million, up 10$3,093 million in Q1 2024[110] - Diluted earnings per share for Q1 2025 were $3.73, a 13$3.31 in Q1 2024[110] - Payment network revenue rose by 13% to $4,432 million, driven by growth in domestic and cross-border dollar volumes and an increase in switched transactions[139] - Value-added services and solutions revenue increased by 16$2,818 million, with a 4 percentage point increase from acquisitions and growth primarily in security and digital solutions[140] - Domestic assessments grew by 8% to $2,658 million, while cross-border assessments increased by 16$2,595 million[131] - Switched transactions growth was reported at 9%, down from 13% in the previous year[129] Tax and Income - The effective income tax rate increased to 18.6% in Q1 2025, up 3.3 percentage points from 15.4% in Q1 2024, primarily due to the 15% global minimum tax[112] - The effective income tax rates for Q1 2025 and Q1 2024 were 18.6% and 15.4%, respectively, with adjusted rates of 19.1% and 15.9%, primarily due to the 15% global minimum tax implemented in 2025[156] Cash Flow and Investments - The company generated net cash flows from operations of $2.4 billion during the quarter[115] - Net cash provided by operating activities increased by$708 million to $2,380 million for Q1 2025 compared to Q1 2024, driven by higher net income and reduced litigation settlement payments[161] - Net cash used in investing activities rose by$166 million to $340 million for Q1 2025, mainly due to lower proceeds from investment securities maturities[162] - Cash, cash equivalents, and investments totaled$7.9 billion as of March 31, 2025, down from $8.8 billion at December 31, 2024, while unused lines of credit remained at$8.0 billion[157] Shareholder Returns - The company repurchased 4.7 million shares for $2.5 billion and paid dividends of$694 million[115] - The company declared a quarterly cash dividend of $0.76 per share, totaling$694 million for Q1 2025, with another dividend of $691 million scheduled for May 2025[170][171] - The company repurchased$2,549 million worth of shares during Q1 2025, with an average price of $541.38 per share, leaving a remaining authorization of$12,639 million[172] Operating Expenses - Operating expenses increased by 13% to $3,101 million, with adjusted operating expenses also rising by 13$2,523 million, primarily due to higher personnel costs[147] - Advertising and marketing expenses surged by 32% to $152 million, reflecting increased spending on marketing campaigns[150] - Depreciation and amortization expenses increased by 27$275 million, driven by higher software capitalization[151] Other Financial Metrics - Total other income (expense) was reported at $(118) million, a decrease of$72 million compared to $(46) million in 2024[154] - The company recorded net losses of$29 million on equity investments in Q1 2025, compared to net gains of $6 million in Q1 2024[114] - Total debt outstanding increased to$18.8 billion as of March 31, 2025, from $18.2 billion at December 31, 2024, with a$750 million principal payment related to the 2019 USD Notes in March 2025[165] Risk Factors - A hypothetical 10% adverse change in foreign currency values could result in a fair value loss of approximately $459 million on foreign exchange derivative contracts as of March 31, 2025[176] - A hypothetical 100 basis point adverse change in interest rates could lead to a fair value loss of approximately$18 million on interest rate derivative contracts designated as a fair value hedge as of March 31, 2025[180]