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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
Or 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 001-32877
ma-20200930_g1.jpg
Mastercard Incorporated
(Exact name of registrant as specified in its charter)
Delaware13-4172551
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
2000 Purchase Street10577
Purchase,NY(Zip Code)
(Address of principal executive offices)
(914) 249-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange of which registered
Class A Common Stock, par value $0.0001 per share
MA
New York Stock Exchange
1.1% Notes due 2022
MA22
New York Stock Exchange
2.1% Notes due 2027
MA27
New York Stock Exchange
2.5% Notes due 2030
MA30
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Yes
☒


No
☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
Yes
☐
No☒
As of October 23, 2020, there were 988,470,444 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 8,454,904 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.


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MASTERCARD INCORPORATED FORM 10-Q
TABLE OF CONTENTS
PART I
Item 1.
Consolidated financial statements (unaudited)
Item 2.
Management’s discussion and analysis of financial condition and results of operations
Item 3.
Quantitative and qualitative disclosures about market risk
Item 4.
Controls and procedures
PART II
Item 1.
Legal proceedings
Item 1A.
Risk factors
Item 2.
Unregistered sales of equity securities and use of proceeds
Item 5.
Other information
Item 6.
Exhibits
-
Signatures

2 MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q

In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.
Forward-Looking Statements
This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
•regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
•the impact of preferential or protective government actions
•regulation of privacy, data, security and the digital economy
•regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption; account-based payment systems; and issuer practice regulation)
•the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
•potential or incurred liability and limitations on business related to any litigation or litigation settlements
•the impact of competition in the global payments industry (including disintermediation and pricing pressure)
•the challenges relating to rapid technological developments and changes
•the challenges relating to operating real-time account-based payment system and to working with new customers and end users
•the impact of information security incidents, account data breaches or service disruptions
•issues related to our relationships with our financial institution customers (including loss of substantial business from significant customers, competitor relationships with our customers and banking industry consolidation), merchants and governments
•exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
•the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls
•the impact of the coronavirus (COVID-19) outbreak and measures taken in response to the outbreak
•reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
•the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture
•issues related to acquisition integration, strategic investments and entry into new businesses
•issues related to our Class A common stock and corporate governance structure
Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A - Risk Factors of this Report. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q 3

PART I


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Consolidated financial statements (unaudited)
Mastercard Incorporated
Index to consolidated financial statements (unaudited)
Page

MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q 5

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in millions, except per share data)
Net Revenue$3,837 $4,467 $11,181 $12,469 
Operating Expenses
General and administrative1,423 1,448 4,285 4,184 
Advertising and marketing168 227 415 644 
Depreciation and amortization141 137 430 376 
Provision for litigation— — 28 — 
Total operating expenses1,732 1,812 5,158 5,204 
Operating income2,105 2,655 6,023 7,265 
Other Income (Expense)
Investment income3 26 27 77 
Gains (losses) on equity investments, net(91)(100)(190)48 
Interest expense(105)(63)(275)(160)
Other income (expense), net3 16 7 26 
Total other income (expense)(190)(121)(431)(9)
Income before income taxes1,915 2,534 5,592 7,256 
Income tax expense402 426 966 1,238 
Net Income$1,513 $2,108 $4,626 $6,018 
Basic Earnings per Share$1.51 $2.08 $4.61 $5.90 
Basic weighted-average shares outstanding1,001 1,013 1,003 1,020 
Diluted Earnings per Share$1.51 $2.07 $4.59 $5.87 
Diluted weighted-average shares outstanding1,005 1,019 1,008 1,025 

The accompanying notes are an integral part of these consolidated financial statements.

6 MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in millions)
Net Income$1,513 $2,108 $4,626 $6,018 
Other comprehensive income (loss):
Foreign currency translation adjustments228 (193)(17)(216)
Income tax effect(8)9 21 12 
Foreign currency translation adjustments, net of income tax effect220 (184)4 (204)
Translation adjustments on net investment hedge(73)72 (82)80 
Income tax effect16 (16)18 (18)
Translation adjustments on net investment hedge, net of income tax effect(57)56 (64)62 
Cash flow hedges2 — (186)— 
Income tax effect(1)— 41 — 
Cash flow hedges, net of income tax effect1 — (145)— 
Defined benefit pension and other postretirement plans— — (1)(1)
Income tax effect— — — — 
Defined benefit pension and other postretirement plans, net of income tax effect— — (1)(1)
Investment securities available-for-sale
2 — (1)4 
Income tax effect— — — (1)
Investment securities available-for-sale, net of income tax effect2 — (1)3 
Other comprehensive income (loss), net of tax166 (128)(207)(140)
Comprehensive Income$1,679 $1,980 $4,419 $5,878 

The accompanying notes are an integral part of these consolidated financial statements.


MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q 7

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (unaudited)
September 30, 2020December 31, 2019
 (in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents$10,225 $6,988 
Restricted cash for litigation settlement586 584 
Investments400 688 
Accounts receivable2,357 2,514 
Settlement due from customers1,375 2,995 
Restricted security deposits held for customers1,568 1,370 
Prepaid expenses and other current assets1,958 1,763 
Total current assets18,469 16,902 
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization
of $1,298 and $1,100, respectively
1,887 1,828 
Deferred income taxes607 543 
Goodwill4,159 4,021 
Other intangible assets, net of accumulated amortization of $1,416 and $1,296, respectively
1,507 1,417 
Other assets4,965 4,525 
Total Assets$31,594 $29,236 
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable$341 $489 
Settlement due to customers1,129 2,714 
Restricted security deposits held for customers1,568 1,370 
Accrued litigation798 914 
Accrued expenses5,011 5,489 
Other current liabilities1,111 928 
Total current liabilities9,958 11,904 
Long-term debt12,574 8,527 
Deferred income taxes86 85 
Other liabilities3,095 2,729 
Total Liabilities25,713 23,245 
Commitments and Contingencies
Redeemable Non-controlling Interests25 74 
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,395 and 1,391 shares issued and 990 and 996 shares outstanding, respectively
— — 
Class B common stock, $0.0001 par value; authorized 1,200 shares, 8 and 11 shares issued and outstanding, respectively
— — 
Additional paid-in-capital4,926 4,787 
Class A treasury stock, at cost, 406 and 395 shares, respectively
(35,653)(32,205)
Retained earnings37,403 33,984 
Accumulated other comprehensive income (loss)(880)(673)
Mastercard Incorporated Stockholders' Equity5,796 5,893 
Non-controlling interests60 24 
Total Equity5,856 5,917 
Total Liabilities, Redeemable Non-controlling Interests and Equity$31,594 $29,236 

The accompanying notes are an integral part of these consolidated financial statements.

8 MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended September 30, 2020
Stockholders’ Equity
Common StockAdditional
Paid-In
Capital		Class A
Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Mastercard Incorporated Stockholders’ EquityNon-
Controlling
Interests		Total Equity
Class AClass B
(in millions)
Balance at June 30, 2020$— $— $4,832 $(33,604)$36,288 $(1,046)$6,470 $28 $6,498 
Net income— — — — 1,513 — 1,513 — 1,513 
Activity related to non-controlling interests— — — — — — — 32 32 
Redeemable non-controlling interest adjustments— — — — — — — — — 
Other comprehensive income (loss)— — — — — 166 166 — 166 
Dividends— — — — (398)— (398)— (398)
Purchases of treasury stock— — — (2,049)— — (2,049)— (2,049)
Share-based payments— — 94 — — — 94 — 94 
Balance at September 30, 2020$— $— $4,926 $(35,653)$37,403 $(880)$5,796 $60 $5,856 

Nine Months Ended September 30, 2020
Stockholders’ Equity
  
Common Stock		Additional
Paid-In
Capital		Class A
Treasury
Stock		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss)		Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests		Total
Equity
 Class AClass B
 (in millions)
Balance at December 31, 2019$— $— $4,787 $(32,205)$33,984 $(673)$5,893 $24 $5,917 
Net income— — — — 4,626 — 4,626 — 4,626 
Activity related to non-controlling interests— — — — — — — 36 36 
Redeemable non-controlling interest adjustments — — — — (5)— (5)— (5)
Other comprehensive income (loss)— — — — — (207)(207)— (207)
Dividends— — — — (1,202)— (1,202)— (1,202)
Purchases of treasury stock— — — (3,454)— — (3,454)— (3,454)
Share-based payments— — 139 6 — — 145 — 145 
Balance at September 30, 2020$— $— $4,926 $(35,653)$37,403 $(880)$5,796 $60 $5,856 

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD SEPTEMBER 30, 2020 FORM 10-Q 9

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited) - (Continued)
Three Months Ended September 30, 2019
Stockholders’ Equity
Common StockAdditional
Paid-In
Capital		Class A
Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Mastercard Incorporated Stockholders’ EquityNon-
Controlling
Interests		Total Equity
Class AClass B
(in millions)
Balance at June 30, 2019$— $— $4,675 $(29,454)$30,517 $(730)$5,008 $27 $5,035 
Net income— — — — 2,108 — 2,108 — 2,108 
Activity related to non-controlling interests— — — — — — — (1)(1)
Redeemable non-controlling interest adjustments— — — — (2)— (2)— (2)
Other comprehensive income (loss)— — — — — (128)(128)— (128)
Dividends— — — — (334)— (334)— (334)
Purchases of treasury stock— — — (1,755)— — (1,755)— (1,755)
Share-based payments— — 50 2 — — 52 — 52 
Balance at September 30, 2019$— $— $4,725 $(31,207)$32,289 $(858)$4,949 $26 $4,975 

Nine Months Ended September 30, 2019
Stockholders’ Equity
  
Common Stock		Additional
Paid-In
Capital		Class A
Treasury
Stock		Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss)		Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests		Total
Equity
 Class AClass B
 (in millions)
Balance at December 31, 2018$— $— $4,580 $(25,750)$27,283 $(718)$5,395 $23 $5,418 
Net income— — — — 6,018 — 6,018 — 6,018 
Activity related to non-controlling interests— — — — — — — 3 3 
Redeemable non-controlling interest adjustments— — — — (6)— (6)— (6)
Other comprehensive income (loss)— — — — — (140)