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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 June 30, 2023
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
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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
2.1% Notes due 2027
MA27
New York Stock Exchange
1.0% Notes due 2029
MA29A
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 July 24, 2023, there were 934,847,899 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,364,444 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

2 MASTERCARD JUNE 30, 2023 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 payments systems, and issuer and acquirer 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 a real-time account-based payments 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 stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants’ continued focus on acceptance costs and unique risks from our work with governments)
•the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls as well as events and resulting actions related to the Russian invasion of Ukraine
•the impact of the global COVID-19 pandemic and measures taken in response
•reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
•the impact of environmental, social and governance matters and related stakeholder reaction
•the inability to attract 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
•exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
•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, 2022. 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 JUNE 30, 2023 FORM 10-Q 3



PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Consolidated financial statements (unaudited)
Mastercard Incorporated
Index to consolidated financial statements (unaudited)
Page
Consolidated Statement of Operations — Three and Six Months Ended June 30, 2023 and 2022
Consolidated Statement of Comprehensive Income — Three and Six Months Ended June 30, 2023 and 2022
Consolidated Balance Sheet — June 30, 2023 and December 31, 2022
Consolidated Statement of Changes in Equity — Three and Six Months Ended June 30, 2023 and 2022
Consolidated Statement of Cash Flows — Six Months Ended June 30, 2023 and 2022

MASTERCARD JUNE 30, 2023 FORM 10-Q 5

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
 (in millions, except per share data)
Net Revenue$6,269 $5,497 $12,017 $10,664 
Operating Expenses:
General and administrative2,200 1,947 4,243 3,791 
Advertising and marketing201 210 368 391 
Depreciation and amortization192 189 383 381 
Provision for litigation20 133 231 133 
Total operating expenses2,613 2,479 5,225 4,696 
Operating income3,656 3,018 6,792 5,968 
Other Income (Expense):
Investment income59 7 114 12 
Gains (losses) on equity investments, net123 (117)(89)(193)
Interest expense(144)(114)(276)(224)
Other income (expense), net10 4 16 8 
Total other income (expense)48 (220)(235)(397)
Income before income taxes3,704 2,798 6,557 5,571 
Income tax expense859 523 1,351 665 
Net Income$2,845 $2,275 $5,206 $4,906 
Basic Earnings per Share$3.01 $2.34 $5.48 $5.04 
Basic weighted-average shares outstanding946 971 949 974 
Diluted Earnings per Share$3.00 $2.34 $5.47 $5.02 
Diluted weighted-average shares outstanding949 974 952 977 

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

6 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
 (in millions)
Net Income$2,845 $2,275 $5,206 $4,906 
Other comprehensive income (loss):
Foreign currency translation adjustments53 (710)147 (774)
Income tax effect— 31 (14)43 
Foreign currency translation adjustments, net of income tax effect53 (679)133 (731)
Translation adjustments on net investment hedges(11)314 (85)400 
Income tax effect2 (70)19 (89)
Translation adjustments on net investment hedges, net of income tax effect(9)244 (66)311 
Cash flow hedges(14)6 (24)7 
Income tax effect6 (2)6 (2)
Reclassification adjustments for cash flow hedges9 — 17 (5)
Income tax effect(5)— (4)1 
Cash flow hedges, net of income tax effect(4)4 (5)1 
Reclassification adjustments for 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)2 (4)
Income tax effect— — — 1 
Investment securities available-for-sale, net of income tax effect— (2)2 (3)
Other comprehensive income (loss), net of income tax effect40 (434)64 (423)
Comprehensive Income$2,885 $1,841 $5,270 $4,483 

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


MASTERCARD JUNE 30, 2023 FORM 10-Q 7

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
June 30, 2023December 31, 2022
 (in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents$6,170 $7,008 
Restricted cash for litigation settlement598 589 
Investments344 400 
Accounts receivable3,763 3,425 
Settlement assets1,378 1,270 
Restricted security deposits held for customers1,723 1,568 
Prepaid expenses and other current assets2,554 2,346 
Total current assets16,530 16,606 
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization
of $2,082 and $1,904, respectively
1,986 2,006 
Deferred income taxes1,121 1,151 
Goodwill7,579 7,522 
Other intangible assets, net of accumulated amortization of $2,087 and $1,960, respectively
4,049 3,859 
Other assets7,739 7,580 
Total Assets$39,004 $38,724 
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable$643 $926 
Settlement obligations1,142 1,111 
Restricted security deposits held for customers1,723 1,568 
Accrued litigation1,079 1,094 
Accrued expenses7,117 7,801 
Short-term debt1,336 274 
Other current liabilities1,596 1,397 
Total current liabilities14,636 14,171 
Long-term debt14,284 13,749 
Deferred income taxes395 393 
Other liabilities4,110 4,034 
Total Liabilities33,425 32,347 
Commitments and Contingencies
Redeemable Non-controlling Interests22 21 
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,401 and 1,399 shares issued and 936 and 948 shares outstanding, respectively
— — 
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 and 8 shares issued and outstanding, respectively
— — 
Additional paid-in-capital5,622 5,298 
Class A treasury stock, at cost, 465 and 451 shares, respectively
(56,659)(51,354)
Retained earnings57,730 53,607 
Accumulated other comprehensive income (loss)(1,189)(1,253)
Mastercard Incorporated Stockholders' Equity5,504 6,298 
Non-controlling interests53 58 
Total Equity5,557 6,356 
Total Liabilities, Redeemable Non-controlling Interests and Equity$39,004 $38,724 

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

8 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended June 30, 2023
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 March 31, 2023$— $— $5,376 $(54,241)$55,424 $(1,229)$5,330 $56 $5,386 
Net income— — — — 2,845 — 2,845 — 2,845 
Activity related to non-controlling interests— — — — — — — (3)(3)
Redeemable non-controlling interest adjustments— — — — (1)— (1)— (1)
Other comprehensive income (loss)— — — — — 40 40 — 40 
Dividends— — — — (538)— (538)— (538)
Purchases of treasury stock— — — (2,423)— — (2,423)— (2,423)
Share-based payments— — 246 5 — — 251 — 251 
Balance at June 30, 2023$— $— $5,622 $(56,659)$57,730 $(1,189)$5,504 $53 $5,557 
Six Months Ended June 30, 2023
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, 2022$— $— $5,298 $(51,354)$53,607 $(1,253)$6,298 $58 $6,356 
Net income— — — — 5,206 — 5,206 — 5,206 
Activity related to non-controlling interests— — — — — — — (5)(5)
Redeemable non-controlling interest adjustments — — — — (4)— (4)— (4)
Other comprehensive income (loss)— — — — — 64 64 — 64 
Dividends— — — — (1,079)— (1,079)— (1,079)
Purchases of treasury stock— — — (5,317)— — (5,317)— (5,317)
Share-based payments— — 324 12 — — 336 — 336 
Balance at June 30, 2023$— $— $5,622 $(56,659)$57,730 $(1,189)$5,504 $53 $5,557 

MASTERCARD JUNE 30, 2023 FORM 10-Q 9

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited) - (Continued)
Three Months Ended June 30, 2022
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 March 31, 2022$— $— $5,026 $(44,994)$47,800 $(798)$7,034 $68 $7,102 
Net income— — — — 2,275 — 2,275 — 2,275 
Activity related to non-controlling interests— — — — — — — (3)(3)
Redeemable non-controlling interest adjustments— — — — (2)— (2)— (2)
Other comprehensive income (loss)— — — — — (434)(434)— (434)
Dividends— — — — (474)— (474)— (474)
Purchases of treasury stock— — — (2,365)— — (2,365)— (2,365)
Share-based payments— — 137 — — — 137 — 137 
Balance at June 30, 2022$— $— $5,163 $(47,359)$49,599 $(1,232)$6,171 $65 $6,236 

Six Months Ended June 30, 2022
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, 2021$— $— $5,061 $(42,588)$45,648 $(809)$7,312 $71 $7,383 
Net income— — — — 4,906 — 4,906 — 4,906 
Activity related to non-controlling interests— — — — — — — (6)(6)
Redeemable non-controlling interest adjustments— — — — (4)— (4)— (4)
Other comprehensive income (loss)— — — — — (423)(423)— (423)
Dividends— — — — (951)— (951)— (951)
Purchases of treasury stock— — — (4,776)— — (4,776)— (4,776)
Share-based payments— — 102 5 — — 107 — 107 
Balance at June 30, 2022$— $— $5,163 $(47,359)$49,599 $(1,232)$6,171 $65 $6,236 

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

10 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Cash Flows (Unaudited)
 Six Months Ended June 30,
 20232022
 (in millions)
Operating Activities
Net income$5,206 $4,906 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives782 812 
Depreciation and amortization383 381 
(Gains) losses on equity investments, net89 193 
Share-based compensation243 175 
Deferred income taxes24 (466)
Other37 18 
Changes in operating assets and liabilities:
Accounts receivable(268)(257)
Settlement assets(108)255 
Prepaid expenses(1,286)(1,033)
Accrued litigation and legal settlements(20)85 
Restricted security deposits held for customers155 (252)
Accounts payable(287)(110)
Settlement obligations31 (239)
Accrued expenses(707)(282)
Net change in other assets and liabilities343 53 
Net cash provided by operating activities4,617 4,239 
Investing Activities
Purchases of investment securities available-for-sale(157)(124)
Purchases of investments held-to-maturity(31)(139)
Proceeds from sales of investment securities available-for-sale45 14 
Proceeds from maturities of investment securities available-for-sale102 113 
Proceeds from maturities of investments held-to-maturity91 160 
Purchases of property and equipment(190)(201)
Capitalized software(395)(280)
Purchases of equity investments(53)(43)
Proceeds from sales of equity investments44 6 
Acquisition of businesses, net of cash acquired— (313)
Other investing activities(71)(5)
Net cash used in investing activities(615)(812)
Financing Activities
Purchases of treasury stock(5,294)(4,788)
Dividends paid(1,086)(956)
Proceeds from debt, net1,550 843 
Tax withholdings related to share-based payments(79)(136)
Cash proceeds from exercise of stock options172 68 
Other financing activities3 (6)
Net cash used in financing activities(4,734)(4,975)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents57 (202)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents(675)(1,750)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period9,196 9,902 
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period$8,521 $8,152 

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

MASTERCARD JUNE 30, 2023 FORM 10-Q 11

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to consolidated financial statements (unaudited)
Note 1. Summary of Significant Accounting Policies
Organization
Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a global technology company in the payments industry. Mastercard connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic forms of payment instead of cash and checks and making those payment transactions safe, simple, smart and accessible.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mastercard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as marketable, equity method or measurement alternative method investments and recorded in other assets on the consolidated balance sheet. At June 30, 2023 and December 31, 2022, there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. The Company consolidates acquisitions as of the date the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. During the fourth quarter of 2022, the Company updated its disaggregated net revenue presentation by category and geography to reflect the nature of its payment services and to align such information with the way in which management views its categories of net revenue. Prior period amounts have been reclassified to conform to the 2022 presentation. The reclassification had no impact on previously reported total net revenue, operating income or net income. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of December 31, 2022. The consolidated financial statements for the three and six months ended June 30, 2023 and 2022 and as of June 30, 2023 are unaudited, and in the opinion of management, include all normal recurring adjustments that are necessary to present fairly the results for interim periods. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to Mastercard’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures, including a summary of the Company’s significant accounting policies.
Note 2. Acquisitions
In April 2022, Mastercard acquired 100% equity interest in Dynamic Yield LTD. As of March 31, 2023, the Company finalized the purchase price accounting of $325 million for this acquisition. The final fair value of the purchase price allocation was not materially different than the preliminary estimated fair value. For the preliminary estimated fair value of the purchase price allocation as of the acquisition date, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

12 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
The Company’s disaggregated net revenue by category and geographic region were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in millions)
Net revenue by category:
Payment network$4,073 $3,609 $7,723 $7,008 
Value-added services and solutions2,196 1,888 4,294 3,656 
Net revenue$6,269 $5,497 $12,017 $10,664 
Net revenue by geographic region:
North American Markets 1
$2,138 $2,008 $4,034 $3,738 
International Markets4,131 3,489 7,983 6,926 
Net revenue$6,269 $5,497 $12,017 $10,664 
1.North American Markets includes the United States and Canada, excluding the U.S. Territories.
The Company’s customers are generally billed weekly, however, the frequency is dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not typically offer extended payment terms to customers. The following table sets forth the location of the amounts recognized on the consolidated balance sheet from contracts with customers:
June 30,
2023		December 31,
2022
(in millions)
Receivables from contracts with customers
Accounts receivable
$3,531 $3,213 
Contract assets
Prepaid expenses and other current assets108 118 
Other assets421 442 
Deferred revenue 1
Other current liabilities567 434 
Other liabilities290 248 
1    Revenue recognized from performance obligations satisfied during the three and six months ended June 30, 2023 was $457 million and $828 million, respectively.
Note 4. Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in millions, except per share data)
Numerator
Net income$2,845 $2,275 $5,206 $4,906 
Denominator
Basic weighted-average shares outstanding946 971 949 974 
Dilutive stock options and stock units2 3 3 3 
Diluted weighted-average shares outstanding 1
949 974 952 977 
Earnings per Share
Basic$3.01 $2.34 $5.48 $5.04 
Diluted$3.00 $2.34 $5.47 $5.02 
Note: Table may not sum due to rounding.
1    For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.

MASTERCARD JUNE 30, 2023 FORM 10-Q 13

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheet that total to the amounts shown on the consolidated statement of cash flows.
June 30,
2023		December 31,
2022
(in millions)
Cash and cash equivalents$6,170 $7,008 
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement598 589 
Restricted security deposits held for customers1,723 1,568 
Prepaid expenses and other current assets30 31 
Cash, cash equivalents, restricted cash and restricted cash equivalents$8,521 $9,196 
Note 6. Investments
The Company’s investments on the consolidated balance sheet include both available-for-sale and held-to-maturity debt securities (see Investments section below). The Company classifies its investments in equity securities of publicly traded and privately held companies within other assets on the consolidated balance sheet (see Equity Investments section below).
Investments
Investments on the consolidated balance sheet consisted of the following:
June 30,
2023		December 31,
2022
(in millions)
Available-for-sale securities 1
$279 $272 
Held-to-maturity securities 2
65 128 
Total investments $344 $400 
1See Available-for-Sale Securities section below for further detail.
2Held-to-maturity securities represent investments in time deposits that mature within one year. The cost of these securities approximates fair value.
Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, held-to maturity and available-for-sale investment securities, as well as realized gains and losses on the Company’s investment securities. The realized gains and losses from the sales of available-for-sale securities for the three and six months ended June 30, 2023 and 2022 were not material.
Available-for-Sale Securities
The major classes of the Company’s available-for-sale investment securities and their respective amortized cost basis and fair values were as follows:
 June 30, 2023December 31, 2022
 Amortized
Cost		Gross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value		Amortized
Cost		Gross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value
(in millions)
Government and agency securities$100 $— $(1)$99 $91 $— $(2)$89 
Corporate securities183 — (3)180 187 — (4)183 
Total$283 $— $(4)$279 $278 $— $(6)$272 
The Company’s government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds which are denominated in the national currency of the issuing country. Corporate available-for-sale investment securities held at June 30, 2023 and December 31, 2022 primarily carried a credit rating of A- or better. Corporate securities are comprised of commercial paper and corporate bonds. Unrealized gains and losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement of comprehensive income.

14 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The maturity distribution based on the contractual terms of the Company’s available-for-sale investment securities at June 30, 2023 was as follows:
 
 Amortized CostFair Value
 (in millions)
Due within 1 year$167 $166 
Due after 1 year through 5 years116 113 
Total$283 $279 
Equity Investments
Included in other assets on the consolidated balance sheet are equity investments with readily determinable fair values (“Marketable securities”) and equity investments without readily determinable fair values (“Nonmarketable securities”). Marketable securities are equity interests in publicly traded companies and are measured using unadjusted quoted prices in their respective active markets. Nonmarketable securities that do not qualify for equity method accounting are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer (“Measurement alternative”).
The following table is a summary of the activity related to the Company’s equity investments:
 Balance at December 31, 2022PurchasesSales
Changes in Fair Value 1
Other 2
Balance at June 30, 2023
(in millions)
Marketable securities $399 $— $— $55 $8 $462 
Nonmarketable securities1,331 53 (44)(144)6 1,202 
Total equity investments $1,730 $53 $(44)$(89)$14 $1,664 
1Recorded in gains (losses) on equity investments, net on the consolidated statement of operations.
2Includes translational impact of currency.
The following table sets forth the components of the Company’s Nonmarketable securities:
June 30,
2023		December 31,
2022
(in millions)
Measurement alternative
$991 $1,087 
Equity method
211 244 
Total Nonmarketable securities$1,202 $1,331 
The following table summarizes the total carrying value of the Company’s Measurement alternative investments, including cumulative unrealized gains and losses through June 30, 2023:
(in millions)
Initial cost basis
$529 
Cumulative adjustments 1:
Upward adjustments629 
Downward adjustments (including impairment)(167)
Carrying amount, end of period$991 
1 Includes immaterial translational impact of currency.

MASTERCARD JUNE 30, 2023 FORM 10-Q 15

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the unrealized gains and losses included in the carrying value of the Company’s Measurement alternative investments and Marketable securities:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in millions)
Measurement alternative investments:
Upward adjustments$6 $17 $6 $103 
Downward adjustments (including impairment)(2)(12)(135)(12)
Marketable securities:
Unrealized gains (losses), net121 (126)55 (288)
Note 7. Fair Value Measurements
The Company’s financial instruments are carried at fair value, cost or amortized cost on the consolidated balance sheet. The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”).
Financial Instruments - Carried at Fair Value
Financial instruments carried at fair value are categorized for fair value measurement purposes as recurring or non-recurring in nature.

16 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recurring Measurements
The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy were as follows:
 June 30, 2023December 31, 2022
 Quoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		TotalQuoted Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
(in millions)
Assets
Investment securities available-for-sale 1:
Government and agency securities$39 $60 $— $99 $35 $54 $— $89 
Corporate securities— 180 — 180 — 183 — 183 
Derivative instruments 2:
Foreign exchange contracts— 49 — 49 — 108 — 108 
Marketable securities 3:
Equity securities462 — — 462 399 — — 399 
Deferred compensation plan 4:
Deferred compensation assets86 — — 86 74 — — 74 
Liabilities
Derivative instruments 2:
Foreign exchange contracts$— $55 $— $55 $— $21 $— $21 
Interest rate contracts — 105 — 105 — 105 — 105 
Deferred compensation plan 5:
Deferred compensation liabilities84 — — 84 73 — — 73 
1The Company’s U.S. government securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. The fair value of the Company’s available-for-sale non-U.S. government and agency securities and corporate securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.
2The Company’s foreign exchange and interest rate derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes for similar derivative instruments. See Note 17 (Derivative and Hedging Instruments) for further details.
3The Company’s Marketable securities are publicly held and classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices in their respective active markets.
4The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.
5The deferred compensation liabilities are measured at fair value based on the quoted prices of identical instruments to the investment vehicles selected by the participants. These are included in other liabilities on the consolidated balance sheet.
Nonrecurring Measurements
Nonmarketable Securities
The Company’s Nonmarketable securities are recorded at fair value on a nonrecurring basis in periods after initial recognition under the equity method or measurement alternative method. Nonmarketable securities are classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment. The Company uses discounted cash flows and market assumptions to estimate the fair value of its Nonmarketable securities when certain events or circumstances indicate that impairment may exist. See Note 6 (Investments) for further details.

MASTERCARD JUNE 30, 2023 FORM 10-Q 17

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Not Carried at Fair Value
Debt
Debt instruments are carried on the consolidated balance sheet at amortized cost. The Company estimates the fair value of its debt based on either market quotes or observable market data. Debt is classified as Level 2 of the Valuation Hierarchy as it is generally not traded in active markets. At June 30, 2023, the carrying value and fair value of debt was $15.6 billion and $14.4 billion, respectively. At December 31, 2022, the carrying value and fair value of debt was $14.0 billion and $12.7 billion, respectively. See Note 10 (Debt) for further details.
Other Financial Instruments
Certain other financial instruments are carried on the consolidated balance sheet at cost or amortized cost basis, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, time deposits, accounts receivable, settlement assets, restricted security deposits held for customers, accounts payable, settlement obligations and other accrued liabilities.
Note 8. Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consisted of the following:
June 30,
2023		December 31,
2022
(in millions)
Customer and merchant incentives$1,472 $1,392 
Prepaid income taxes65 34 
Other1,017 920 
Total prepaid expenses and other current assets$2,554 $2,346 
Other assets consisted of the following:
June 30,
2023		December 31,
2022
(in millions)
Customer and merchant incentives$4,778 $4,578 
Equity investments1,664 1,730 
Income taxes receivable656 633 
Other641 639 
Total other assets$7,739 $7,580 
Customer and merchant incentives represent payments made to customers and merchants under business agreements. Payments made directly related to entering into such an agreement are generally capitalized and amortized over the life of the agreement.
Note 9. Accrued Expenses and Accrued Litigation
Accrued expenses consisted of the following:
June 30,
2023		December 31,
2022
 (in millions)
Customer and merchant incentives$5,397 $5,600 
Personnel costs754 1,322 
Income and other taxes449 279 
Other517 600 
Total accrued expenses$7,117 $7,801 
Customer and merchant incentives represent amounts to be paid to customers under business agreements. As of June 30, 2023 and December 31, 2022, long-term customer and merchant incentives included in other liabilities were $2,507 million and $2,293 million, respectively.

18 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2023 and December 31, 2022, the Company’s provision for litigation was $1,079 million and $1,094 million, respectively. These amounts are not included in the accrued expenses table above and are separately reported as accrued litigation on the consolidated balance sheet. See Note 15 (Legal and Regulatory Proceedings) for additional information regarding the Company’s accrued litigation.

MASTERCARD JUNE 30, 2023 FORM 10-Q 19

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Debt
Debt consisted of the following:
June 30,
2023		December 31,
2022		Effective
Interest Rate
(in millions)
Senior Notes
2023 USD Notes4.875 %Senior Notes due March 2028$750 $— 5.003 %
4.850 %Senior Notes due March 2033750 — 4.923 %
2022 EUR Notes 1
1.000 %Senior Notes due February 2029817 800 1.138 %
2021 USD Notes2.000 %Senior Notes due November 2031750 750 2.112 %
1.900