Mastercard Incorporated ($MA)

Okay. Thanks, everybody, for joining. This is Tien-Tsin Huang. I follow the payment sector here at JPMorgan and always excited to have Mastercard with us, super grateful to get Sachin Mehra, the CFO with us, we'll do a fireside chat. Devin Corr is here as well from the IR team. So thank you for being here, both of you.

Thank you, Tien-Tsin. Thanks for having us. I always enjoy being here at your conference.

No, it's always fun. I always enjoy the conversation. It's easy. You make it easy, Sachin. So we'll have a quick 30 minutes. I'm sure to go through the topics of the day.

But let's kick it off. Of course, you just had the quarter recently, and we talked a lot about a lot of uncertainty out there in the market, heightened uncertainty, I think, is the term you used. Can you give us just a sense of what the health of the consumer looks like today on the ground, you have such a great insight into what the consumer is doing, you describe it today?

Happy to do that. So look, I mean, as we mentioned at the earnings call and as I look at even trends post earnings, the consumer continues to be in actually pretty good shape. And what we're seeing from a consumer spend standpoint is holding up nicely. That's true, largely being driven by the fact that as I look across the globe, unemployment rates are still very much within the range of all-time lows. So that's certainly a contributing factor. Wage growth is something, which we're tracking closely, and that continues to do well as well. There's a little bit of a headwind, which we see coming through on account of higher inflation, primarily driven by high energy prices. So when you actually peel back what's going on from an inflation standpoint, you're certainly seeing higher energy prices come through in the nature of the headline inflation number. But then on other categories of spend, you're actually seeing some level of disinflation, which is taking place. So there are offsets taking place there as well. All of that being said, when I take low unemployment rates, the fact that wage growth is still at pretty healthy rates as well as the wealth effect, i.e., the fact that equity markets continue to do well, all of that is translating into a healthy consumer as we see it. So much so that, when I look at our own metrics, and we've shared with you metrics as it relates to what we saw through the week ending April 28. And then I've seen what's kind of gone on through the first 2 weeks of May. I would tell you, by and large, across our metrics, we're seeing stable to slightly better trends across the metrics. Now that includes some of the adjustment, which takes place from a timing standpoint. And the timing is something I had flagged as part of the earnings call, which placed in April, i.e., we had seen some headwinds from a timing standpoint. In our first 4 weeks of April, you see the reversal of that come through. But by and large, good strong trends from a consumer health standpoint.

Good. I know that's always important. I'm glad for the update there. Just thinking about, I know going into the quarter, there was a lot of concern around the geopolitical tension, the conflict that's happening in the Middle East, et cetera. So I have to ask you here, Sachin. And just thinking about the conflict here in the Middle East. What are the implications for Mastercard? You cited some exposure there. Any update on how that's playing out? And any surprise there.

Yes. Look, I mean, I'll go back to the comments I just made from a driver trend standpoint, right? I'd mentioned at the time of the earnings call that the impact of the conflict in the Middle East was primarily showing up across 2 vectors. One was in our cross-border travel metrics specific to what you're seeing in the nature of inbound into the impacted countries, let's call it the GCC and Israel, right, outbound from those countries and travel through those countries. Because remember, a lot of those countries actually happen to be transit hubs as well. So there's travel, which takes place, even though my end designation may not be the GCC country infection, there was previously travel going on, which was taking place through that. Now some of that actually is being changed in the nature of travel routing, which is taking place through other countries, right? But the reality is the impact of the conflict is very much there, as you saw in our metrics for the first few weeks of April. But I wouldn't say that what I'm observing right now from a trend standpoint is outside of our expectations from what I shared with you 2 weeks ago as part of the earnings, right? So there's the impact of the conflict on that. But beyond that, what you also see is it goes back to my comment around higher energy prices, oil prices, what that's translating into is a higher nominal value of spend taking place on gas prices, right? So you can have a little bit of an offset coming through on that. Again, it's a little bit of a give and get. But on the travel side, you're certainly seeing that impact through on cross-border.

Yes. So with all of these puts and takes, Sachin, as you're putting together the full year guide, what really matters? What would you emphasize to us? I know the mix is changing. You got some pricing dynamics as well, how would you summarize it for us.

So here's how I'd summarize it. It's very much in line with what I shared with you 2 weeks ago. We -- when we shared with you our full year guide 2 weeks ago, that was very consistent with what we shared with you at the start of the year, right? So we kind of held our full year guide. At what we call the high end of low double digits on a currency-neutral basis, excluding the impact of inorganic equity, right? And that's what we had kind of shared with you. The reason there are these puts and takes is obviously, for the reasons we've talked about, which is the conflict. But remember, we had a very solid first quarter. We have an assumption, which we shared with you when we gave you that guide for the full year, which was around the impacts of the conflict being most pronounced in Q2 and then there being a progressive recovery in Q3 and Q4, right? But the most important message I'd like to leave you with is, we are an incredibly diversified business. I know people are hyper-focused on cross-border travel. The reality is we have a lot of levers in our business, and you've seen this through COVID, and you've seen this post-COVID. The business tends to grow, depending on which levers are actually in favor or not. So for example, as a company, we have 40% of our revenues coming from services. Our services capabilities continue to be in very strong demand, right? You saw the performance of our value-added services and solutions. In the first quarter, everything I'm hearing from our customer base, from our sales teams is that continues to be in very strong demand, right? So holistically, I feel pretty good about where we are from a guide standpoint. Obviously, I have no idea what happens from whether the impact of the conflict gets worse or better between now and the end of the year. But based on the assumptions I've shared with you, I feel very good about the diversified nature of our business lending to what we've shared from a guide standpoint. The other point I'll share with you is we've shared -- you've seen our first quarter performance. You've seen our guidance for the second quarter. What that naturally implies is that you will see an uptick in terms of what our performance will be in the second half of the year just because that's just simple math, would suggest that to be the case. And I would say, if you went back to last year, you saw that we had tailwinds from FX volatility, which were most pronounced in the second quarter, which creates for a tougher comp this year in the second quarter, already reflected in the guidance I shared with you, just to be clear, right? But you also had tailwinds on FX volatility in Q1 of last year and Q3 of last year. In Q4, that was pretty normalized. So my point to you is from a cadence standpoint, as you're thinking about Q3 and Q4, think about the acceleration in the second half being more back-end loaded into Q4 is the other piece I'd share with you.

Okay. No, thanks for going through that. I know it's annoying probably to focus in all of the things...

No, it's okay.

But the first view of the business, of course, is what matters most. There's been a lot of cycles, and we've seen that. But I do think before we get into some of the other services and some of the other -- the growth pieces, Sachin, the balance of trade, the competitiveness of the network business. We've been getting a lot of questions on that. Same question there. How would you characterize the competitive environment today, have you seen any changes in terms of how deals are coming together?

Short answer is no. We operate in a competitive environment. We've always operated in a competitive environment. I haven't seen a remarkable change in terms of either to the upside or the downside as it relates to the competitive environment. I suspect part of the reason you're asking that question and getting that question is around rebates and incentives and what you see in the nature of rebates and incentives. And you got to remember, at the end of the day, rebates and incentives are part of what is the playbook to drive net revenue yield accretion. And I think this is really, really important for all of us to understand, right? The idea is for the right kinds of portfolios, which have the right growth potential, which where we have the ability to deliver services we want to pay rebates and incentives to bring that volume onto the system. When you bring that volume into the system, you have the ability to grow the portfolio at a faster pace, deliver more services to drive that net revenue yield accretion, I was just talking about. So anybody who's tracking our net revenue yield accretion, we'll see that we have been growing net revenue yield, notwithstanding the fact that rebates and incentives are growing faster than where volumes are growing. And I think that's really, really important to understand because we cannot miss the larger plot. The larger plot being we've got to drive overall net revenue growth, including services revenue growth. And services revenue growth is highly enabled by what we do in the payment network and winning the right kind of volume there. That's kind of point number one, I'd say, from a competitive environment standpoint. The second point I'd make is rebates and incentives tend to fluctuate quarter to quarter. And I say that it's a function of what the pipeline of deals is. It's a function of how volumes are coming on to the system. It's a function of what we estimate volume assumptions to be for our customers. So oftentimes what will happen is, remember, we have fixed incentives and we have variable incentives. Fixed incentives are amortized on a straight-line basis over the life of the deal. Variable incentives are incentives which are accrued based on what our estimates are of what volumes come on. So at any given time, we'll make estimates on volumes and we'll accrue those incentives from a variable standpoint. But in every quarter, we true up that to reflect actual performance. So for example, last year, right, there was a true-up to the positive on rebates incentives. Let's pick a quarter in the first quarter or the second quarter, it's going to create for a tougher comp in any 1 given quarter. So I wouldn't -- I would suggest that you don't hyper focus on rebates and incentives in any 1 given quarter, but rather take a view on the bigger picture, the bigger picture being are we doing the right thing in terms of driving net revenue yield accretion, which is what we're very focused on.

That's the punch line. Net revenue yield is up. Even ex services, I think it's up. So you're getting the performance, I think you want. But look, I have that asked the question. Thinking about then growth algorithm, I know we obsessed over volume growth, and you went through a lot of the volume dynamics already. Would you encourage us to look at it maybe a little bit differently from a growth algorithm standpoint? Are there new forces of growth that are coming in that are maybe more important, whether it be to yield or it's a net revenue or gross revenue.

So I think the pillars of growth that we've outlined for you as an investment community and for which we are executing on are still very sound. We've got to continue to do that, which is continue to drive growth in our consumer payments, in our commercial and new payment flows and our value-added services and solutions, got to drive that secular shift, which is the digitization of flows. I think the interesting things, which we are working on today, which don't necessarily manifest themselves in meaningful revenue contribution today are around the new and different we're doing in the stablecoins going space, or let me broaden that out and call it the digital asset space and what we're doing in agentic payments. And literally, this is Mastercard's playbook, and it has been Mastercard's playbook for a while. We'll execute on everything we're talking about in terms of the here and now, but we're also investing in what is going to be drugs of growth for decades to come, and that's what we're doing right now. So to answer your question, we've got to be able to deliver on the opportunity we see today, which is around consumer payments, commercial and the value-added services and solutions, which we've got our portfolio, but continue to invest in the new and different, which we see. For us, there's a very important role we can play in digital assets. This is a very important role we can play in a genic payments that we're actually very focused on to deliver that long-term growth.

You mentioned the agentic. So I'll ask on that. It's a perfect tech conference type question. It does feel like it's an extension of e-commerce in a lot of ways. And we've written about that, you've built the foundation around tokenization. So we do think Mastercard will, for sure, participate. But how do you see it evolving within the ecosystem? I know there's a lot of debate around protocols. You're playing a role in that, Sachin. But what should we be tracking to see how this takes off, given it is early.

So look, we -- First, I'm going to actually comment on it the following, which is we're not going to pick winners and losers. We're going to let consumers decide what is their preferred method of actually shopping. So if they want to use agents going forward, we want to be the preferred payment rails if that consumers decide to do. That's kind of the starting point. That's the philosophy. We, as a company, have adopted for decades now. So that's kind of point number one. Point number two is, as we think about agentic payments, there as you talked about protocols, right? You have to think about this as the commerce layer and then there's the payments layer. So there are protocols around the commerce layer. This is where this requires protocols to be established between the folks who are developing the agents with the merchant community, right, in order to get access to the merchant catalog. And then there's the payments layer and the payments protocols, which is what we define as a network. And there has to be interoperability between the protocols we define and the payments layer with that in the commerce layer, which is exactly what we've been doing. So now our issuers are fully enabled for agentic payments across the globe. What do we do? We establish trust. Why are agentic payments -- why trust a necessity in agentic payments? It is because as a consumer and as a merchant, we need to have payments which are well authenticated, point number one. Number two, where the intent of the consumer is well recorded, which is where we have put out there the verifiable intent product to allow for that intent to be recorded. And for a registration process for agents in order for that shopping experience to take place in a safe and secure manner. Now you asked the question as to how we see this evolving. I'll argue that, that's entirely going to be determined by consumers, but our view is you will first see human-assisted agentic payments before you will see autonomous agentic payments. So I see this as a multistep process as opposed to all of a sudden a consumer waking up in the morning and saying, I no longer want to actually be involved in purchasing what I really need. I'm going to let some agent make that happen for me. I think what will happen is the search and discover process, folks will leverage the agents for as they have been and will continue to do. And then as it relates to closing a commerce transaction, I think human beings will be involved initially to delegate the authority after they see the shopping basket to the agent to make that final transaction happen. Over time, that will move into more of an autonomous environment, which is why that trust layer is really, really important. And this is why we're very focused on delivering on exactly that. The second piece I'd mention is how -- people oftentimes ask a question on agentic payments. Is this just a dollar of volume moving from what would have been traditional e-commerce into what is an agentic payment, right? And the reality is, yes, there will be some amount of that. There will be -- what would have been an e-commerce transaction, which should have gone over card rails, which will go into agentic payments, which will also go to card rails. But what it does do is it creates 2 new -- 3 new opportunities. Number one, it creates for the potential for a multiplication of transactions. And the reason it does is because agents will not necessarily be emotionally attached to shopping from the same merchant. They will look to find what is the most optimal answer. And so you might end up buying shoes from 1 merchant and socks from another merchant, hat from a third merchant if there's an agent which is doing that transaction. Compared to a human being by all 3 from the same merchant, which might result in 1 transaction. And remember, Mastercard owns revenue, both on basis points on volume and [ cents ] per transaction. So more transactions result in more -- more revenue for Mastercard. So that's number one. Number two, you have the ability to derive greater amounts of revenue from delivering more services because as you move away from the more physical interaction, which takes place between to human beings when a cost transaction takes place to now what is transactions purely taking place between agents. There's a greater need for established trust. There's a greater need for preventing fraud, things of that sort. So greater ability for us to deliver more services to generate revenue. And the third piece is around tokenization, which you talked about, Tien-Tsin, which is every agent transaction will be a tokenized transaction. So you have a real opportunity there as well.

Yes. And feel very good that with tokenization and network tokens being deployed that you'll play a role there. So that's the external view on AI and agentic commerce, so things were going though that. What about leveraging AI internally, right, at Mastercard. You and I haven't talked about that at length, and I got to share we did some benchmarking, Sachin. I don't know if you saw that, but when we scored all of our coverage companies across gross profit or net revenue per employee, Mastercard scored very highly already. So naturally a very productive base already. But what else can be done from an AI standpoint, sitting in your seat as CFO? Or is your dealing with Michael, what are his priorities on AI?

So look, hyper-focused on doing it the right way and doing it the right way is important because you want to do AI, not for the sake of doing AI, but because you actually truly believe you can deliver productivity gains and good returns on investment. And here's what I would tell you as it relates to Mastercard is doing a bunch of work leveraging AI around the cost side of the equation. It's certainly happening on the coating side with our engineers. As you know, we do a bunch of work from an engineering standpoint. We're leveraging AI for coding. But we're also using it for call center operations. We're using it in the finance operation, for example, for forecasting and things of that sort. So there are going to be use cases which are there. But I got to be candid with you. Right now, all of that's only resulting in the following answer when you asked the question, which is, yes, Sachin, we are making investments in AI, where we see a lot of benefit. It's resulting in productivity gains. And I say translate productivity gains in terms of what is my return on investment, and that is something which still needs to be done. So said differently, what people are saying as in the employee base is bringing out is, we can do more with less, but we can't quite quantify for you what more with less looks like. This is important because as a CFO, if I'm sitting in the seat I am, I want to see a return on investment as well as opposed to someone just telling me, I would have normally come and asked you in theory for more people, but now I'm not going to ask you for more people, because I'm leveraging AI. So I see the value of this. That's why we're investing in it. But I think we've got to take the next click forward. And I don't think Mastercard's unique in this. I've spoken to a bunch of my peers across the finance community. Most of us are in the same place, which is it's around -- we're seeing the productivity gains. We haven't quite seen the delivery in terms of lower cost come to the bottom line quite yet, right? So that's kind of point number one. That's on the cost side. But let's not forget, we've been in the AI space, delivering revenue for the better part of a decade, right? We have about 1/3 of our value-added services and solutions products, right? Leverage both predictive and generative AI. And that's really important because at the end of the day, you remember, we talked about the growth on value-added services and solutions. Well, that's been enabled by our investments in AI, initially in predictive AI now in generative AI, which is really paying rich dividends. I would argue. And frankly, for a company like Mastercard, I want to lean in both on the cost side and the revenue side, but I'm hyper-focused on making sure we're doing the right kind of investments or to deliver the right kind of products and capabilities to generate that growth on the revenue side of the equation.

Okay. Good. Makes a lot of sense awful. So let's pivot a little bit to digital assets and stablecoins. You asked about it. I mean a lot has changed, obviously, since Michael was here last year, we talked about it. You guys made an acquisition with BVNK. What's the thesis on buying that versus building something organically, have your views changed on stablecoin in the last 6 months or so?

So look, I think from a stablecoins, we see this as a net incremental opportunity, particularly as it relates to B2B flows, P2P flows and me to me. And me to me is basically me loading my digital wallet. So our view is that there will be consumers again, who will want a certain portion of their assets, which will be in some sort of digital assets, whether it's stable coins or otherwise. However, there is going to be a proliferation of digital assets. You might see tokenized deposits, as in tokenized bank deposits, you might see the likes of USDC, USDT and more stablecoins to come. What that effectively means is you're going to need a central clearing authority from an interoperability standpoint because not everybody is going to be vested in the same digital asset. You might want to send me USDC, I want to receive USDT. Somebody needs to actually play the role from an interoperability standpoint, and this is where BVNK comes into play. What BVNK does, and again, this acquisition still remains to be close, we are expecting for that to happen before the end of the year. It has 4 main capabilities. It has what we call send, receive, store and convert. And it's exactly what they sound like. Your ability to send stable coins digital assets, your ability to receive stablecoins, digital assets, your ability to convert from 1 stablecoins to the other stablecoin and your ability to store. And we believe that with these capabilities and as there's greater proliferation of digital assets, this is going to be a very interesting new addressable market for us to go into. Their revenue model is actually quite akin to that of what we do as a payment network. It's basis points on the volume, which is either sent, receive, converted or stored, and that's super important. Initially, I see this taking place in the cross-border B2B space, but I certainly see opportunities around P2P and me to me as well with [indiscernible].

Right. But B2B is probably the most imminent and measurable one.

It's probably the most imminent. I would argue that I think as time goes along, and you start to see remittances take place beyond what is there right now where our business is remitting funds to another business. you will see consumer remittances as well taking place. So if I'm looking to send money back home to India and I understand that using stablecoins, right, BVNK can play a big role in that, and that would be a P2P transaction where Sachin is sending it to his brother, dad, whoever right, the proceeds, I could do it in fiat. I do it in fiat, right? But I could do it in stablecoins as well and [indiscernible] play a role in that.

Okay. Good. So let's talk about value added services and solutions are vast, as we all call it. I mean a lot of what we've talked about fits with invest, I think Mastercard was very early. Culturally, I think, in embracing value-added services and solutions with some of the things you did earlier with Orbiscom, et cetera. So my question is more just as that's evolved and it's gotten quite large, Sachin, how dual is that growth. That's a very common investor question. How would you address the durability of that? And where are the biggest sources of growth today coming from with VASS.

Okay. So I think it's important to actually first step back and think about VASS as not being divorced from the payment network. Because at the end of the day, what we do in our value-added services and solutions, the basic raw material is the data we derive from our payment network. So the more that we can do to drive more volume into the system and get more data, the greater we are enabling ourselves to actually be successful on the VASS side of the equation. They're very closely linked. And then in turn, our ability to deliver value-added services and solutions powers the payment network because our customers who are delivering these value-added services and solutions appreciate what we bring to them and hence move more payment volume to us. So I need to frame it that way because your question around sustainability is a function of what your belief is around our ability to drive sustained growth on the payment network. Approximately 60% we had mentioned at our last Investor Day, approximately 60% of our VASS revenues are network-linked. And by that, I mean, linked to the payment network. Now what that effectively means is as you see volumes and transactions grow card-not-present transactions grow on the payment network. We have attached value-added services and solutions to those transactions, so you see a natural tailwind come through from that. So that's kind of lever number one to drive growth. Lever number two is increasing the number of value-added services, which are attached to each transaction. We have very successfully done that both organically and inorganically over the past decade or so. And we will continue to do more and more of that because we think there's a greater, greater need for it for our customers. That's what we hear from our customers, and we'll continue to do that, right? Lever number three is around driving deeper penetration across our existing customer base. So it doesn't mean every customer buys every solution that we've got, even if it's attached to the payment network, right? And we continue to do that as well. Lever number four, and this is all to your question around sustainability of growth, right, is around what we do from a consulting and marketing services practice standpoint. This is the 40%, call it, which is not network-linked, but still reliant on the network for the data we get from the network, right? Really important because what it does do is it allows us to help sell what are those network-linked services so that you have that consulting engagement, which goes in there and says, by the way, you have a fraud problem. Let me help you out with a fraud solution, which happens to be a network-linked solution, right? So you got to do that as well as part of the journey. And then the last piece from a growth algorithm standpoint for VASS is around expanding our addressable market. And the best example I can give you in the most recent example I can give you is the recent acquisition we did of a company called Recorded Future, which is in the threat intelligence space. Completely new addressable market, something Mastercard has not participated in, but has huge synergistic value with what we've got in the nature of data across our payment network. So it's all of these building blocks, which are helping us drive for value. We talked about tokenization earlier. Tokenization is another big contributor to our value-added services and solutions growth. So just as a reference point, approximately 40% of all our transactions are currently tokenized. That's the good news. The even better news is that in 60% are not tokenized, which means there's tremendous runway, which still remains to drive greater amount of tokenization to deliver services around that tokenization, which is what we charge for, right, and drive greater revenue growth. So we see sufficient number of levers here to see how we can drive that sustained growth from a value-added services and solutions standpoint.

Okay. Good. So I have to ask, what does this mean for margins, Sachin. I mean tokenization, we're bullish on as well, penetration story, incremental margins. Compare that to say the consulting business that you mentioned, which is a different margin profile. Is there a tension there in balancing revenue growth and the margins that we've come to expect from Mastercard?

Well, look, I mean, I think the biggest, search we can do to our long-term investors is to actually take a shortsighted view around costs to impinge on our growth to drive longer-term revenues for this company. So let me just kind of frame this whole question on margins around that, right? We've got to continue to invest in the business to realize the opportunities which we've just talked about. So on your specific question, I think it'd be short sight for us not to grow our consulting and marketing services practice. If what that does is enables greater growth of the payment network enables greater growth of what would be our network linked revenues. We've got to do it. We've got to do it smartly and that's what we're going to do. Does it come with higher incremental costs relative to what might be a tokenized transaction, for example? Sure, it does. But for us to actually just say, I'm only going to chase because I've got an artificial threshold, which I've said as it relates to what going to deliver from a margin standpoint, I think would be very shortsighted for us as a company.

Buybacks. So there's a little bit of a step-up in buyback on the -- in the last quarter. I think you talked about a greater appetite to take advantage of the share price being where it is. Is this a change? Is this just opportunistic and structural? I'm just trying to better understand the thinking around buybacks versus M&A.

Well, our capital allocation priorities have not changed from what we've shared with you in the past. We continue to actually prioritize maintaining a strong balance sheet. The first all of capital will be towards reinvesting in the business to realize the growth opportunities that will be both organic and inorganic, right? And then to the extent there's money to be returned thereafter, that will be returned back to the shareholders with a bias towards buybacks. Certainly, we do dividends as well, but with the bias towards buybacks. But we've always said that we'll be opportunistic and the first quarter would be a prime example of what opportunistic looks like. We continue to have tremendous confidence in the long-term potential for the business. We continue to believe that this is a great time to be opportunistic and exercise a greater amount of buybacks, which is exactly what we did as part of the first quarter here. So I mean, all I'll say is we'll continue to be opportunistic going forward.

Thinking about M&A, though, same thing around being opportunistic. I mean, you've done BVNK, you mentioned recorded future. It does feel like there's a little bit more consolidation going on in the space and valuations, I think, are still all over the place or some inconsistencies.

I think we'll be active on the M&A front. We will continue to stay active, Tien-Tsin. I mean that -- it's all strategy-led. If it makes sense for us to build it, we'll build it. If it's better for us to buy it, that's what we'll do. In the instance of BVNK, I would tell you, building what BVNK has built will take a long, long, long, long time. There is licenses, you've got to get in different jurisdictions. There's the technology they bring. It's about the connectivity they've got with the ecosystem with the other digital asset providers who are out there. I think that's really important to realize that time to market and being there quickly and being there first is important, in which case, we won't be shy to acquire a company.

This displays some dispositions, too, though, right, Sachin, so as you're thinking about the portfolio, is that a more active place to think about maybe more dispositions?

Again, we've got to be prudent and good stewards of capital. To the extent we do acquisitions, there are some, which are successful and there are others which are not necessarily paying off the way we would like for them to pay off. In those instances, I think the right thing to do for us would be to actually exit those which don't necessarily make a lot of strategic sense for us, and that's where the disposition piece will come. We'll continue to do that. We just got to be very, very, very prudent in terms of how we're managing the capital of this company right, which is what we've always done and will continue to do.

Yes. But fair to say that you're leaning mostly into the VASS category in terms of content addition?

Yes. Look, I mean, you see that VASS is a definition, which is it's what I call a created definition, right? BVNK, somebody told me it's infrastructure, right? And I say, all right, well, you can call it what you want. The reality is at the end of the day. And I say it's a creative definition only because a lot of what we've done in VASS historically used to be part of the payment network, right? And so I think you've got to kind of just think about what we're doing. Yes, we've been very acquisitive on the -- what we now call VASS. We'll continue to do that, but we'll also do stuff beyond VASS is, I guess, my point, where it will make sense.

Okay. Good. So we'll close it out, just get your final thoughts. We've talked a lot about a lot of different things. I'm sure you've been doing meetings here and coming into the conference. What would you underline, Sachin? I mean, what do you think the opportunity is maybe misunderstood or underappreciated?

Yes. Look, I mean, here's what I'd say. I'd say we're executing. The strategy is sound. I couldn't believe that for those who are patient investors, this is a -- it's a great -- it's one where we are very well positioned. And I continue to believe that, I can't tell you whether it's underappreciated or not. What I can tell you is that we continue to see tremendous growth opportunities and we're capitalizing on that. And you're seeing that in the numbers. Funny thing about everything we talk about is every quarter, we print numbers. They happen to be better than what people expect and we expected, right? But then there's this -- but all of this can go wrong kind of thing. And the reality is yes, but Mastercard's lived in the world of everything can go wrong for the better part of a decade and some and it actually demonstrated good performance thereafter. So I continue to believe we have to keep our head down, continue to focus, continue to drive, pick up the opportunities, but maintain a healthy level of paranoia. I will not tell you that this company is complacent. I will tell you this company has got a healthy level of paranoia, which is understand what's going on in the ecosystem around you and make sure you're leaning in as opposed to turning your back to what's happening in there, whether it's stable coins, whether it's genetic payments you name it. This is out of the culture of this company, and we'll continue to do that going forward.

The company is active. There's no doubt about that. Thank you for the update, Sachin. I always enjoy the conversation.

Thank you. Appreciate it.

Yes. Thank you.