Mastercard Incorporated (NYSE:MA) Q3 2023 Earnings Call Transcript

Mastercard Incorporated (NYSE:MA) Q3 2023 Earnings Call Transcript October 26, 2023

Mastercard Incorporated beats earnings expectations. Reported EPS is $3.39, expectations were $3.21.

Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Inc. Q2 2023 Earnings Conference Call. [Operator Instructions]. Mr. Devin Corr, Head of Investor Relations, you may begin your conference.

Devin Corr: Thank you, Audra. Good morning, everyone, and thank you for joining us for our Third Quarter 2023 Earnings Call. With me today are Michael Miebach, our Chief Executive Officer; and Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce your opportunity to get into the queue for the Q&A session. It is only then, that the queue will open for questions. You can access our earnings release, supplemental performance data and the slide deck that accompany this call in the Investor Relations section of our website, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis unless otherwise noted.

A side profile of a consumer within a store handing a credit card to a cashier, reflecting the debt collection services of the company.

Both the release and the slide deck include reconciliations of non-GAAP measures to GAAP reported amounts. Finally, as set forth in more detail in our earnings release, I’d like to remind everyone that today’s call will include forward-looking statements regarding Mastercard’s future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our website for 30 days. With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach.

Michael Miebach: Thank you, Devin. Good morning from New York, everyone. Let me start by acknowledging the recent terror attacks in Israel and the resulting war with Hamas and the growing humanitarian crisis in Gaza. We’re deeply saddened by the suffering and the loss. Our focus is on the well-being of our people, those who have been directly impacted and those in our teams around the world, who are dealing with this terrible situation. We will continue to give them support while contributing to relieve efforts. We will monitor the situation closely so we can take action as required. Turning to our results, our quarter three results demonstrate the strong fundamentals of our business, our diversified model, and the continued resilience in consumer spending.

Quarter three net revenues were up 11% and operating income was up 13%, both versus a year ago on a non-GAAP, currency-neutral basis, excluding special items. On a macroeconomic front, there are a few factors we focus on. First, the labor market remains strong, which is a key driver of consumer spending. However, we continue to monitor aspects such as credit availability and savings behaviors. Second, although inflation levels have moderated, they remain elevated. As central banks continue to actively manage monetary policy, we expect the impacts to vary across countries and sectors. Also, geopolitical uncertainty remains a concern, further underscored by the recent events in the Middle East. We are monitoring these moving pieces and stand ready to manage the business accordingly.

Looking at our switch trends this quarter, domestic volume growth remains healthy, with some moderation in spend in select international markets. Cross-border travel remains strong at 155% of 2019 levels in the third quarter. And cross-border card present X-travel continues to hold up well at 209% of 2019 levels in the third quarter. And this is cross-border card not present X-travel. So overall, consumer spending remains resilient and we remain focused on executing against our strategic priorities. We see substantial runway for growth through the long-term potential in person to merchant payments, the sizable opportunity to address new payment flows, our diverse suite of fast-growing service capabilities, and our investments in areas of future growth like open banking and digital identity.

Let’s explore these in more detail. Starting with person to merchant payments, where we see a sizable long-term growth opportunity. We’re winning deals with a diverse set of partners and investing in technology to further drive the shift to electronic forms of payment and capture new ways to pay. The third quarter, our deal momentum across the globe continued. In the US, we’re happy to announce that Webster Bank, a leading commercial bank in the Northeast, has chosen MasterCard as their exclusive payment network. They selected us because of our marketing assets, safety and security tools, and commitment to small business. This builds up on recent wins in the US like the Citizens Debit Portfolio Flip with the transition on track for 2024. These two wins are clear examples of the value we deliver through our partnerships and the reasons banks are willing to move their debit business to MasterCard.

Further, we have partnered with Citi’s wealth business to launch their ultra-high net worth credit proposition, targeting their private bank clients in Singapore and Hong Kong. And in East Africa, we signed a long-term deal with Equity Bank Group that significantly increases our share across the six markets where they have presence. On the co-brand front, we joined Barclays to launch Xbox, first credit card in the United States. Building off our long-standing relationship with Microsoft, this product is an example of how we’re tapping into the fast-growing gaming space. And of course, we continue to strengthen our travel-focused programs, renewing our Frontier Airlines program issued by Barclays, as well as the Turkish Airlines program with Garanti BBVA.

Winning deals positions us well to capture PCE and secular growth. There’s a sizable opportunity across volumes and transactions, and we benefit from both. We’re bringing together innovation, technology, the experience, and trust that consumers want and expect in their daily lives. And that starts with our best-in-class digital solutions such as Contactless and tokenization. Contactless now represents 63% of our in-person switch purchase transactions, and the convenience and security of our capabilities are helping us to further penetrate verticals like transit. By converting transit to Open-Loop, we gain access to more low-ticket, high-frequency transactions, both at the station and the surrounding merchants. The last quarter alone, we launched Open-Loop programs with two of the largest transit systems in North America, Toronto and Philadelphia.

We’re now live with over 25 agencies in the U.S. and Canada. This year in the Netherlands, we supported the launch of a nationwide Contactless transit payment system. And in Pakistan, we’re helping to digitize daily commutes in Karachi with issuance over one million prepaid Open-Loop cards. On tokenization, it has been 10 years since we first introduced the token standard to the industry. Today, it is foundational to the network and it’s performing exceptionally well. The number of tokenized transactions has more than doubled over the past two years. We just processed over three billion tokenized transactions in one month. And this functionality is extending to new places to pay. For example, Mercedes-Benz customers in Germany can now pay for fuel directly from their vehicle using only their fingerprint.

And Hyundai Motor America is enabling in-vehicle payments for parking with additional features and EV use cases to be enabled in the future. Digital solutions are also key to migrating Maestro to Debit Mastercard. This conversion drives a better cardholder experience, including in many cases, the ability to shop online and across borders, which leads to incremental card spend. And prior to full transition, we offer a virtual companion card to the current Maestro cards for immediate online use. In Europe, we’re in the process of sun-setting new issuance of Maestro, and we will continue to work with our issuers on the migration of well over 100 million cards over time. A lot happening in P2M for sure. Onto the second vector for growth, new payment flows.

There are substantial untapped flows across commercial payments and the disbursements and remittance space. In commercial, we continue to see strong growth. We’re expanding our market-leading virtual card capabilities into new use cases. In the US and Canada, our mobile payment solution is now live with BMO and TechPartner Extend, bringing our virtual card capabilities to contactless business payments. We also continue to expand our reach to corporates by partnering with Oracle to embed MasterCard virtual card capabilities into their Fusion Cloud ERP to enable supplier invoice payments and corporate purchases. And we are integrating our commercial payment and open banking capabilities into SAP Firenir platforms to deliver an embedded payment and lending experience.

There remains a significant opportunity to convert cash and check to commercial card products. We’re signing deals across the globe to do just that. We’re excited to announce that we have agreed a long-term deal with Citibank to forge a global commercial card partnership covering more than 60 markets. The deal extends our leadership position with Citibank and reinforces our efforts to modernize and grow B2B payment flows. We also signed our first ever commercial contract with Axis Bank in India and a commercial deal with the biggest investment bank in Latin America, BTG Pactual. Now, let’s focus on disbursements and remittances. With access to more than 95% of the world’s bank population, our reach spans more than 180 countries and more than 150 currencies.

And we are seeing strong growth. In the third quarter, transactions were up more than 30% on a year-over-year basis. To continue growing in this space, we’re expanding into new use cases and geographies. A great example is our partnership with Remitly, one of the fastest growing digital remittance platforms with over five million active users. Remitly will leverage our disbursement and remittance solutions to help make international payments faster, easier, and more secure. We’re also expanding our collaboration with Paysend in the UK to enhance cross-border payments for SMEs. Now our value-add services and solutions are another important driver for our growth. Collectively, this suite of capabilities is fast-growing and provides a diversified revenue stream.

We have invested thoughtfully to develop services focused on supporting our customers in areas of growing need. Cybersecurity threats are rising, a trend that will unfortunately persist. And there’s an increasing demand for actionable insights and more personalized experiences. Our services, bolstered by our data-driven intelligence, can help customers reduce fraud, grow their portfolios, and better engage with their end customers. Take our cyber solutions, which protect consumers and the payments ecosystem more broadly. One example is SafetyNet, which in the past 12 months has prevented more than $20 billion in fraud. This is just one of our many fraud solutions that we’re deploying to deliver more value and support continued growth. AI also continues to play a critical role powering our products and fueling our network intelligence.

We’re scaling our AI-powered transaction fraud monitoring solution, which delivers real-time predictive scores based on a unique blend of customer and network-level insights. This powerful solution gives our customers the ability to take preventive action before the transaction is authorized. This quarter alone, we signed agreements in Argentina, Saudi Arabia, and Nigeria with financial institutions and Fintech’s, who will benefit from early fraud detection and with merchants who will experience less friction and higher approval rates. In the end, this all makes for a better consumer experience. We’re also using our services, combining our data and expertise to help clients optimize and do more with their portfolios. This drives both direct services revenue and incremental payments revenue.

Our consulting, marketing services, and targeting analytics help clients design and execute portfolio migrations, drive incremental card acquisition, and stimulate spend. For example, in Spain, we are working with Financiera El Corte Inglés to boost the migration of closed-loop clients to our new open-loop co-badge proposition. And we’re working with Saudi National Bank to enable growth in their credit portfolio by increasing penetration from their debit base. So the headline for me is the power of our strategy to drive payment network and service revenue for MasterCard. Service improved the performance of a client’s portfolio, leading to incremental payment flows which lead to more opportunities to use our services, and so on, and so on. It’s a virtuous circle.

We also had success in expanding our customer base and services through best-in-class personalization and our leading test and learn analytics capabilities. Don’t just take our word for it. Gartner recognized the superior value proposition of dynamic yields, personalization activities, and selected it as the leader in its 2023 Gartner Magic Quadrant for the third year in a row. That’s why luxury brands like Saks Fifth Avenue work with us to create hyper-personalized experiences for their e-commerce customers. This quarter, we extended our partnership with the merchant ALDI in both the U.S. and Australia to continue to leverage our test and learn platform to optimize category reviews, store hours, and marketing spend. And we’re working with Duncan International to enhance their foundational data analytics capabilities to improve operational efficiencies.

Our best-in-class solutions address the unique needs of a diverse set of customers, giving us ample opportunity to continue to grow across our value-add services and solutions. We have a strong foundation for growth in P2M, as discussed, new-flows and services, and we are also embracing new opportunities for future growth. As digital adoption continues to rise, open banking remains a key opportunity. We have a powerful set of assets with connectivity to over 95% of deposit accounts in the U.S. and 3,000 banks across Europe. We engage with a broad set of partners who are increasingly interested in the scale and potential of the open banking solutions we bring. This includes the account-to-account bill payments use case. Our open banking solutions enhance existing ACH flows by providing a simple and secure experience, allowing consumers to seamlessly share data with trusted parties.

A previously announced partnership with JPMorgan Payments, Pay-by-Bank is now live, and Verizon plans to pilot this offering with their U.S. customers in the coming months. In addition to this, we’re now collaborating with Worldpay to enable consumers to pay bills directly from their bank account. Our progress here continues. So in summary, our third quarter results reflect the strong fundamentals of our business and the continued resilience in consumer spending. There are substantial runways supported by opportunities to digitize person-to-merchant payments across both the dollar volume of flows and the number of transactions, and opportunities to address new payment flows and extend our diverse suite of services, all while we continue to invest in future areas for growth.

When you put it all together, our diversified business is well-positioned for strong growth for years to come. Sachin, over to you.

Sachin Mehra: Thanks, Michael. Now turning to page three, which shows our financial performance for the quarter on a currency-neutral basis, excluding where applicable special items and the impact of gains and losses on our equity investments. Net revenue was up 11%, reflecting resilient domestic consumer spending and strong cross-border volume growth, as well as the continued growth in our value-added services and solutions. Operating expenses increased nine%, including a one ppt increase from acquisitions. And operating income was up 13%, including a minimal impact from acquisitions. Net income and EPS increased 21% and 24%, respectively, both reflecting the strong operating income growth, as well as a net tax benefit, which was primarily discrete due to U.S. tax guidance released in the current period.

EPS was $3.39, which includes a nine-cent contribution from share repurchases. During the quarter, we repurchased $1.9 billion worth of stock and an additional $475 million through October 23, 2023. So let’s turn to page four, where you can see the operational metrics for the third quarter. Worldwide Gross Dollar Volume, or GDV, increased by 11% year-over-year on a local currency basis. In the U.S., GDV increased by 5%, with credit growth of 7% and debit growth of 4%. Outside of the U.S., volume increased 13%, with credit growth of 13% and debit growth of 14%. Sequentially, the debit growth rate was primarily impacted by the lapping of the net West portfolio migration in the U.K. Overall, cross-border volume increased 21% globally for the quarter on a local currency basis, reflecting continued strong growth in both travel and non-travel-related cross-border spending.

While this is sequentially lower versus Q2, this is due to tougher comps as we lapped the cross-border travel recovery from last year. When you look at the trend versus 2019, as Michael said, cross-border travel remained strong at 155% of 2019 levels in Q3, and cross-border card-not-present ex-travel continues to hold up well. Turning now to page five, switch transactions grew 15% year-over-year in Q3. Both card-present and card-not-present growth rates remain strong. We also continue to increase the percentage of transactions we switch. This is strategically important for us as it presents a revenue growth opportunity in both payments and services. An example of this is in Japan, where we began switching domestic transactions last September.

In Q3 2023, we switched over 65% of our total transactions worldwide. For historical context, this figure was approximately 55% in 2018. In addition, card growth was 7%. Globally, there are 3.3 billion MasterCard and Maestro-branded cards issued. Turning to slide six, for a look into our net revenues for the third quarter discussed on a currency-neutral basis. Payment network net revenue increased 10%, primarily driven by domestic and cross-border transaction and volume growth, and also includes growth in rebates and incentives. Value-added services and solutions net revenue increased 14% relative to a strong Q3, a year ago. So let me give you a little bit of color. Our cyber and intelligence solutions continue to grow at a healthy pace driven by our underlying key drivers and demand for our fraud and security solutions.

And we continue to see strong demand for our consulting and marketing services, as well as our loyalty solutions, which is partially tempered by other solutions. Now let’s turn to page seven, to discuss key metrics related to the payment network, again described on a currency-neutral basis unless otherwise noted. Looking quickly at each metric, domestic assessments were up 10%, while worldwide GDV grew 11%. The difference is primarily driven by mix. Cross-border assessments increased 26%, while cross-border volumes increased 21%. The five ppt difference is primarily due to mix. Transaction processing assessments were up 11%, while switch transactions grew 15%. The four ppt difference is primarily due to lower revenues related to FX volatility versus the prior year.

Our network assessments related to licensing, implementation, and other franchise fees were $229 million this quarter. As a reminder, these other network assessments may fluctuate from period to period. Moving on to page eight, you can see that on a non-GAAP currency-neutral basis, excluding special items, total adjusted operating expenses increased 9%, including a one ppt impact from acquisitions. This increase was primarily due to increased spending on personnel to support the continued execution of our strategic initiatives. Now turning to page nine, let me comment on the operating metric trends in the third quarter and through the first three weeks of October. Starting with switched volume growth year-over-year, we lapped the NatWest migration early in the quarter and the commencement of switching in Japan late in the quarter.

These factors are the primary drivers of the sequential declines in both Q3 and into October. One point on the U.S., the sequential drop in October primarily relates to the timing of certain Social Security payments this year versus last. Switch transactions follow similar patterns. Looking at cross-border, cross-border travel growth is being impacted by tougher comps as we continue to lap the recovery of travel. When compared to the 2019 index, cross-border travel metrics remain strong. Cross-border card-not-present ex-travel continues to show strength. Just for your information, we have included all the data points from the schedule, excluding activity from Russian-issued cards from current and prior periods in the appendix. Turning to page 10, I wanted to share our thoughts on Q4.

So let me start by saying consumer spending remains resilient and that our diversified business model continues to position us well for the many opportunities ahead. That being said, we are closely monitoring the elevated macro and geopolitical concerns and stand ready to adjust expenses should circumstances warrant. Consumer spending patterns continue to normalize post-pandemic, while pockets of opportunity remain for further recovery of cross-border travel, notably into and out of China. This will take some time as these corridors continue to face a variety of constraints. Having said this, our base case scenario continues to assume consumer spending remains resilient, buoyed by strong labor markets, and reflects recent spending dynamics.

With respect to the fourth quarter, we expect year-over-year net revenue to grow at the low end of a low double-digit rate on a currency-neutral basis, excluding acquisitions. Acquisitions are expected to have a minimal impact to this growth. Due to the recent strengthening of the U.S. dollar in Q4, foreign exchange is now expected to be a tailwind of approximately zero to one ppt for the quarter, as compared to the three to four ppt benefit we had previously expected. This follows the impact we saw in the third quarter where the stronger dollar led to a foreign exchange benefit of two ppt to revenue, down from our initial expectations of a three ppt benefit. From an operating expense standpoint, we expect Q4 operating expenses to grow at a high single-digit rate versus a year ago on a currency-neutral basis, excluding acquisitions and special items.

Acquisitions are forecast to add about one ppt to this growth, and foreign exchange is expected to be a headwind of between zero to one ppt for the quarter. Other items to keep in mind, on the other income and expense line, we forecast an expense of approximately $85 million for Q4. This excludes gains and losses on our equity investments, which are excluded from our non-GAAP metrics. Finally, we expect a tax rate of approximately 18% to 19% in Q4, based on the current geographic mix of our business. And with that, I will turn the call back over to Devin.

Devin Corr: Thank you, Sachin. Thank you, Michael. Audra, you can now open the call now for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] We’ll take our first question from Sanjay Sakhrani at KBW.

Sanjay Sakhrani: Thanks. Good morning. Sachin, when we look at that fourth quarter revenue deceleration, I think what the outlook implies, how much of it is, like, macro versus timing of incentives or something like that? I’m just curious, what factors are sort of driving that and how we should think about, that outlook, if there’s still moderating trends going forward. Thanks.

Sachin Mehra: Sure, Sanjay. So, a couple of thoughts. One, in the fourth quarter, you remember last year, we continued to experience elevated levels of FX volatility in the fourth quarter of last year. And those FX volatility levels are certainly moderated by a meaningful extent. You saw some of that come through in Q3. There’s more that we would expect at current volatility levels in Q4. So that’s certainly, baked into our thinking. And then to your point around rebates and incentives, look, we continue to compete in this market, and we have a strong pipeline of deals. We continue to win, as you’ve seen, in the nature of the various announcements we’ve put out. And I would say our planning, for planning purposes, we’re continuing to, execute on the strong pipeline.

You would expect that contra sequentially would be up as a percentage of our, assessment revenue in the fourth quarter, not too different than what you would see in any other year. We typically have higher contra levels in the fourth quarter when you look at them as a percentage of our assessment revenue. So really, that’s what’s there. And to your specific point around macro, it’s like I said, our base case assumes, a resilient consumer. And that’s very much what we’re assuming going forward as well. there are always puts and takes depending on markets in question, but broadly speaking, we continue to see a strong consumer.

Operator: We’ll go next to Tien-Tsin Huang at J.P. Morgan.

Tien-Tsin Huang: Hi, thanks. Good morning to everyone. Just on the Europe front, I noted that it’s so a little bit, the four points, I think, sequentially, Euro and Euro. Is that just a NatWest comp out? Is there anything else to call out? I’m curious if you saw any change in or interesting performance country by country in Europe. Thanks.

Sachin Mehra: Sure, Tien-Tsin, so a couple of thoughts. First, it’s primarily the lapping effect of NatWest. So let’s start there. there are always going to be puts and takes by country. I would say that, Michael talked a little bit about in select international markets, we’re seeing some level of moderation. I would say in Europe, you’re seeing that in the UK. But largely, if you see the decel, which you’re talking about, that’s largely driven by the lapping of our NatWest win last year.

Operator: We’ll go next to Harshita Rawat at Bernstein.

Harshita Rawat: Hi, good morning. I want to ask about regulation. There’s been some unrelated activity recently with Fed proposing new debit interchange caps, REG-II implementation for China present and the credit card competition bill. So Michael, taking a step back, how are you thinking about the regulatory environment in the US and abroad? Thank you.

Michael Miebach: Thank you, Harshita. Thank you for directing that straight to me after a few questions on trends. But, there is certainly a lot going on. So that’s for sure true. it’s a lot of activity and they have been overlapping, REG-II, CCCA, the Fed on debit. So all this is related in a way, but it’s also not related in a way. And I think this is important for us to take them one by one. And, without any particular order, let me start with CCCA, which has been a topic on this call for a little while. this topic is garnering a lot of momentum across our industry and industry participants. We are seeing a more united voice across banks and across merchants to address this point. Senators Durbin and Marshall have been very active over the last quarter since we last walked to attach this particular legislation proposal to other proposals and get a vote.

They were not successful. And I think we actively used the time and productively used the time to bring across that this is not good for consumers. It is not good for small business. It is not good for merchants, particularly those who are driving large reward programs. So for all those reasons, we think this is a misguided proposal, a misguided legislation. We’ll see where it goes going forward. But I have not been more optimistic on the industry pulling together to making those arguments understood than at this point. So this is CCCA. We’re closely engaged on that. Now, on REG-II; so we’re in compliance with that. Have we seen any particular outcome? I think it was a question on last call. Do you see this as an opportunity or as a risk? At this point, neither; what I can tell you is we will compete.

We have invested billions over the years in the security of our network proposition and we think security is at the center of this whole debate. Can the merchant take away decisions from a consumer here and route this to the least cost and possibly the least secure network? Well, that is what we want to point out. That shouldn’t be the case. We’re leaning in on that. We haven’t seen it yet at this point. So for us to just monitor and see what happens, we’ll surely talk about it again next quarter. The Fed debit pricing piece that was put out yesterday is going into a consulting period. Here again, the same kind of momentum across the industry, across the American Bankers Association, the Electronic Payments Council, put out a letter to the Fed on Friday night along with seven other trades, if I recall correctly, arguing that price caps are generally driving market distortions.

This is not a good thing. It’s not a good thing for the consumer. Yet again, not a good thing for merchants who run reward programs and so forth. So we’ll have to see where it goes. It is important, though, to point out that interchange is a balancing mechanism for the industry. It does not directly affect our P&L. So those are important things to keep in mind. For all of those, we see ourselves as an industry custodian to make sure that the arguments around safety and security and consumer choice are fully understood by all stakeholders.

Operator: We’ll go next to Craig Moore at FT Partners.

Craig Moore: Hi. Thanks for taking the question. Actually, two; one, considering what we’re seeing in the U.S. with deterioration in certain, should I say, credit quality buckets and so on and so forth, I’m curious if you could discuss how your spend in the U.S. has broken down between sort of the top 1% and the rest versus historical levels. It just might help us understand how insulated spend is to the specific credit issues we might be seeing over the next six months. And secondly, we’ve seen some pretty strong rhetoric out of Asia regarding moving away from the global networks due to actions taken around Russia and other places. I was wondering if you could comment on how discussions with those markets might have changed in recent times. Thanks.

Ashwin B.S: Hey, Craig. It’s Ashwin. I’ll take your first question on the spending trends in the U.S. and particularly in light of what you’re talking about on the deterioration of credit quality. The headline for you is the following. Our portfolio in the U.S. is actually a pretty well-diversified portfolio across all spectrums of the consumer base. If you look at our company 10 years ago, I would argue it was a company which was more kind of weighted towards our credit portfolio. We have got a better mix right now of credit and debit across the spectrum of consumers. And diversification has always been our friend, whether it’s around products, whether it’s around geographical markets. That’s kind of the way we’ve kind of tried to drive the strategy of the business.

I would tell you, I mean, if you look at the composition of the issuers in the U.S., right, so we have a decent amount of, co-brand portfolios which cater to the affluent. And hopefully from a credit quality standpoint, they stand to actually hold up pretty well even in, in down markets. The other piece I tell you is that we like the fact that we have been recently investing in winning debit portfolios. We’ve talked about how we won citizens. We talked about — Michael just talked about how we won Webster. These are important portfolios because, as in up and down cycles, right, what happens with the diversified portfolios in down cycles, debit tends to be in favor because of the spend going towards these non-discretionary categories of spend.

So, the headline I tell you is pretty well diversified across products and across the spectrum of consumers in the U.S.