Michael Miebach: And as we were saying earlier, we’re monitoring credit availability. Credit availability is not an issue as far as we can see. At this point, it’s beyond historic level. It’s below historic level. So that’s something that is part of our continuing efforts to understand where the dynamics are going. Now on Asia, you answered the question on their strong rhetoric from Asia. I would probably word this differently and say we’re not seeing that. We’re seeing this is an argument in a broader conversation around where value is coming from, the value of globalization and global connectivity. On the other hand, things like sanctions play into this. It’s a very complex mix. And across the world, not just in Asia, there’s a conversation around weighing all of that off.
So it’s important for you to understand that we have been partnering with countries around the world for years. Just take Europe to start with. Early on, we talked about Maestro and Debit Mastercard. We’re partnering with a whole range of local payment systems for years. And there are no particular concerns around that. The same is in many other parts of the world. Where this is going and going forward, we’ll have yet to see. But it is understood that as part of a globally connected economy and a world where some de-risking plays into that, trusted cross-border data flows matter. People still want to travel. And all of that makes us an important player. Also keep in mind that our capabilities across network level, trusted solutions, cyber-security solutions, gets us a seat at the table.
We’re seen as a technology company, a global technology company, not necessarily as a US payment brand when we have those conversations because we help across. We enable local payment solutions through those services. So I’m not overly worried about this, but it’s an active dialogue where we are seeing some really good things coming out of that. Think about some of the advancements in financial inclusion when local governments set up systems that reach consumers that haven’t been reached before. That lifts everybody’s boat. And that is good for the overall payments industry. So it is a broad topic. We’ve been engaging through the US government, through other governments, multilateral organizations. And I personally spend quite a bit of time on that topic to ensure that we don’t lose the benefit of a globally connected economy.
Operator: We’ll move next to Will Nance at Goldman Sachs.
Will Nance: Hey guys, I appreciate you taking the question. I wanted to ask about some of the trends in value-added services. It sounds like the commentary this quarter was similar to last quarter, kind of a tale of two S’s, relatively strong growth in services and maybe a little bit of drag from solutions. I was just wondering if you could talk on the drag in solutions, a little bit of color on what’s driving that and maybe for the outlook, how long should we kind of expect that drag to continue and what’s sort of the outlook for the two buckets?
Sachin Mehra: Sure, Will. So a couple of thoughts first. Like we mentioned in my prepared remarks, value-added services and solutions net revenue increased 14% this quarter. I will kind of emphasize that our cyber and intelligence solutions continue to grow at a healthy pace. This obviously is driven by underlying drivers as well as demand for our various solutions which we offer. And we’re seeing similar trends in terms of strong demand for our consulting, marketing, and other quality solutions. To your point about the tempering effect of other solutions, that certainly is having a tempering effect. And what we have in other solutions is the relative growth rates from real-time payments, from what’s going on from a bill payment standpoint.
It’s things of that nature which are actually growing at a slower pace, which is, candidly, I mean, something which we should expect. The reality is we’ve always talked about services in the past. We haven’t talked about value-added services and solutions. Now we’re talking about value-added services and solutions, which is where you’re seeing that tempering effect come through. I think if it’s helpful, one of the things which I want to actually also share with you is that this overall growth rate can be impacted quarter to quarter by transaction growth, by comps, and by timing. And just as a reference point, when excluding other solutions which have the tempering effect, our value-added services have grown at 19% year-over-year on a year-to-date basis, excluding Russia.
So I think what I’m kind of trying to share with you is there is this tempering effect on other solutions. You should expect that tempering effect to continue. All of that being said, there is the overall strength we see in our CNI and DNS side, which we’re actually very positive of, we’re seeing good demand in that space.
Operator: We’ll take our next question from David Togut at Evercore ISI.
David Togut: Thank you very much. Given some of the tempering growth that you’ve highlighted, especially in VAS, how are you thinking about flexing expenses over the next six to 12 months? Where do you have a fair amount of discretion? And what are some of the areas, particularly like R&D, which would be sacrosanct?
Michael Miebach: Right. So what Sachin said, he wasn’t really talking about tempering in VAS. He was talking about tempering in the other solutions. So I just want to kind of get that straight out. I think there is potentially a little bit of confusion here with our revenue disaggregation and the definitions here. We’ve talked about services in a particular way for years, and now we have a slightly different definition, as which we shared with you. So I just want to put that out there first. To your question, so we continue to expect strong growth in value-added services and solutions, DNS and CSI, as we said. As far as expenses go, I said it at the beginning, looking at macro, looking at everything that’s going on around us, and we have demonstrated this through COVID, we have demonstrated it through Russia, and we will continue to demonstrate as we have a whole range of levers in a not particularly capital-heavy business to adjust our expenses.
You’ve seen us managing for positive bottom line and top line growth on a year-over-year basis. We’re not managing this quarter-by-quarter, but that is always something that we keep in mind. So our financial discipline will continue here. We have no reason to change that. It’s working well, and that is the disciplined way to do this. Thank you.
Sachin Mehra: And David, I’ll just add, just as Michael said, I think our philosophy from an operations standpoint is to continue to deliver positive operating leverage over the long term. We will do that in a disciplined manner to continue to drive short, medium, and long-term growth, and we will invest prudently. And we will obviously keep an eye on what’s going on on the top line and kind of moderate on expenses as appropriate, as we’ve done historically. So I just want to reiterate exactly what Michael said there. Thank you.
