Michael Miebach
Chief Executive Officer at Mastercard
Thank you, Devin. Good morning, everyone. Our momentum continued this quarter as we once again delivered strong revenue and earnings growth. Quarter one net revenues were up 11% and adjusted net income up 16% versus a year ago on a non-GAAP currency neutral basis. These results were powered by healthy consumer spending and strong cross-border volume growth of 18% year-over-year on a local currency basis. We had new deal wins in every region, and we're driving growth by scaling our innovative technologies. That's why people choose Mastercard, a simple, seamless and secure way to pay.
With these strong results, we are reiterating our full year 2024 outlook for both net revenue and operating expense on a currency neutral basis, excluding acquisitions and special items. On the macroeconomic front, the picture remains mixed. First, strong labor markets and solid wage growth remain in countries across the globe. This is supportive of healthy consumer spending. Second, inflation has been moderating over the path towards normalization of monetary policy in most countries. Persistent inflation in the United States could delay rate cuts here. And third, geopolitical uncertainty remains in several countries.
In addition to these areas, we are closely monitoring the strength of the dollar. Commodity prices and consumer balance sheet health. With tailwinds and headwinds to economic growth remain on balance, we are positive about the growth outlook. With this backdrop, we are focused on our strategic priorities, consumer payments, new flows, and services and new networks. The recent realignment of our organizational structure will help our teams to execute on these priorities faster to deliver more value to our partners and customers.
In payments, our growth algorithm consists of being in the flow to capture the natural growth of economies. Accelerating the secular shift to electronic payments. Further penetrating new flows, growing market share and optimizing our customer portfolios. I will address a few of those.
Starting with the shift to digital for person to merchant payments. This secular opportunity has been a very important component of our growth algorithm across both volume and transactions. We are confident this will continue over the long term. Our acceptance footprint is a key competitive advantage. And we continue to expand our reach globally while enhancing the user experience for digital transactions through our technologies. Our fast and secure contactless technology has been instrumental in displacing cash. Contactless now represents more than two of every three in-person switch purchase transactions, up from one in three prior to the pandemic. And our tap on phone capabilities are simply a cost effective way for merchants of all sizes to accept digital card payments. We're now live in over 100 markets. In Brazil alone, the number of active devices is now over 1.5 million. And Apple continues to expand tap to pay on iPhone in markets like Brazil, where recently the solution was rolled out by fintechs, Stone, Neobank, SumUp and CloudWalk.
As payments become more digital, there's an increasing demand from consumers and merchants for a simpler and more secure payment experience. Whether online or through a wallet provider, our tokens deliver an elevated level of security when payment credentials are shared between the bank and the merchant. This improves the performance of a client's portfolio while supporting new ways to pay. This key differentiator creates a flywheel effect. Lower fraud, higher approval rates, and a better consumer experience bring more transactions and volume to the Mastercard network, which in turn drives more payments revenue and brings more data.
Tokens also create a streamlined way to accelerate the monetization of associated services to our customers. In quarter one, tokenized transactions grew over 50% year-over-year. With more room to go, as only approximately one in four transactions on the Mastercard network are tokenized today. Further opportunity lies on the verticals traditionally underpenetrated by card. Merchants are embracing solutions to simplify checkout, reduce missed payments and drive engagement. We are focused on segments such as housing and healthcare that have sizable spend and where our solutions can address the needs of providers and consumers. Rent payments is non-vertical where we are working with aggregators to enable digital payments.
In healthcare, we're partnering with several providers to grow acceptance in key markets like Germany. And we are playing in the gaming community, all puns intended, with partners like global video game commerce company, Xsolla, to improve the payment experience.
The opportunity to bring more transactions onto the Mastercard network remains. We now switch approximately two thirds of our total transactions worldwide, up from approximately 65% [Phonetic] in 2018. Our actions in markets were switching penetration was historically low, like Japan, Mexico, Colombia and Chile have increased this penetration and we will continue to focus on this. My takeaway for you is the secular opportunity is large, and it's lasting, and we are well positioned to go after it.
Our momentum also continues with issuers and Co-brand partners as we are winning new deals and retaining key business in every region. Starting in the Americas. In the first quarter, we further solidified our position in Brazil. Signing an agreement with Banco Bradesco, one of the largest banks in the market across credit, commercial and services. We're making great progress in converting the previously announced debit wins in the United states. The Fiserv's Money Network card program for the California Employment Development Department has now gone live with Mastercard. On the conversions Citizens and Webster [Phonetic], We are well underway. We are further strengthening our leadership position with retail co-brands in the US. Mastercard will be the exclusive network for the Citi issued Dillard's co-brand. We have also extended our longstanding partnerships with Target and the TJX Companies.
In Asia Pacific, Middle East and Africa, we signed a 10-year exclusive partnership with First Abu Dhabi Bank, the largest bank in the UAE. The agreement spans consumer and commercial issuance across UAE, Saudi Arabia, Oman and Egypt. We entered into a new exclusive co-brand agreement across the EMEA region with Global Hotel Alliance. The world's largest alliance of independent hotel brands. And in India, we signed a 10-year consumer credit issuance deal with Axis Bank.
And finally, in Europe, we extended our long standing partnerships with [Indecipherable] the deal renews our payments relationship with one of the largest banks in the region while continuing to embed comprehensive marketing, consulting and loyalty solutions. These examples, like many others, are true partnerships. Our teams are invested in making them a win-win experience, and we will continue to use our innovative product capabilities and differentiated service offerings. And our solution selling approach of use positive results for our customers and for Mastercard. Now, you asked before, why are we winning? That's exactly why we're winning.
Moving next to the new flows pillar of our growth algorithm, we continue to execute against our strategy to further penetrate the addressable market in targeted areas like commercial payments and disbursements and remittances. Growth in commercial is about making sure we are connected to the right partners and have the right solutions to power growth. Make great strides in securing key partnerships, including traditional banks, travel, and ERP providers. We previously announced our expanded agreement with Wells Fargo in the US. As part of our small business relationship, I'm happy to share that we've made significant progress in the conversion of this card portfolio to the Mastercard network.
Also this quarter we won our first commercial credit issuance deal with SBI Card in India. And commercial solutions were components of the Banco Bradesco and First Abu Dhabi Bank deals, I mentioned earlier. In addition to aligning with the right partners, it's also about having the right solutions to help commercial clients address their needs like consumers, they want an easy and secure payment experience. Our new innovative mobile virtual card app enables commercial cards to be seamlessly added to digital wallets as you do as a consumer. But businesses can easily enable employees to pay for expenses with a click and a smile. At the same time, they can optimize back office processes with robust spend controls, enhanced reconciliation data. HSPC Australia and Westpac will be the first financial institutions to offer this solution.
The same principle applies to the open-loop commercial fleet space, where we are the market leader. Our differentiated capabilities have positioned us as a preferred partner with the market leading fleet providers such as Corpay. And fleet fintech AtoB has announced they will now convert their commercial credit card program exclusively to the Mastercard network.
And sticking to new flows, disbursement and remittances, will continue to extend our reach to new markets. In quarter one, we grew transactions by over 40%. To combined our portfolio of domestic and international money movement capabilities into one offering, Mastercard Move. It includes our Mastercard Send and cross-border services and reaches nearly 10 billion endpoints worldwide. This quarter, we extended our reach further in China with our connection to Alipay. In the US, we're partnering with Verituity to create a wide label solution for banks to modernize their disbursements and remittances through a plug and play solution. And we will work with Sweden based Pagero to support account based cross-border and domestic payments.
Now shifting from payments to services and new networks. Another important component of our growth algorithm. It starts with a powerful set of diversified solutions with best-in-class fraud capabilities, data analytics, consulting, marketing, loyalty, identity, and open banking assets. These carefully curated assets help us grow and diversify our revenues and differentiate our payments. We drive growth in services and new networks across several vectors. First, remember a portion of our services revenue was driven by payments, and these metrics continue to perform well. In addition, we're driving growth by increasing the penetration of existing customers. We're extending our services across new customers and new payment flows. And we build and deploy new solutions.
Here are a few examples of how we're executing against these. Starting with increasing penetration with existing customers. Success in delivering our services strengthens relationships and can generate opportunities for future service engagements. Our best-in-class conversion support is often an entry point. A great example is with Westpac in Australia and New Zealand, where we expanded our service offerings to include digital strategy, marketing solutions, innovation, sprints, and portfolio optimization campaigns.
We have a diverse set of solutions to also help banks manage critical business needs outside of payments. Take credit risk for example, core to all banks, our consultants are working with Ford Brazil to improve their credit policies and management. In a Saudi national bank, we are enabling new credit risk modeling and scoring capabilities. There is still room to further penetrate services. Our Top 50 services customers on average, are using two to three times more services than the balance of our issuing and acquiring customer base.
We're also driving growth by extending our reach across multiple rails and networks outside of the Mastercard network, Mastercard Access provides customers with a single trusted connection to quickly and easily source a suite of services and we are seeing great traction. For example, Saudi National bank will leverage Access to deploy a set of scheme agnostic services across their portfolio. We also continue to innovate and develop new services and solutions. This helps us to meet the evolving needs of our clients while growing our addressable target market. Here's an example. Think about how people are shifting to streaming and other digital services. As they do, they're looking for one simple view of all their subscriptions, I think we've all been there, it's why we developed smart subscriptions. It's an open, banking powered solution that puts a simple dashboard of all subscriptions, regardless of network, right into their consumer banking application.
Cybercrime is a growing concern. Last year alone, people in the United States lost over $12 billion to Internet scams. Scam Protect builds on the cybersecurity projections we have delivered for years, combines our identity, biometric AI and open banking capabilities to identify and prevent scams before they occur. As part of this, we're partnering with organizations around the world, including Verizon to collaborate on new solutions to protect consumers. By combining Mastercard's identity insights with Verizon's robust network technologies, new AI power tools will be designed to more accurately identify and block scammers.
We continue to enhance our solutions with generative AI to deliver even more value. Our world leading real time fraud solution decision intelligence has been helping banks score and safely approve billions of transactions ensuring the safety of consumers and the entire payments networks for years. The next generation technology, Decision Intelligence Pro is supercharged by generative AI to improve the overall score and boost fraud detection rates on average by 20%. So overall there's a strong demand for our services and new networks across a diverse customer base. They continue to grow faster than the core, and we remain optimistic about the opportunity ahead.
With that, I will wrap it up. In summary, we delivered another strong quarter of revenue and earnings growth. We're successfully executing against our strategy in realizing our growth algorithm. Our differentiated capabilities, diversified business model, and our focused strategy position us well to capitalize on a significant opportunity in front of us.
Sachin, over to you.
