Mastercard Incorporated (MA) Management Presents at Citi Fintech Conference

Nov. 14, 2022 12:44 PM ETMastercard Incorporated (MA)1 Comment
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Mastercard Incorporated (NYSE:MA) Citi Fintech Conference November 14, 2022 8:15 AM ET

Company Participants

Sachin Mehra - Chief Financial Officer

Conference Call Participants

Ashwin Shirvaikar - Citi

Ashwin Shirvaikar

Good morning, everyone, and time for our first session. As I mentioned, I'm Ashwin Shirvaikar, I'm Citi's Payments Processors Analyst, the Global Head of Fintech, all that good stuff. But more important than that is my first guest, Sachin Mehra, who is CFO of Mastercard. Sachin, thank you for coming. Thank you for doing this for us. I appreciate it.

Question-and-Answer Session

Q - Ashwin Shirvaikar

And I'd maybe just like to start with the question that's on everyone's mind, which is give us your perspective on the macro environment and what you're seeing in terms of consumer spending trends there?

Sachin Mehra

First, thank you for having me, Ashwin. Good morning, everyone, and it's a pleasure to be here today.

Ashwin, to your question around the macro environment, we had shared at our Q3 earnings call, you know, given the macro environment currently prevailing and the geopolitical uncertainties, which are there, we generally remain vigilant as it relates to what the macro environment is. I mean it remains uncertain. That's no surprise, so we're closely monitoring the situation.

There are several pluses and minuses as we think about the macro environment. On the minus column, I would put things around high inflation on a sustained basis, rising interest rates as a result of that with all the central banks doing what they're doing, and then the geopolitical uncertainties, which create for some level of uncertainty in the environment. On the positive side, what we continue to see is a very strong consumer. Consumer spending is healthy. It's being bolstered by high savings levels, levels at the consumer, record low unemployment rates, which are their rising wage levels. So there are puts and takes as we see it.

But on balance, I would tell you that we're closely monitoring the situation as are most companies at this point in time. How we see it generally playing out from a Q4 standpoint, what we had shared at our Q3 earnings call was that we generally expected a resilient consumer through the end of the year. And what we had also shared at that point in time was that as it relates to cross-border travel that we expected stable to slightly improved cross-border travel trends relative to 2019 levels, so sequentially, looking Q3 to Q4 relative to 2019 levels. And for what we've seen from our operating metrics through the first week of November what we're seeing is generally consistent with our expectations as we had laid out in Q3. So generally, that's what we're seeing overall.

Now one final point as it relates to the macro environment, what you are seeing from a consumer standpoint is a change in how they're spending. Back during the COVID environment, you saw a greater amount of spend taking place in what we call the nesting category, home improvements, appliances, things of that sort. What you are seeing much more of now is a bent towards spending towards experiences. So we're seeing good strength in airlines, lodging, restaurants, and a little bit more moderation taking place in the home improvements and those, kind of, categories, generally spread more.

Ashwin Shirvaikar

Right, right, right. So more towards services than goods, and that's pretty consistent with what we also have heard since your earnings as many others reported. On travel, though, I want to just pick up on that. You talked a little bit about the travel trends, but do you see room for continued growth cross-border? Obviously, as you know, your major theme of conversation with investors, so anything that you can mention there? Is there maybe fear of backsliding or anything you can comment on there, yes?

Sachin Mehra

So look, we think the travel proposition broadly speaking, both domestic and cross-border is very sound, right? You went into COVID, people started a question a little bit as to whether people will get back on the -- out on the road and travel again. Well, the reality is the value prop for travel still stays. When people have the ability to travel, we've seen that they've expressed their intent to travel, so broadly speaking, that's what I would tell you.

What we saw in Q3 were in terms of our metrics, we saw travel, cross-border travel, staying at about 124% of 2019 levels in Q3. And this is across all cross-border travel. More specifically, what we had shared with you was that in Asia Pacific, we had seen still some further scope for recovery in terms of cross-border travel. Specifically in Asia Pacific, in Q3, cross-border travel into Asia stood at approximately 76% of 2019 levels.

And again, we're stacking this up to 2019 just to kind of give you a comp as to where it was pre-pandemic, so there is room. Short answer is there's room for travel recovery, certainly in Asia Pacific as more and more countries open up. But even beyond Asia Pacific, I would point out that the travel value prop stands good, and we are seeing potential for continued improvement in travel.

Ashwin Shirvaikar

Okay. Okay. Cool. And given that investors obviously fear a downturn recession and the question always comes up, how well can you manage your expenses. So talk to us about, sort of, your approach to expense management. And also, the related questions, one of the things associated with value creation nowadays is which companies have pricing power? And obviously, Mastercard associated as a company that does have some level of pricing power. So could you talk about that?

Sachin Mehra

Sure. Happy to do so. So in terms of our expense philosophy, I would tell you, our expense management philosophy is not too different than it has been historically. The overriding theme is we are going to continue to invest in the growth of our business to drive long-term revenue growth sustainability for the business. Now obviously, we will do that while keeping an eye on what's going on from a top line standpoint, and we have the flexibility to moderate expenses as appropriate. We've demonstrated that ability in the past even during the COVID environment, and we will continue to keep an eye on both top line growth and bottom line growth.

But I do want to leave you with the message out here, which is we continue to invest in the business by driving long-term growth is something we will do. And in terms of levers which we've got for managing our expenses, back to my comment around looking at the top line, look, approximately 50% of our operating expense base sits in the personnel line. So you've got the -- we've certainly got the flexibility to manage the pace of hiring on the personnel side as and when appropriate. We'll do that while keeping in mind what is the time to revenue on the initiatives we're investing in, as well as what is the level of customer demand for the things we're investing.

So certainly, there's personnel, which is an opportunity for us. But even beyond personnel, we've got spend across A&M and across pro fees and T&E, all of these levels exist. We've used them in the past. We've used them while being deliberate about not impairing our opportunities, so that when we do come out, but from what might be a slowing, kind of, economic environment, we're not in a position where we've disadvantaged ourselves. We want to stay nimble and ready to go through up and down cycles, that's kind of the basic principle.

On your second question around pricing, we've always been of the philosophy that we're going to price for the value we deliver. We've done that historically. We will continue to do that on a going-forward basis, and our operating assumption is that we assume minimal net pricing. And I say minimal net pricing, I talk about that net of rebates and incentives is kind of how we think about our pricing philosophy.

Ashwin Shirvaikar

Okay. Okay. Just moving on from talking about macro and adjusting to macro, one of the interesting and hopefully exciting announcements last week, JPMorgan and Mastercard announced Pay by Bank. Could you talk about that?

Sachin Mehra

Sure. Absolutely. So look, I mean what that is all about is it's our approach towards exercising our multideal strategy. This is our multideal strategy in action. This is about expanding our TAM, our total addressable market. And really what we're going after out here is flows, which are taking place in the bill payments universe, which happened to be ACH focused, leveraging our open banking assets.

And we've always, kind of, maintained that we want to be in the business of providing choice to consumers. This is another place in which we would be doing that. So the message is I would leave you with is great opportunity to expand the TAM we’re involved in. This is about leveraging our open banking assets and the way we're leveraging our open banking assets is across multiple facets. It's around account validation, so consumer account validation. It's around helping with making sure that there is balanced confirmations, which are being done again with consumer consent being able to look through from an open banking standpoint, what are the balances consumers have in their accounts in order to enable those bill payments which are there. It's around providing what we call a payment success indicator.

So one of the big pain points which exists in the bill payments universe is the fact that very often people, who are actually doing the ACH pool have not sufficient funds message received. So there are insufficient funds in the consumer's account. And so what our payment success indicator does is it's an application we've built across our open banking rails to allow us to provide our customers the ability to have a score as to what the likelihood of success is going to be when they do that ACH for payment. So we're very excited about this partnership. It is, like you said, with JPMorgan Chase, it's with their merchant services arm, and we think there's a lot of promise not only in terms of the engagement around this bill payments opportunity, but more broadly speaking, leveraging our material strategy to get after new and different addressable markets for ourselves.

Ashwin Shirvaikar

Right, right. And should we understand JPMorgan as a sort of exclusive to this? Or like any other product you'll expand it?

Sachin Mehra

Yes. We're in the business of being available to provide this capability to our customer base broadly speaking. So that's where we're going with this.

Ashwin Shirvaikar

Okay. Okay. Cool. One of the things Mastercard had done just over time is just expand the applicability of consumer payments electronically, so to speak. And you've talked more recently about, sort of, your digital first initiative. Could you talk about that in more granular detail maybe to see what exactly is the digital first initiative? How does it help you if you could talk about that?

Sachin Mehra

Yes. So broadly speaking, no surprise to anybody in this room, the world is going more digital, and what our digital-first initiative is about providing a product construct to allow for the digital transformation of our customers to occur. So that's kind of the highest level what we're doing. But more granularly, what we're looking to do out here and what we have done with several customers globally is around various aspects of helping them improve their interaction with their end consumers by leveraging our digital assets, and it comes across various areas.

First and foremost, thinking about the payments life cycle, the customer acquisition journey. So it's about leveraging our digital assets to enable our customers to do acquisition of consumers in a digital format with a seamless experience. The next up -- after you do the acquisition is around usage, providing them the capabilities to do digital payments. This is something which we do, it’s through our card-on-file initiatives, it’s through our click-to-pay initiatives, it's things of that sort.

Thereafter, it's around managing their account. So again, every consumer wants to have a digital interaction where they can manage their accounts and can manage what might be there in the nature of experiences that they have, and these could be things around fraud management and things of the like. And last but not the least, on digital initiatives is around engagement. It's about bringing our loyalty assets in a digital format to our consumers, to our customers to help them get that seamless experience. And we've launched this with numerous customers globally, and we will continue to go down the path.

It's actually resulted in fairly promising results in terms of increasing approval rates for our customers, reduce fraud levels, maximizing the level of spend which is taking place on active accounts. These are all attributes our customers are realizing by virtue of our digital-first initiative. So that's really the essence of what we're doing here. You're looking at where the puck is going and you're trying to actually get there with the best assets you can to support your customers to keep doing their business.

Ashwin Shirvaikar

Understood. And then the second aspect of growth in consumer payments is a steady drumbeat of contracts that you've been signing. And obviously, you announced many of these at your earnings calls. But what's been driving that steady drumbeat.

Sachin Mehra

Yes. Look, I mean, it's -- there's a combination of what we've been doing in terms of our investments over the past decade to build out our capabilities to differentiate ourselves from the competition. It's that, it’s active relationship management, it's blocking and tackling at a daily level. It's working with our customers to provide them a seamless experience when they look to convert their portfolios to Mastercard.

So let me give you an example of things which we're doing. You know we've been investing pretty heavily in our services capabilities. When you invest in services, what you end up doing and our services kind of comprise of our data and insights assets, they are comprised of our fraud management capabilities, things of that sort. When you do that, you have the ability to sit across the table with your customer to help think through how they can grow their top line and manage their expense base beyond just what the switching costs associated with them moving to Mastercard is. This is really, really important, right?

Because if you think about it from a customer standpoint, for them to move from one network to the other network typically will come with maybe some level of cost benefit associated with the switching costs. But if you look at their total P&L, their total P&L comprises of various elements, which are far in excess from an expense standpoint, namely fraud, right, which they really want to find assets and partners who can help them actually bring down those costs, and at the same time, help them grow their top line. And this is where our data insights and analytics capabilities come to bear. So you'll see a lot of the wins we've been talking about, oftentimes are accompanied by our services capabilities, and that's a huge asset, which helps us differentiate as we drive down this path.

So look, I mean that's 1 element of it, but services in and of themselves are great. You still need a great engagement model. You need to actually, at the customer where the customer is, but also giving them thought leadership, which is something we pride ourselves on. So it's a combination of all of these things, which have been enablers for our recent wins.

Ashwin Shirvaikar

Understood, understood. Switching gears a bit and just one relatively frequent question we get from investors is on regulation and more recently has been with regards to Durbin and debit routing. Could you sort of give us your view on how you think of that?

Sachin Mehra

Sure. Look, I mean, the most recent clarification that the Fed provided on debit routing is just a clarification of something, which has been in place for the better part of a decade now. I think most of you are aware that as part of the Durbin amendment, which was put in place at the early part of what was -- I think it was 2010 or 2011, there was a requirement to have two unaffiliated networks on debit card transactions. And really, what the Fed did was clarify that, that needs to be there not only in the card present environment, but the card not present environment. And the reality is all of us have to be ready for that and enabled for that by middle of next year, I think it's July 1, ‘23, we're going to be ready. And we kind of view this as just a clarification of something which is already in effect.

Ashwin Shirvaikar

Okay, okay. Got it, got it. The other parts of your growth is, where I want to go next. So we’ve talked about consumer payments and so on. But you also outlined on a few different occasions, but notably at your investment committee meeting in November last year. You're pursuing new flows, I think of B2B accounts payable, think of commercial point of sale. Could you give us sort of an overview of that? And sort of when I think of some of those things, I think, of virtual cards, so maybe an update on virtual card.

Sachin Mehra

Sure, absolutely. So we kind of laid out at our Investor Day last year, it was November of last year, what we categorize as new payment flows. And let me just recap what that is. There are four elements to it: number one is remittances and disbursements; number two is what we call commercial point of sale; number three is virtual cards and B2B accounts payable; and number four is bill payments. So there are four areas where we see opportunity.

Across these four areas, what we laid out last year at Investor Day is we see a total addressable market of approximately $80 trillion of flows. And the way we define that is based on our existing suite of products and services, as well as things which are currently in development. So that's kind of going to define what we think about in terms of new payment flows. And the way we think about this is depending on which area of these four areas that you're talking about, we are in different stages of development.

There are some which are generating revenue in the here and now and are going at a pretty healthy clip, for example, commercial point of sale, for example, our remittances and disbursements capabilities, for example, virtual cards to what you're asking. There are others which are in the early stages of development. They're generating revenue, but they're in the early stages of development. Take something like consumer bill payments, case in point would be what we just talked about as pay-by-bank, which would be a great example of how we're making further progress in consumer bill payments.

And then there are still others like our B2B accounts payable initiative, which I would say are more in the build phase. And we personally, from our company management standpoint, we feel pretty good about the portfolio and the laddering effect that this provides us to drive that long-term sustainable revenue growth. So really, that's what kind of the thinking behind this is.

On your specific question on virtual cards, we've been in the virtual card space for quite a few years now. It started with an acquisition of a company we did in 2009 called Orbiscom, where we acquired the virtual card technology. We took that technology and we built use cases around it, and we've been actually powering those use cases in terms of how we are tapping new accounts payable flows in that space. We like our position of strength, which is there. We've been penetrating various verticals, utilizing virtual cards. It's true for the travel vertical. It's true for insurance, commercial real estate, things where the attributes of being able to embed your virtual card capabilities into ERP systems is really where we're going after on this.

So most recently, we announced a partnership with SAP and Talia where we are effectively integrating our virtual cloud capabilities into their platform to enable them and their customers to make virtual card payments on their accounts payable flows. So that would be an example of how we're driving growth in the virtual card area.

Ashwin Shirvaikar

Great. And you talked of the laddering effect and that's a great way to look at it. But even on a slightly, I don't want to call it older, but it has been in use for many years like something like virtual cards. Where would you say we are in sort of the penetration phase?

Sachin Mehra

I think we're in the early stages of the virtual card as well. Even though we've seen very good growth in virtual cards, I mean, the number of use cases which have been tapped are just -- we're just scratching the surface as it relates to that, so lots more work to that.

Ashwin Shirvaikar

Okay, okay. And then let's move to the very other end of the spectrum and talk about crypto where it is getting started. And in spite of the headlines of the last few days, I mean, let me -- what do you think of crypto and [Multiple Speakers]

Sachin Mehra

Yes, look out even crypto hasn't changed, right? And the way we've always thought about crypto is it's an asset class. I think our overriding philosophy is what's really important, and that's the message I'd like to leave you with. And our philosophy is we're not going to pick winners and losers. We want to be where consumers want to be. We want to be able to bring our solutions where consumers are and where consumers have an interest.

So to your specific question on crypto, if there's demand for crypto, what we've been doing is enabling our capabilities to provide an on-ramp for crypto. So in other words, the utilization of our products, our debit and credit card, for the purchase of crypto and an off-ramp to enable consumers to spend their crypto balances leveraging our assets like MasterClass, for example. That would be one area of participation. But we also recognize that the crypto space is brought with several risks, which our customers face, particularly as it relates to compliance-related risk, which is why we've invested quite heavily, both organically and inorganically in assets which we might be able to bring to the crypto universe to help them manage that risk.

So for example, we acquired a company called CipherTrace. CipherTrace is in the business of providing our customers the ability to be able to support what might be less than clean transactions, so to say. And it's this ability to be able to provide those kind of services, which keeps us engaged in the game, brings value. The thing which is most important for us to do and recognize as we will do what's required so long as it complies with law, it meets the regulatory requirements which are there, whether it's in the crypto space or others, and that's kind of been the principle which we adopted.

So look, at the end of the day, there are things which come into tremendous demand and then tend to actually fade away. What we want to do is recognize that there's no one single solution, which is going to be -- the be all, end all for payments, and we want to be part of each one of the solutions the best we can.

Ashwin Shirvaikar

Okay, okay, okay. We already incorporated some of this next question that I'm going to ask basically services in previous answers, but it is 35% of your revenues. It's pretty significant. It's also growing at a very healthy clip. Could you, sort of, disaggregate services for us in terms of what are the important ones? How do you think of it and talk about it on a more detailed basis?

Sachin Mehra

Sure. Yes, absolutely. So last year in Investor Day, we detailed out what our services are, and we kind of talked about how services comprise roughly 25% of the revenues of the company. And what do we include in this when we say services? It's everything from what we do from payments consulting to what we do from payments marketing services to data insights and analytics to the various fraud management capabilities, which we provide our customers. And again, we are a B2B2C model. So every time I talk about this, it's the delivery of our services to our customers to help them get to a better place in terms of how they deliver value to their consumers.

Why are we in this space? And why do we think this is important? We believe, one, it helps drive revenue growth. Services have been growing at a pace faster than the overall growth rate for the company. So it's accretive from a revenue growth standpoint. Number two, very importantly, to help us differentiate our four payments proposition. So services and payments are very integrally tight together. It goes back to the question you had asked earlier why are we winning more on payments? Well, services help us win on payments. That's really important. That differentiation factor is important.

Number three, what services do is they diversify our revenue base. And when we diversify our revenue base, we like the diversification benefit, because macro environments are going to go through up and down cycles. And what you want is you don't want to be over-concentrated in any one particular area, you want to have the benefit of a diversified revenue stream. And once again, services provides that to us as was demonstrated during COVID, when we saw a pullback in payments-related revenues, and we saw services revenue hold up pretty nicely.

We continue to see good promise in this area. The way we're going after services and the opportunity there is to cause for deeper penetration of our existing services with our existing customers, kind of, first leg of the stool. The second leg of the stool around this is to take our services capabilities and broaden the utilization beyond cards to our various other rails over, which we're providing our capabilities.

So for example, open banking, digital ID, our real-time ACH capability. So it's about taking those services and expanding them across multiple rails. And third is about continuing to grow the nature of services we're delivering to our customers. So it's kind of a three-pronged strategy at the highest level, and obviously, there's detailed behind each one of these.

Ashwin Shirvaikar

Right, right. I wanted to -- you just mentioned digital ID and open banking, obviously, network opportunities. Maybe we can move to talking about that next, digital ID. We have lots of digital ID companies at the conference, including a few of your partners. And I just kind of tend to think of at least that as sort of a gateway to more fintech opportunities. But give us your view on just broadly speaking, that third pillar, new network opportunities and then we can talk a little bit more about digital ID and open banking.

Sachin Mehra

Yes. So what we identified in our third pillar of what we call our strategic priorities is it's about embracing new networks, and what we currently call new networks or what we're focused on are on open banking and digital ID. An example of open banking was what we just talked about our partnership with JPMorgan Chase, where we're leveraging our open banking capabilities to drive greater and more effective ACH-related bill payment flows. That's just one example.

But what we're also doing in open banking is leveraging our open banking assets to enable better credit decisioning, better credit scoring, and this is true in verticals like the mortgage space and small business lending, in automotive lending. These are important areas, because really what we're doing here is we're bringing value to consumers with their consent. And again, this is really important. It is with consumer consent while respecting their privacy requirements, while respecting security requirements from a data privacy standpoint and a security standpoint, to give them value of the data they bring to the ecosystem. So those are the use cases. We believe this is a scale business, which is why we're in it, because we think it's important for us to be there to be able to deliver that value, so that's on open banking.

On digital ID, and none of this is in isolation, kind of, operating. A lot of these things kind of work together. The reason we think digital ID is interesting is, because the world has gone more digital, will continue to remain digital. And as it's gone more digital and will remain more digital, one of the big pain points, which exist is authenticating individuals in their digital interactions. So you no longer have the flexibility, if you are a bank financial institution, a fintech company, where individuals come into a bank branch and identify themselves. Very often, back to our digital first discussions we were having, people are actually creating new accounts, for example, in a remote environment.

How do you authenticate those individuals? So really, that's what we're bringing. We're bringing our digital ID assets to help authenticate consumers and small business owners not only during the payment transaction, but prior to the payment transaction and after the payment transaction. And that's kind of at the highest level, what we're doing on the digital ID space. We're seeing some tremendous traction there. We acquired a company called Ekata in the digital ID space.

We have several other assets, particularly around biometrics on the company called New Data, which we have, where we're bringing the power of these assets together to deliver those experiences to our partners who are looking for that authentication, which we're talking about, both -- and when I talk about partners, this is fintech partners, this is banks. And then there are merchants on the other side who are looking for that same experience. We're certainly focused on that.

Ashwin Shirvaikar

Okay, okay. Got it. I want to talk about M&A, but I want to ask a question which is sort of sets up the M&A as part of our overall process. So it's more of a process question, and through this conversation, kind of, talked about many different types of services, network opportunities, flows. What you do today is tremendously grown from what you used to do a few years back and definitely from a decade ago, right?

So if you can, kind of, walk us through the thought process of how you think about that growth? I mean how do you invest organically, and then we'll get to the inorganic question. But just give us your thought process.

Sachin Mehra

Yes. I think the thought process all kind of starts from the strategy of the company, right? And whatever we do, whether it's organic investments or M&A is all linked back to the strategy of the company. And I think it's important for me to just reiterate what are the growth elements of what makes Mastercard do what Mastercard does, right? And you've heard this before, but I'll kind of repeat this just to, kind of, set the stage.

There are key elements which drive the growth of our company. First and foremost, it's what happens from a personal consumption expenditure standpoint. The second piece is around the secular shift from cash to electronic forms of payments, not only in P2M flows, but also in B2B flows. The third piece is around driving market share growth, and then there are several other things which we do, which sit in various other buckets, such as what we're doing from a service growth standpoint, what we're doing from a new network growth standpoint.

How we go about each one of these is very much a function of what are the set of assets we've got, where are the gaps in our portfolio, are we better off building, buying or partnering as part of that. And that assessment has to be done in order to what's quickest time to market, where do we feel like our capital is best deployed as part of that exercise, right?

And so where M&A fits into this is when we feel like in our strategy, there are certain gaps in terms of how we're going to accomplish this. If you feel like the right way to go about addressing those gaps is through an acquisition, we'll go ahead and do that. And we've not been shy to do that, and we've done that pretty successfully historically, and we will continue to do that on a going-forward basis. That's kind of the thinking.

But just remember when we talk about our strategic priorities, there is no one particular area, which is singularly standing on its own. They're all very closely tied together. Payments are tied to services are tied to new networks, and it's all kind of 1 big thing, which we've got to kind of go after because that's the value we're delivering. And that will come through organic and inorganic investments.

Ashwin Shirvaikar

Got it. Got it. Yes, and when you speak of M&A, obviously, no single investment, just given your size and scope. No single investment typically matters from a materiality standpoint. But from a strategic standpoint, they are all -- they all matter. I just wanted to talk about valuations as it relates to M&A. And given what's happened with public market valuations, and we get various different views with regards to the speed with which that has or has not happened in private market valuations, what's your view on that topic? And how important is valuation as a single factor when you do M&A?

Sachin Mehra

Yes. So we're definitely not in the business for we're paying for assets. Let me stop there. Now that being said, we don't buy companies, because they're cheap. We look to buy companies, because they make sense from a strategic standpoint and they scratch an itch as far as Mastercard goes. That's where it starts. Thereafter, what we've got to kind of make an assessment of is, what's our probability of success on delivering the synergies, which we've identified as part of that acquisition.

Remember, a lot of the acquisitions we do are about driving revenue-related synergies. And we've got to feel comfortable that we can deliver those synergies, and that kind of then ties back into the valuation question, Ashwin, because at the end of the day, it all kind of backs into relative to the value of the company, how do we feel about what we can deliver not only for the stand-alone value of that company is, but inclusive of the synergies of that company.

As it relates to what we're seeing in the market, look, there's been some rightsizing of valuations, which has taken place. I would tell you that in the private market, depending on where private market companies are, if they're in need for funding, they've probably done the revaluations or some part of the revaluations to where public market comps are. If companies in the private market are not in need for funding, we haven't necessarily seen a revaluation take place, so it's kind of a mixed bag of that.

Ashwin Shirvaikar

Yes, yes. Okay. Cool. With the light here changed from green to yellow, so we're able to kind of almost out of time. But let me just give you the opportunities, closing remarks. What keeps you wake at night in terms of what is -- what opportunities do you think about that we might not have discussed just like overall arc of your thoughts?

Sachin Mehra

Yes. Look, I think we've discussed most of the opportunities. We continue to believe there's tremendous runway left on the payment side, both in terms of consumer payments, that's our P2M, but also the new payments flow area. Our services capabilities are in good demand. We think there's lots of promise there, and then we're in the early stages of this new networks area we talked about, so I kind of feel like from an opportunity side, we've covered it pretty nicely.

On the risk side, the things we keep a close eye on are cybersecurity-related risks, super important. It's not getting any better. It's just moving from what used to be previously a point of less resistance to new points of less resistance as people are tightening up cybersecurity environment. The other one is around nationalism. And the fact is the world is getting more into this so-called nationalistic tendency area where countries are trying to decide what's best for the interest of those countries. And in some cases, they are putting up walls and requirements, and it's about navigating through that, which we have to do.

We feel good about that. And the reason we do is because we have a set of assets, which go well beyond just card payment-related assets, services we bring, it's some multi-rail assets we bring. So those are the two areas I would tell you where we've got to keep an eye on from a risk standpoint.

Ashwin Shirvaikar

Makes sense. Makes sense, tremendous conversation. Thank you very much, Sachin.

Sachin Mehra

Hey, great. Thank you for having me, Ashwin. Thanks very much.

Ashwin Shirvaikar

Thanks.

Sachin Mehra

Thanks a lot. Yes, thank you.

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