Quarterly earnings calls can be a great way for investors to get up to speed on a company's recent operating performance and future growth expectations. Reading through a transcript of a call can therefore be a worthwhile endeavor.
1. A broad and growing suite of services is helping Mastercard win new business.
I'm a believer that our future will be built on choice and on offering bundled solutions. Those are the two things I'm very focused on building -- choice across every category of payment. So, we want to digitize every form of payment and we want to allow every form of payment to be available as a one-stop shop from us. You want it, we've got it. That's the approach that we're trying to use. You combine that with bundling both payments with all these other services solutions that a number of the newer banks want. They don't have capabilities of self-paid, fraud management, data analytics, processing, loyalty, and rewards. If you can try and bundle these things together, then you get a good, attractive conversation going with them. I think that's probably what's helping us right now.
-- CEO Ajay Banga
Mastercard is augmenting its top-tier credit and debit card network with capabilities such as real-time payments -- via its VocaLink Fast ACH service -- and pay-by-bank applications, which allow consumers to make online purchases directly from their bank account without the need to link a debit card. By offering services that reach beyond its card-based network, Mastercard is positioning itself to earn a far larger share of a digital payments market opportunity that exceeds $120 trillion.
This has helped Mastercard pile up some notable wins in recent quarters, including insurance giant Anthem's prepaid consumer spending accounts and retailer L.L. Bean's consumer credit card business. Banking giant JPMorgan Chase also recently extended its commercial agreement with Mastercard.
Perhaps most notably, PayPal (NASDAQ:PYPL) chose Mastercard's network for its new Venmo card, which will enable Venmo users to access their funds online or in store, wherever Mastercard is accepted. In this way, Mastercard has positioned itself as a valuable partner for one of the fastest-growing brands in peer-to-peer payments. So while PayPal was once thought to be a potential threat to Mastercard, it will now serve as an additional source of growth.
2. Mastercard is investing aggressively to strengthen its competitive advantages.
What we do is we take the extra margin that we are making on the core business and invest it very significantly in terms of expanding and the other things that we have been talking about. One is the services. Many of these different services have actually lower margin, other than safety and security front services, but we're investing in that still heavily, such as data analytics, such as loyalty, etc., and that will continue to happen. The second expansion that we have been talking about in a fairly significant way since our last investor day in September of 2017 is the investment that we're doing in the B2B space. Remember the $120 trillion of opportunity, which we are taking certain slices of the opportunity and those kinds of investments will continue to stay with us.
-- CFO Martina Hund-Mejean
Rather than rest on its laurels and wait for a rising digital payments tide to lift its boat, Mastercard is spending heavily to develop new capabilities and strengthen its existing services. This willingness to sacrifice short-term profits in order to better serve customers -- and widen its economic moat -- should allow Mastercard to create even more long-term value for shareholders.
3. Mastercard remains a powerful growth story.
Our strong performance continued this quarter with net revenue growth of 18% and EPS growth of 48% versus a year ago on a currency-neutral basis and excluding special items. Even if you exclude the impacts of the accounting changes and the acquisitions that affect year-over-year growth comparisons, our underlying net revenue growth was 14% and operating income was up 26%. These results were achieved while investing for the future and reflect solid underlying business fundamentals and the continued execution of our strategy by all our employees around the world.
Mastercard is an incredibly profitable business, with operating margins that typically exceed 50%. And despite the company's heavy growth investments, earnings still rose sharply in the second quarter.
Moreover, the company's core business drivers continue to move in the right direction. Global card growth was 7%, bringing the total number of Mastercard and Maestro-branded cards issued worldwide to 2.4 billion. And gross dollar volume (GDV) -- essentially, the total amount of purchases and cash disbursements processed on Mastercard's network -- rose 14% on a local currency basis.
Better still, Mastercard's operating and free cash flow during the first six months of 2018 jumped more than 20% year over year. In turn, Mastercard was able to pay out $525 million in dividends and repurchase nearly $2.9 billion of its stock during the first two quarters of the year.
Looking forward, with $2.1 billion remaining under its current repurchase program, investors can expect more value-creating stock buybacks in the quarters ahead. And with dividends accounting for only about 22% of its earnings, Mastercard is likely to continue to reward investors with a fast-growing dividend income stream in the coming years.