Mastercard Exceeds Q3 Expectations, Fueled by Strong Consumer Spending and Value-Added Services
Mastercard Inc. (NYSE: MA) reported impressive third-quarter earnings, surpassing analyst estimates on both revenue and earnings per share. The company’s net revenue reached $7.37 billion, marking a 13% year-over-year increase, or 14% on a currency-neutral basis. This outperformance was driven by strong consumer spending, reflected in the growth of its payment network revenue, cross-border volume, and switched transactions.
Key Highlights:
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Payment Network Revenue:
Rose 10% year-over-year (11% on a currency-neutral basis), propelled by a 10% increase in gross dollar volume, a significant 17% jump in cross-border volume, and an 11% rise in switched transactions. This indicates robust global economic activity and increased travel demand.*
Value-Added Services and Solutions:
Demonstrated strong growth, with net revenue increasing 18% and 19% on a currency-neutral basis. This segment benefited from the continued expansion of cyber and intelligence solutions, high demand for consulting and marketing services, and the scaling of its fraud and security and identity and authentication solutions.*
Strategic Investments:
Mastercard highlighted its commitment to expanding its addressable market through strategic acquisitions. The company plans to acquire Recorded Future, a leading AI-powered threat intelligence provider, and Minna Technologies, a subscription management platform. These acquisitions will bolster its offerings and enhance its ability to meet the evolving needs of its customers.Positive Outlook:
Mastercard’s CEO, Michael Miebach, expressed optimism about the company’s future prospects, highlighting the ongoing strength of consumer spending and the continued growth of its value-added services. Mastercard’s CFO indicated a positive outlook for consumer confidence in Europe and exciting opportunities in the Chinese market in the medium to long term.
Financial Performance:
* Mastercard’s adjusted EPS surged 15% year-over-year to $3.89, exceeding analyst expectations of $3.74.
* The adjusted operating margin expanded by 50 basis points year-over-year to 59.3%.
* Net income climbed 3% on a currency-neutral basis to $3.3 billion, while the adjusted net income improved by 13% on a currency-neutral basis.
* As of September 30, 2024, Mastercard and Maestro branded cards in circulation reached 3.4 billion.
* During the third quarter, the company repurchased 6.3 million shares for $2.9 billion and paid $611 million in dividends.
* Cash and cash equivalents stood at $11.4 billion as of September 30, 2024.
Stock Performance:
Mastercard’s stock has gained 35% in the past 12 months. However, on Thursday, MA stock dipped 2.21% to close at $502.33.
Looking Ahead:
For the fourth quarter, Mastercard anticipates low-teens net revenue growth, surpassing the analyst consensus estimate of $7.27 billion. This indicates a continuation of the company’s strong performance and its ability to capitalize on the positive trends in consumer spending and its value-added services. Mastercard’s focus on strategic investments in emerging technologies, like AI and subscription management, positions it well for future growth and market leadership.
