- Mastercard beat estimates for the third quarter. Adjusted EPS was $5.31 versus the $5.17 FactSet consensus, a 14-cent beat, and revenue rose 14% to $9.81 billion versus $9.66 billion expected, about $150 million above forecasts.
- Profit grew faster than sales. Net income rose to $4.63 billion, or $5.28 a share, from $3.93 billion, or $4.34 a share, a year earlier, an increase of about 18% in profit and 22% in per-share earnings.
- Both businesses grew. Payment-network revenue rose 11% on growth in gross dollar volume, cross-border volume and switched transactions plus higher pricing, while the value-added services and solutions segment, which includes fraud prevention and data analytics, grew revenue 19%.
- Investors rewarded the beat. The shares rose 3.2% to $629.55 in premarket trading Thursday, a sign of continued confidence in consumer spending and cross-border travel.
What Happened?
Mastercard reported results Thursday morning. The payment network’s growth came from higher spending volume, more cross-border transactions and more transactions processed on its network, along with price increases. The company said rebates and incentives paid to partners in its payment network also increased during the quarter, a cost that offsets part of the gross revenue growth.
Why It Matters?
The quarter shows US-led card spending holding up even as inflation stays elevated and the Fed leans toward higher rates, with higher prices themselves lifting the dollar volume on which Mastercard earns fees. The 19% growth in services is especially important, because fraud prevention and data analytics are less tied to transaction volume and give Mastercard a second engine beyond its core network. Faster profit growth than revenue growth also points to continued operating leverage.
What’s Next?
Watch whether cross-border volume growth holds up as energy prices and geopolitical tensions weigh on travel, and whether rising rebates and incentives squeeze net revenue growth. Investors will also compare the results with rival Visa’s, and track how the services segment holds its pace as a share of total revenue.
Affected Tickers and Coins: MA, V, AXP
Source: The Wall Street Journal
