Mastercard (MA) – Earnings Review – February 3, 2024

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Mastercard (MA) – Earnings Review – February 3, 2024

“Healthy consumer spending drove strong results for 2023.” – CEO Michael Miebach


It beat revenue estimates by 1.1% & met its “low double-digit growth” guidance. Its 16.7% 3-year revenue CAGR compares to 19.4% Q/Q & 23.4% 2 quarters ago.

  • FX neutral revenue growth was about 11% Y/Y.
  • Cross-border revenue growth was 18% Y/Y.
  • Payment network revenue rose 9% Y/Y (7% FX neutral growth)
  • Value-add services rose 19% Y/Y (17% FX neutral growth). Cyber, authentication and intelligence solutions continue to be the standouts.
  • Gross dollar volume growth of 10% overall was powered by 13% Y/Y rest of world growth. U.S. volume growth was 4% Y/Y.

It beat EBIT estimates by 1.7%. It roughly met adjusted operating expense growth of 7%-9% Y/Y on a currency neutral basis. It also beat $3.08 EPS estimates by $0.10. A 16% tax rate vs. 18.3% Y/Y helped 13% Y/Y GAAP EPS growth a tad. Non-GAAP EPS growth was 20% Y/Y. EPS growth led net income growth due to $1.8 billion in buybacks for the quarter.

Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases

Balance Sheet

  • $8.6 billion in cash & equivalents.
  • $15.7 billion in total debt.
  • Dividends rose 13.4% Y/Y.
  • Diluted share count fell 2.5% Y/Y via $9 billion in 2023 buybacks.

Guidance & Valuation

Annual guidance was about in line on revenue and roughly in line (slightly, slightly weak) on EBIT. Revenue estimates ticked slightly higher and EBIT estimates ticked slightly lower after the report. Very small revisions. Growth will be slower in Q1 than the rest of the year due to lapping strong FX volatility revenue and tougher value-add service comps.

Quarter-to-date (QTD), switched volume growth in the USA slowed from 5% to 4% and from 15% to 14% for the rest of the world. Overall switched volume growth went from 12% to 11% Y/Y. Cross-border growth remained stable QTD at 18% Y/Y growth. Like for Visa, growth slowing was due to severe weather; growth in the USA moved back to 5% Y/Y for the last week of the month that had no severe weather.

“We continue to grow through a combination of healthy consumer spending, new and renewed customer agreements, a continued secular shift from cash to card and strong growth across our service offerings… Our base case scenario for 2024 reflects healthy consumer spending and recent spending dynamics.” – CFO Sachin Mehra

Call & Release Highlights


Like Visa, Mastercard is among the very best gauges of consumer spending growth. It doesn’t take credit risk, but the volume data is still very important. The company sees a mix of headwinds and tailwinds currently playing out in macro land. The labor market remains strong with robust wage growth. That’s a positive. Conversely, delinquency rates are rising for its credit partners, liquidity is drying up and inflation hasn’t fully normalized. Those are headwinds. Overall, it “remains fairly positive about the outlook, but is monitoring the environment closely.”

Deal Momentum:

CEO Michael Miebach’s prepared remarks were dedicated to highlighting Mastercard’s strong deal momentum. Here’s a list of partnerships and deals mentioned:

BOK Financial is moving its U.S. debit portfolio to Mastercard. Its fraud value-add service and virtual card capabilities helped it win this business. This is the third major U.S. debit portfolio to flip to Mastercard this year. BOK joins Webster Bank and Citizens.

Internationally, it inked a long-term deal with Shinhan Card, which is the largest Korean issuer. It won BNP Paribas Fortis’s credit portfolio in Belgium. It secured BPER Banca’s (among the largest Italian banks) debit portfolio. It received formal approval for domestic bank card clearing in China. It also added cross-border services to its existing AliPay partnership. UBS added Mastercard’s cross-border services too. This should help cross-border momentum remain strong, which likely helped QTD growth remain stable Q/Q at 18%.

From a FinTech perspective, Mastercard enjoys 80% of the largest digital Neobanks as customers per CNBC. It won more business with Square this past quarter and renewed its large partnership with Starling Bank (massive in the U.K.).

For the public sector, it won an exclusive Fiserv partnership to help with government benefits and wage disbursement. Like Visa, it also partnered with Clearing House, which operates the Fed’s new Real-Time Payments (RTP) network.

Its value-add services prowess led to a deepening of its Bank of America partnership to include “test and learn product management and supplier enablement solutions.” Worldpay is also now using its fraud services for dispute resolution, while Citi added Mastercard’s consumer clarity product to uplift consumer data and profile transparency.

More Payments News:

  • Tap to pay with mobile phones is live in 18 markets. Smaller merchants can now accept payments “by simply downloading an app.”
  • Apple Pay is expanding across the globe with Mastercard as a partner.
  • Open-loop transit momentum remains strong. Open vs. closed loop simply means payment collection lets consumers use their choice of card or digital wallet vs. forcing a specific option. Using open-loop transit has been shown to juice the average consumer’s Mastercard engagement.
  • Click-to-pay transaction growth was 60% in 2023. Klarna will add this tool in Europe in 2024.
  • Tokenization is reducing fraud and juicing approval rates by 3%-6%.
  • Partnered with Nippon Electric Company (NEC) to expand its biometric payments to Asia to “pay with a smile or a wave.”


Mastercard is working on “Small Business AI” and a conversational shopping assistant. It didn’t say much about either tool aside from both being set for beta testing in 2024.


This quarter was basically the same as Visa. It was solid all-around. Consumer spending resilience is encouraging, and that’s the most important macro read-through we have from this company.

Disclaimer: Third party content is provided for informational purposes only and should not be construed as an offer to sell or a solicitation of an offer to buy or sell any security. Third party content is not intended to serve as a recommendation to buy or sell any security and is not intended to serve as investment advice. Third party content creators are not affiliated with BBAE Holdings LLC, (“BBAE”) Redbridge Securities LLC (“Redbridge Securities”) or BBAE Advisors LLC (“BBAE Advisors”). All investments involve risk, including the possibility of total loss of principal. For additional important information, please click here.

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