Key Points
- Adjusted EPS of $3.59 beat analysts' consensus estimate of $3.51.
- Net revenue was $7.0 billion, exceeding the $6.85 billion expected.
- Gross dollar volume was $2.4 trillion, up 9% in local currency.
Mastercard (MA 0.82%), the financial services company best known for its global payments network, reported its second-quarter results on July 31. The highlight of the report was its adjusted EPS number, which at $3.59 surpassed analysts' estimates of $3.51. The company also reported net revenue of $7.0 billion, exceeding the expected $6.85 billion. Year over year, net revenue increased by 11%, or 13% on a currency-neutral basis.
| Metric | Q2 2024 Result | Q2 2024 Analyst Estimate | Q2 2023 Result | % Change (YoY) |
|---|---|---|---|---|
| Net revenue | $7.0 billion | $6.85 billion | $6.3 billion | 11% |
| Operating expenses | $2.9 billion | — | $2.6 billion | 12% |
| Operating income | $4.0 billion | — | $3.7 billion | 10% |
| Adjusted operating margin | 59.4% | — | 58.6% | 0.7 percentage points |
| Net income | $3.3 billion | — | $2.8 billion | 15% |
| Adjusted net income | $3.3 billion | — | $2.7 billion | 22% |
| Diluted EPS | $3.50 | — | $3.00 | 17% |
| Adjusted diluted EPS | $3.59 | $3.51 | $2.89 | 24% |
| Gross dollar volume | $2.4 trillion | — | $2.2 trillion | 9% |
| Cross-border volume | $741 billion | — | $635 billion | 17% |
| Switched transactions | 47.4 billion | — | 42.4 billion | 11% |
| Source: Analyst estimates for the quarter provided by FactSet. |
The Business and Its Focus Areas
Mastercard is a leading player in the global payments industry, operating across over 210 countries and supporting transactions in more than 150 currencies. Its core business revolves around its payments network, but its key areas of focus include value-added services like cybersecurity and fraud prevention.
In recent years, Mastercard has concentrated on expanding its multirail payment capabilities into new areas such as business-to-business (B2B) payments, remittances, and digital currencies. It has also significantly invested in value-added services, including consulting, data analytics, and cybersecurity solutions. Its commitment to technological innovation is intended to keep it ahead of the curve in areas like open banking, digital identity, and blockchain technology.
Quarter Highlights
During Q2, Mastercard made tangible progress on several metrics. Gross dollar volume processed reached $2.4 trillion, a 9% increase on a constant-currency basis. The number of switched transactions rose by 11% to 47.4 billion, and cross-border volume surged 17% to $741 billion. These increases underline the company's robust transaction volumes and its strong positioning in the global payments ecosystem.
Moreover, Mastercard reported an 18% rise in net revenue from value-added services. The company emphasized enhancements in cybersecurity, with strong uptake of its fraud risk solutions and identity authentication services.
One significant development was the reported increase in operating expenses by 12% year over year. Higher general and administrative expenses and litigation provisions were the primary contributors to this rise. Although this figured prominently, it was balanced out by the impressive revenue gains, resulting in a net income increase of 15% to $3.3 billion.
Management also highlighted the continuous growth in new payment flows. Products like Mastercard Send and virtual card numbers saw heightened adoption. Payment network net revenue specifically rose 7%, or 9% on a currency-neutral basis, pointing to the success of these initiatives.
Mastercard took notable strides in technological innovations with developments in digital identity solutions and blockchain technology -- areas that will be crucial in future financial ecosystems. Such innovations fortify Mastercard's market position and pave the way for its growth.
Looking Ahead
For the remainder of the year, Mastercard management is optimistic, expecting net revenue to grow at the high end of a low double-digit range on a currency-neutral basis. This outlook was buoyed by healthy consumer spending patterns and strong demand for the company's extensive range of services.
The company has advised investors to watch for further developments in cybersecurity, digital identity, and expansion into new payment flows. Operating expenses were flagged as an area to monitor. However, overall, the company's strategic initiatives and innovations signal positive momentum.
