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Mastercard (MA) Q1 Earnings Beat on Higher Cross-Border Volume

Mastercard Incorporated MA reported first-quarter 2022 earnings of $2.76 per share, which outpaced the Zacks Consensus Estimate by 27.2%. The bottom line surged 59% year over year.

Revenues of this leading technology company in the global payments industry amounted to $5.2 billion, which improved 24% year over year in the quarter under review. The top line beat the consensus mark by 5.4%.

Shares of Mastercard gained 2.6% in the pre-market trading session, courtesy of its better-than-expected first-quarter results.

The quarterly results benefited from substantial recovery in cross-border volume, which resulted from cross-border travel rebounding to pre-pandemic levels as of March 2022. Improved gross dollar volume (GDV) and higher switched transactions contributed to the upside. However, the upside was partly offset by escalating operating expenses.

Mastercard Incorporated Price, Consensus and EPS Surprise

Mastercard Incorporated Price, Consensus and EPS Surprise
Mastercard Incorporated Price, Consensus and EPS Surprise

Mastercard Incorporated price-consensus-eps-surprise-chart | Mastercard Incorporated Quote

Q1 Operational Performance

GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) came in at $1.9 trillion, which climbed 17% year over year in the first quarter.

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Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) surged 53% year over year on a local-currency basis.

Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 22% year over year to nearly 29 million.

Other revenues improved 18% year over year in the quarter under review. The year-over-year growth comprised 7% contribution from buyouts and the remaining growth resulted from Cyber & Intelligence and Data & Services solutions.

Rebates and incentives climbed 26% year over year in the first quarter.

MA’s clients issued 2.9 billion Mastercard and Maestro-branded cards as of Mar 31, 2022.

Operating expenses amounted to $2.2 billion, which escalated 13% year over year primarily due to higher general and administrative, advertising and marketing coupled with depreciation and amortization expenses.

In the first quarter, operating income of $3 billion climbed 34% year over year. Adjusted operating margin came in at 57.5%, which improved 460 basis points (bps) year over year.

Balance Sheet (As of Mar 31, 2022)

Mastercard exited the first quarter with total assets of $37.2 billion, which dipped 1.3% from the 2021-end figure.

Cash and cash equivalents totaled $6.9 billion, which declined 7.3% from the figure at 2021 end. Nevertheless, the figure is way above the current portion of long-term debt ($778 million).

Long-term debt came in at $13.9 billion, up 5.8% from the 2021-end level.

Cash Flows

In the first quarter, Mastercard generated operating cash flows of $1.8 billion, which advanced 21.8% year over year.

Share Repurchase and Dividend Payout

MA bought back 6.8 million shares for $2.4 billion. As of Apr 25, 2022, it had $8.9 billion left under the authorized share buyback programs.

Concurrently, Mastercard paid out dividends worth $479 million in the quarter under review.

2022 Outlook

Management anticipates net revenues to lie in high-end of mid-teens in 2022. The metric was expected to witness high-teens growth as per the earlier guidance.

Operating expenses are forecast to remain at low-end of low double-digits this year, while the prior view expected the metric to witness low-teens growth.

Zacks Rank

Mastercard currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Of the Business Services sector players that have reported first-quarter results so far, the bottom line of Equifax Inc. EFX, Visa Inc. V and IQVIA Holdings Inc. IQV beat the Zacks Consensus Estimate.

Equifax reported adjusted earnings of $2.22 per share, which beat the Zacks Consensus Estimate by 3.3% and improved 13% on a year-over-year basis. Revenues of EFX amounted to $1.36 billion, which outpaced the consensus mark by 2.4%. The figure improved 12.4% year over year on a reported basis and 13% on a local-currency basis.

Visa reported second-quarter fiscal 2022 earnings of $1.79 per share, which beat the Zacks Consensus Estimate by 8.5%. V’s bottom line improved 30% year over year. Visa’s net revenues of $7.2 billion climbed 25% year over year in the quarter under review. The top line outpaced the consensus mark by 5.1%.

IQVIA’s adjusted earnings per share of $2.47 beat the consensus mark by 1.7% and improved 13.3% on a year-over-year basis. IQV’s total revenues of $3.57 billion outpaced the consensus estimates by 0.5%. The top line increased 4.7% year over year on a reported basis and 6.8% on a constant-currency basis.


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