Mastercard Incorporated MA reported third-quarter 2024 adjusted earnings of $3.89 per share, which surpassed the Zacks Consensus Estimate by 4.3%. The bottom line improved 15% year over year. Its shares gained 1.7% in the pre-trading session.
Net revenues of the leading technology company in the global payments industry advanced 13% year over year to $7.4 billion. The top line beat the consensus mark by 1.6%.
The quarterly results reflect benefits from increased gross dollar volume, cross-border volumes, strong demand for value-added services and growth in switched transactions. However, the upside was partly offset by escalating operating expenses and higher rebates and incentives.
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Mastercard Incorporated Price, Consensus and EPS Surprise
Mastercard Incorporated Price, Consensus and EPS Surprise
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) increased 10% on a local-currency basis to $2.5 trillion. Yet, the metric fell short of the Zacks Consensus Estimate of $2.52 trillion and our estimate of $2.51 trillion.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) rose 17% on a local currency basis. Switched transactions, which indicate the number of times a company’s products have been used to facilitate transactions, improved 11% year over year to 41.1 billion. The metric outpaced the consensus mark of 40.7 billion.
Value-added services and solutions net revenues of $2.7 billion advanced 18% year over year and met our estimate. The year-over-year growth was driven by higher demand for consulting and marketing services, expansion of fraud, security, identity and authentication solutions, as well as effective pricing strategies.
Payment network rebates and incentives increased 17% year over year as a result of new and renewed deals.
MA’s clients issued 3.4 billion Mastercard and Maestro-branded cards as of Sept. 30, 2024.
Adjusted operating expenses escalated 12% year over year to $3 billion due to increased general and administrative expenses.
Operating income was $4 billion, which grew 4% year over year but slightly missed our estimate of $4.03 billion. Operating margin deteriorated 450 basis points year over year to 54.3%.
Mastercard’s Financial Position (As of Sept. 30, 2024)
Mastercard exited the third quarter with cash and cash equivalents of $11.1 billion, which climbed nearly 29% from the 2023-end level. The figure is way higher than the short-term debt of $750 million.
Total assets of $47.2 billion increased 11.3% from the figure at 2023-end.
Long-term debt amounted to $17.6 billion, up 22.8% from the figure as of Dec. 31, 2023.
Total equity of $7.5 billion rose 7.2% from the 2023-end level.
Mastercard generated cash flows from operations of $9.9 billion in the first nine months of 2024, which advanced 26.7% from the prior-year period.
MA’s Capital Deployment Update
Mastercard bought back 6.3 million shares for $2.9 billion in the third quarter. Over the period between Oct. 1 and Oct. 28, it bought back another 2 million shares for $983 million, thereby leaving a buyback capacity of $5.6 billion as of Oct. 28, 2024. Mastercard paid out dividends worth $611 million in the quarter under review.
MA’s 4Q24 Guidance
Management projects net revenues to register low-teens growth on a year-over-year basis in the fourth quarter of 2024, while adjusted operating expenses are anticipated to record high-end of low-double-digit growth.
Mastercard’s 2024 View
Earlier, management estimated net revenues to witness low-double-digit growth from the 2023 figure.
Adjusted operating expenses were forecast to witness low-end of low-double-digit growth from the 2023 figure.
MA’s Zacks Rank
Mastercard currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the other Business Services sector industry players that have reported September-quarter results so far, the bottom-line results of Visa Inc. V, The Western Union Company WU and Trane Technologies plc TT beat the Zacks Consensus Estimate.
Visa reported fourth-quarter fiscal 2024 earnings of $2.71 per share, which outpaced the Zacks Consensus Estimate of $2.58 by 5%. The bottom line increased 16% year over year. Net revenues of $9.6 billion improved 12% year over year. The top line beat the consensus mark by 1.2%. Visa's payments volume increased 8% year over year on a constant-dollar basis . Processed transactions (implying transactions processed by Visa) grew 10% year over year to 61.5 billion. On a constant-dollar basis, the cross-border volume rose 13% year over year.
Service revenues (depending on payments volume in the previous quarter) advanced 8% year over year to $4.2 billion in the September quarter. Data processing revenues of $4.61 billion grew 8% year over year. International transaction revenues advanced 9% year over year to $3.47 billion. Client incentives (a contra-revenue item) increased 6% year over year to $3.6 billion
Western Union reported third-quarter 2024 adjusted earnings per share (EPS) of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year. However, total revenues declined 6% on a reported basis to $1.04 billion. Additionally, the top line beat the Zacks Consensus Estimate by 0.4%. Adjusted operating margin was 19.1%, which deteriorated 50 basis points (bps) year over year.
Operating income fell 22% year over year to $164.9 million, which fell short of our estimate of $201.7 million. The Consumer Money Transfer (CMT) segment recorded revenues of $932.2 million, which tumbled 9% on a reported basis and 8% on an adjusted basis. Transactions within the CMT segment grew 3% year over year. The Consumer Services segment’s revenues climbed 32% on a reported basis and 15% on an adjusted basis to $103.8 million.
Trane Technologies reported third-quarter 2024 adjusted EPS of $3.37, which surpassed the Zacks Consensus Estimate by 4.3% and increased 20.8% year over year. Revenues of $5.4 billion beat the consensus mark by 2.4% and increased 11% year over year on a reported basis and organically. Bookings were up 5% year over year on a reported basis and organically. The Americas segment’s revenues of $4.5 billion were higher than our estimate of $4 billion and increased 15% year over year on a reported basis and organically. Bookings of $4.3 billion were up 8% on a reported basis and organically.
Europe, Middle East and Africa segment’s revenues were $667.8 million, up 8% year over year on a reported basis and organically. Bookings of $637 million were up 9% year over year on a reported basis and organically. Revenues from the Asia Pacific segment were down 21% year over year on a reported basis and organically to $298.5 million. Adjusted operating income was $56.9 billion, down 31% year over year. Adjusted operating margin declined 290 basis points to 19.1%.
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