Mastercard Incorporated MA reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year.
Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%.
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The strong quarterly results reflect benefits from increased gross dollar volume, cross-border volumes, strong demand for value-added services and growth in switched transactions due to robust consumer spending. However, the upside was partly offset by escalating operating expenses and higher rebates and incentives.
Mastercard Incorporated Price, Consensus and EPS Surprise
Mastercard Incorporated Price, Consensus and EPS Surprise
Net revenues of $28.2 billion rose from $25.1 billion in 2024 and beat the Zacks Consensus Estimate of $28.06 billion. Similarly, adjusted EPS of $14.60 jumped 19% year over year in 2025 and beat the consensus mark of $14.47. Adjusted operating margin of 58.4% improved 40 bps year over year.
Mastercard’s Q4 Operational Performance
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from Mastercard-branded cards) increased 12% on a local-currency basis to $2.6 trillion. The metric was in line with the Zacks Consensus.
Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) rose 20% 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 42.2 billion. The metric outpaced the consensus mark by 0.6%.
Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year and met our estimate. The year-over-year growth was driven by higher demand for consumer acquisition and engagement, as well as business and market insight services. Also, the scaling of its security and digital and authentication solutions, as well as improving pricing strategies aided the metric.
Payment network rebates and incentives increased 174% year over year as a result of new and renewed deals.
Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024.
Adjusted operating expenses escalated 14% year over year to $3.3 billion due to increased general and administrative expenses.
Adjusted operating income was $4.22 billion, which grew 15% year over year and beat our estimate of $4.14 billion. Adjusted operating margin improved 10 basis points year over year to 56.3%.
Mastercard’s Financial Position (As of Dec. 31, 2024)
Mastercard exited the fourth quarter with cash and cash equivalents of $8.44 billion, which declined from the 2023-end level of $8.59 billion. The figure is way higher than the short-term debt of $750 million.
Total assets of $48.08 billion increased from the $42.45 billion figure at 2023-end.
Long-term debt amounted to $17.48 billion, up from the $14.34 billion figure as of Dec. 31, 2023.
Total equity of $6.52 billion fell from the 2023-end level of $6.98 billion.
Mastercard generated cash flows from operations of $14.8 billion in 2024, which advanced from the prior-year period’s $12 billion.
Mastercard’s Capital Deployment Update
Mastercard bought back 6.5 million shares for $3.4 billion in the fourth quarter. Quarter-to-date through Jan. 27, it bought back another 1.2 million shares for $644 million, thereby leaving a buyback capacity of $14.5 billion. Mastercard paid out dividends worth $606 million in the quarter under review.
Mastercard’s 1Q25 Guidance
Management projects net revenues to register low-double-digits growth on a year-over-year basis in the first quarter of 2025, while adjusted operating expenses are anticipated to record low-teens growth.
Mastercard’s 2025 View
Management estimates adjusted net revenues to witness low-double-digit growth in 2025 from the 2024 figure. Adjusted operating expenses are forecasted to witness low-teens growth from the year-ago figure.
Zacks Rank & Key Picks
Mastercard currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Business Services space are Sezzle Inc. SEZL, Fidelity National Information Services, Inc. FIS and Affirm Holdings, Inc. AFRM. While Sezzle currently sports a Zacks Rank #1 (Strong Buy), Fidelity National and Affirm carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sezzle’s 2024 bottom line is pegged at $9.85 per share, up from $1.25 a year ago. The consensus estimate for SEZL’s 2024 top line is pegged at $249.2 million, suggesting 56.4% year-over-year growth.
The Zacks Consensus Estimate for Fidelity National’s current-year earnings is pegged at $5.18 per share, which remained stable over the past month. FIS beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 8.2%. The consensus estimate for current-year revenues is pegged at $10.2 billion.
The Zacks Consensus Estimate for Affirm’s current-year earnings indicates a 62.9% improvement from the year-ago period. AFRM beat earnings estimates in three of the trailing four quarters and missed once, with an average surprise of 17.8%. The consensus mark for current-year revenues suggests a 33.7% year-over-year increase.
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