MasterCard’s Profits Surge Backed By Strong Transaction Volume Growth

July 27th, 2018 by Trefis Team
+3.56%
Upside
455
Market
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Trefis
MA: Mastercard logo
MA
Mastercard

American financial services company, MasterCard (NYSE: MA), posted solid second quarter financial results, backed by the strong global macro-economic environment that augmented transaction volume growth. Further, the company’s focus on expanding its network of co-branding partners and improving technology to compete in the online payments segment augmented its top-line as well as bottom-line. The company expects to deliver high-teen revenue growth for 2018 driven by a healthy macro-economic environment and the company’s efforts to expand its product offerings.

We currently have a price estimate of $211 per share for MasterCard. View our interactive dashboard for MasterCard and alter the key drivers such as revenue and earnings to visualize the impact on its valuation.

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Key Highlights of 2Q’18 Results

  • MasterCard’s 2Q’18 revenue rose 14% (nominal basis) primarily driven by strong volume and transaction growth as well as growth in services. Cross-border volume grew around 19% due to the double digit growth in all the regions, particularly Europe.
  • The company’s total operating expenses increased 6% (excluding special items on a currency neutral basis), due to the investments in strategic initiatives, such as digital infrastructure, safety and security platforms, data analytics, and geographic expansion.
  • MasterCard continued to grow the network of its co-branding partners. For instance, the company won the L.L.Bean consumer credit program, and renewed its relationship with Hawaiian Air for both consumer and business co-brand cards. In addition, the company also partnered with leading healthcare company, Anthem, and cemented a strategic relationship with JPMorgan Chase.
  • The company expects to deliver high teen revenue growth for 2018 driven by a healthy macro-economic environment and the company’s efforts to expand its product offerings. Further, it expects its operating expenses to grow in mid-teens for the full fiscal year 2018.

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