Mastercard Q1 Earnings Exceed Expectations On Strong Key Metrics

Mastercard Inc MA reported Q1 2023 net revenues of $5.75 billion, up 11% Y/Y and 14% on neutral currency basis, beating the consensus of $5.64 billion.
Payment network net revenue rose 7% Y/Y (+10% on a currency-neutral basis), led by growth in gross dollar volume (+15% Y/Y), cross-border volume (+35% Y/Y) and switched transactions (+12% Y/Y).
Value-added services and solutions net revenue rose 19% Y/Y (+21% Y/Y on a currency-neutral basis), driven by continued strong growth in cyber and intelligence solutions and high demand for data analytics, consulting and marketing services.
As of March 31, 2023, the customers had issued 3.2 billion Mastercard and Maestro-branded cards.
Adjusted operating expenses rose 10% Y/Y to $2.4 billion due to higher personnel costs.
The adjusted operating margin rose 70bps Y/Y to 58.2%.
Adjusted EPS rose 1% Y/Y to $2.80, exceeding the consensus of $2.72.
In Q1, Mastercard repurchased shares worth $2.9 billion and paid $545 million in dividends.
Cash flow from operating activities was $1.9 billion in Q1.
Cash and equivalents stood at $8.8 billion at the end Q1 2023.
Outlook: For 2023, the company expects net revenue to grow in low-teens and adjusted operating expense to grow in the low-end of low- double-digits.
In Q2 2023, MA expects both net revenue and adjusted operating expense to grow in the high-end of low- double-digits Y/Y.
"We are actively managing the business to capitalize on the significant digital payment and services opportunities ahead, and stand ready to navigate through any headwinds. We are making sure people and businesses can use their Mastercard when and where they want, now surpassing 100 million acceptance locations worldwide. As we look to the future, I believe our focused strategy, diversified business model, and our relationships around the globe position us very well," said Michael Miebach, CEO.
Price Action: MA shares are trading higher by 0.98% at $370.35 on the last check Thursday.

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