Credit Card Juggernaut Mastercard Defies Market Predictions In Q4 - Is Consumer Spending Healthy?

Mastercard Inc MA shares are trading lower after the company reported fourth-quarter 2023 results.

Net revenues stood at $6.55 billion, up 13% Y/Y and 11% Y/Y on a neutral currency basis, beating the consensus of $6.48 billion.

Adjusted EPS rose 20% Y/Y to $3.18, exceeding the consensus of $3.08.

Payment network net revenue rose 9% Y/Y (+7% Y/Y on a currency-neutral basis), led by growth in gross dollar volume (+10% Y/Y), cross-border volume (+18% Y/Y) and switched transactions (+12% Y/Y). 

Value-added services and solutions net revenue rose 19% and 17% on a currency-neutral basis, driven by continued strong growth in cyber and intelligence solutions and high demand for consulting and marketing services and loyalty solutions.

Total operating expenses increased 21%. Excluding the impact of special items, adjusted operating expenses increased 10%, or 9%, on a currency-neutral basis primarily due to higher personnel costs. 

The adjusted operating margin expanded over 100bps Y/Y to 56.2%.

As of December 31, 2023, the customers had issued 3.3 billion Mastercard and Maestro-branded cards. 

In the fourth quarter, Mastercard repurchased shares worth $1.8 billion and paid $534 million in dividends.

As of December 31, 2023, cash and cash equivalents stood at $11.03 billion.

“We delivered strong earnings and revenue growth for the full year 2023, driven by healthy consumer spending, cross-border volume growth of 24 percent, and the solid execution of our strategy,” said Michael Miebach, CEO of Mastercard. “In the fourth quarter, we signed the third U.S. regulated bank debit portfolio flip to our network within the last twelve months.”

Outlook: For the first quarter, Mastercard expects net revenue growth in the low-end of low double-digits versus the $6.43 billion consensus. 

Price Action: MA shares are down 0.27% at $444.00 premarket on the last check Wednesday.

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