Mastercard Q2 Earnings: Revenue And Profit Beat, Rise In Discretionary Consumer Spending And Travel Boost Network Volume

Mastercard Inc (NYSE: MA) reported fiscal second-quarter net revenues of $7.0 billion, up 10% year over year and 13% year over year on a neutral currency basis, beating the analyst consensus estimate of $6.85 billion.

Adjusted EPS rose 24% year over year to $3.59, exceeding the analyst consensus estimate of $3.51.

A tight labor market has secured job stability for customers, and wage growth has boosted their discretionary spending, enabling purchases despite the U.S. Federal Reserve’s tight monetary policy, Reuters reports.

Payment network net revenue rose 7% Y/Y (+9% Y/Y on a currency-neutral basis), led by growth in gross dollar volume (+9% Y/Y), cross-border volume (+17% Y/Y) and switched transactions (+11% Y/Y). 

Value-added services and solutions net revenue rose 18% and 19% on a currency-neutral basis, driven by continued strong growth in cyber and intelligence solutions and high demand for consulting, data analytics and marketing services.

Mastercard’s switched volume, reflecting the value of transactions on its network, rose by 10% year-over-year. Cross-border volume, which indicates travel demand by tracking spending on cards outside their country of issue, increased by 17% in the same period.

The adjusted operating margin expanded 70 bps Y/Y to 59.4%.

The net income climbed 17% on a currency-neutral basis to $3.3 billion. The adjusted net income improved by 24% on a currency-neutral basis.

As of June 30, 2024, the company’s customers had issued 3.4 billion Mastercard and Maestro branded cards.

During the second quarter of 2024, Mastercard repurchased 5.8 million shares for $2.6 billion and paid $615 million in dividends. 

As of June 30, 2024, cash and cash equivalents stood at $9.13 billion.

CEO Michael Miebach said, "This was supported by continued healthy consumer spending, robust cross-border volume growth of 17%, and demand for our value-added services and solutions where net revenue increased 18%, or 19% on a currency-neutral basis.”

Outlook: For the third quarter, Mastercard expects net revenue growth in the low-double-digit versus the $6.85 billion analyst consensus estimate. 

For fiscal 2024, Mastercard projects net revenue growth of low-double-digits (prior low-end of low-double-digits) versus the $27.84 billion analyst consensus estimate.

Mastercard stock gained over 13% in the last 12 months.

Price Action: MA shares are up 2.71% at $459.57 premarket at the last check on Wednesday.

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