Mastercard Q3 2024 $MA (-0,53%)

Financial performance:

Mastercard's financial results for the third quarter of 2024 show a solid performance: Net revenue increased 13% to USD 7.4 billion, up 14% at constant currency. Adjusted net income grew 12% to USD 3.6 billion and adjusted diluted earnings per share (EPS) increased 15% to USD 3.89. Operating costs increased by 25 % due to restructuring costs and provisions for litigation. The operating margin therefore fell to 54.3 %, compared with 58.8 % in the previous year.

Balance sheet overview:

As of September 30, 2024, Mastercard's total assets were USD 47.2 billion, an increase from USD 42.4 billion at the end of 2023. Current assets increased to USD 22.3 billion, including cash and cash equivalents of USD 11.1 billion. Total liabilities amounted to USD 39.7 billion, including non-current liabilities of USD 17.6 billion. Shareholders' equity amounted to USD 7.5 billion.

Revenue overview:

The main sources of income include revenues from the payment network and value-added services, with the latter recording an increase of 18%. The main cost drivers were general and administrative expenses, advertising and marketing and depreciation and amortization. The adjusted operating margin was 59.3 %.

Overview of cash flows:

For the nine months ended September 30, 2024, Mastercard generated $9.9 billion in net cash from operating activities, compared to $7.9 billion in the prior year. Investing activities used USD 724 million, mainly for the acquisition of securities and real estate. Financing activities used USD 6.8 billion, mainly for the repurchase of treasury shares and dividend payments.

dividend payments.

Key criteria and profitability ratios:

Adjusted effective tax rate increased to 16.3%, compared to 15.0% in the prior year. The operating margin decreased by 4.5 percentage points to 54.3%.

Segment information:

The payment network recorded growth in gross dollar volume (GDV) of 10% (adjusted for local currency), with cross-border volume increasing by 17%. The number of switched transactions increased by 11%.

Competitive position:

Mastercard continues to strengthen its market position through strategic acquisitions such as Recorded Future and Minna Technologies to expand its capabilities in AI-powered threat analytics and subscription management.

Management guidance and comments:

Management remains optimistic about future growth and is focused on expanding the addressable market and improving value-added services. The company expects continued demand for its services and solutions.

Risks and opportunities:

The main risks include regulatory challenges, competition and technological changes. Opportunities lie in the expansion of digital payment solutions and the use of AI technologies.

Summary of results:

Mastercard's financial performance in Q3 2024 reflects strong growth and strategic investments and positions the company well for future expansion. The increase in net revenue as well as the strategic acquisitions underline the focus on expanding the service offering and market penetration. Despite increased operating costs, the company remains financially robust and has significant growth potential.

Positive aspects:

• Revenue growth: Mastercard reported a 13% increase in net sales to USD 7.4 billion, up 14% at constant currency, supported by growth in the payment network and value-added services.
• Value-added services: The value-added services and solutions business achieved significant revenue growth of 18%, or 19% at constant currency, indicating strong demand and successful scaling of services.
• Cross-border volume: Cross-border transaction volume increased by 17% (local currency adjusted), reflecting strong international transaction activity.
• Strategic acquisitions: The planned acquisitions of Recorded Future and Minna Technologies are expected to strengthen Mastercard's capabilities in AI-powered threat intelligence and subscription management and position the company for future growth.
• Cash flow from operating activities: Net cash provided by operating activities increased to USD 9.9 billion in the first nine months of 2024, compared to USD 7.9 billion in the prior year, demonstrating strong cash generation.

Negative aspects:

• Operating costs: Operating costs increased by 25%, primarily due to higher general and administrative expenses, including restructuring costs and litigation provisions, which weighed on profitability.
• Operating margin decline: The operating margin fell by 4.5 percentage points to 54.3%, reflecting the increase in costs.
• Litigation and restructuring costs: Significant provisions for litigation and restructuring expenses contributed to the increase in operating costs.
• Interest expenses: Increased interest costs in connection with the debt portfolio had a negative impact on other comprehensive income, although positive income was generated from investments.
• Increase in the effective tax rate: The adjusted effective tax rate rose from 15.0% to 16.3%, which could impact net profit growth.