MasterCard : Q2 2024 Mastercard Inc. Earnings Earnings Release
MA
Earnings Release
Mastercard Incorporated Reports Second Quarter 2024 Financial Results
Purchase, NY - July 31, 2024 - Mastercard Incorporated (NYSE: MA) today announced financial results for the second quarter 2024.
"We delivered another strong quarter across all aspects of our business with double-digit net revenue and earnings growth," said Michael Miebach, Mastercard CEO. "This was supported by continued healthy consumer spending, robust cross-border volume growth of 17%(1), and demand for our value-added services and solutions where net revenue increased 18%, or 19% on a currency-neutral basis. These results reflect how payments and services enable each other to create differentiated value for our customers and help us realize even more of the shift to digital."
Quarterly Results
Second Quarter Operating Results
Increase / (Decrease)
$ in billions, except per share data
Q2 2024
Q2 2023
Reported
Currency-
GAAP
neutral
Net revenue
$7.0
$6.3
11%
13%
Operating expenses
$2.9
$2.6
12%
13%
Operating income
$4.0
$3.7
10%
12%
Operating margin
58.0%
58.3%
(0.4) ppt
- ppt
Effective income tax rate
17.3%
23.2%
(5.9) ppt
(5.9) ppt
Net income
$3.3
$2.8
15%
17%
Diluted EPS
$3.50
$3.00
17%
19%
Key Second Quarter Non-GAAP Results 2
Increase / (Decrease)
$ in billions, except per share data
Q2 2024
Q2 2023
As adjusted
Currency-
neutral
Net revenue
$7.0
$6.3
11%
13%
Adjusted operating expenses
$2.8
$2.6
9%
10%
Adjusted operating margin
59.4%
58.6%
0.7 ppt
1.0 ppt
Adjusted effective income tax rate
17.5%
23.9%
(6.4) ppt
(6.3) ppt
Adjusted net income
$3.3
$2.7
22%
24%
Adjusted diluted EPS
$3.59
$2.89
24%
27%
Q2 2024 Key Business Drivers
(YoY growth)
Gross dollar volume
Cross-border volume
Switched
(local currency basis)
(local currency basis)
transactions
up 9%
up 17%
up 11%
The following information is provided to aid in understanding Mastercard's second quarter 2024 results, versus the year ago period.
This increase in payment network net revenue includes growth in payment network rebates and incentives provided to customers. Payment network rebates and incentives increased 14%, or 16% on a currency-neutral basis, primarily due to an increase in our key drivers as well as new and renewed deals.
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Year-to-date Results
Year-to-date Operating Results
Increase / (Decrease)
$ in billions, except per share data
2024
2023
Reported
Currency-
GAAP
neutral
Net revenue
$13.3
$12.0
11%
12%
Operating expenses
$5.7
$5.2
8%
9%
Operating income
$7.6
$6.8
12%
14%
Operating margin
57.4%
56.5%
0.9 ppt
1.1 ppt
Effective income tax rate
16.4%
20.6%
(4.2) ppt
(4.2) ppt
Net income
$6.3
$5.2
20%
22%
Diluted EPS
$6.72
$5.47
23%
24%
Key Year-to-dateNon-GAAP Results 1
Increase / (Decrease)
$ in billions, except per share data
2024
2023
As adjusted
Currency-
neutral
Net revenue
$13.3
$12.0
11%
12%
Adjusted operating expenses
$5.4
$5.0
9%
9%
Adjusted operating margin
59.1%
58.4%
0.6 ppt
0.9 ppt
Adjusted effective income tax rate
16.7%
21.2%
(4.5) ppt
(4.5) ppt
Adjusted net income
$6.4
$5.4
19%
20%
Adjusted diluted EPS
$6.90
$5.69
21%
23%
Year-to-date 2024 Key Business Drivers
(YoY growth)
Gross dollar volume
Cross-border volume
Switched
(local currency basis)
(local currency basis)
transactions
up 10%
up 18%
up 12%
The following information is provided to aid in understanding Mastercard's year-to-date 2024 results, versus the year ago period.
This increase in payment network net revenue includes growth in payment network rebates and incentives provided to customers. Payment network rebates and incentives increased 17%, or 18% on a currency-neutral basis, primarily due to an increase in our key drivers as well as new and renewed deals.
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Return of Capital to Shareholders
During the second quarter of 2024, Mastercard repurchased 5.8 million shares at a cost of $2.6 billion and paid $615 million in dividends.
Through the first half of 2024, Mastercard repurchased 10.2 million shares at a cost of $4.6 billion and paid $1.2 billion in dividends.
Quarter-to-date through July 26, the Company repurchased 1.9 million shares at a cost of $820 million, which leaves $8.7 billion remaining under the approved share repurchase programs.
Second Quarter 2024 Financial Results Conference Call Details
At 9:00 a.m. ET today, the Company will host a conference call to discuss its second quarter 2024 results. The dial-in information for this call is 1-888-330-2508(Toll-free) and 1-240-789-2735 (Toll dial-in), using passcode 6451878. A replay of the call will be available for 30 days and can be accessed by dialing 1-800-770-2030(Toll-free) and 1-647-362-9199 (Toll dial-in), using passcode 6451878.
A live audio webcast of this call, along with presentation slides, can also be accessed through the Investor Relations section of the Company's website at investor.mastercard.com.
Forward-Looking Statements
This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this press release, the words "believe", "expect", "could", "may", "would", "will", "trend" and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company's future prospects, developments and business strategies. We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made. Except for the Company's ongoing obligations under the U.S. federal securities laws, the Company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or
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industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
For additional information on these and other factors that could cause the Company's actual results to differ materially from expected results, please see the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequent reports on Forms 10-Q and 8-K.
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About Mastercard (NYSE: MA)
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.
www.mastercard.com
Contacts:
Investor Relations:
Media Relations:
Devin Corr or Jud Staniar
Seth Eisen
914-249-4565
914-249-3153
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Consolidated Statement of Operations (Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
(in millions, except per share data)
(in millions, except per share data)
Net Revenue
$
6,961
$
6,269
$
13,309
$
12,017
Operating Expenses:
General and administrative
2,418
2,200
4,704
4,243
Advertising and marketing
184
201
300
368
Depreciation and amortization
225
192
441
383
Provision for litigation
98
20
224
231
Total operating expenses
2,925
2,613
5,669
5,225
Operating income
4,036
3,656
7,640
6,792
Other Income (Expense):
Investment income
60
59
155
114
Gains (losses) on equity investments, net
(13)
123
(7)
(89)
Interest expense
(153)
(144)
(303)
(276)
Other income (expense), net
9
10
12
16
Total other income (expense)
(97)
48
(143)
(235)
Income before income taxes
3,939
3,704
7,497
6,557
Income tax expense
681
859
1,228
1,351
Net Income
$
3,258
$
2,845
$
6,269
$
5,206
Basic Earnings per Share
$
3.51
$
3.01
$
6.74
$
5.48
Basic weighted-average shares outstanding
929
946
931
949
Diluted Earnings per Share
$
3.50
$
3.00
$
6.72
$
5.47
Diluted weighted-average shares outstanding
930
949
933
952
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Consolidated Balance Sheet (Unaudited)
December 31,
June 30, 2024
2023
(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents
$
6,996
$
8,588
Restricted security deposits held for customers
1,772
1,845
Investments
362
592
Accounts receivable
4,195
4,060
Settlement assets
1,514
1,233
Prepaid expenses and other current assets
2,941
2,643
Total current assets
17,780
18,961
Property, equipment and right-of-use assets, net of accumulated depreciation and
2,148
2,061
amortization of $2,373 and $2,237, respectively
Deferred income taxes
1,423
1,355
Goodwill
7,563
7,660
Other intangible assets, net of accumulated amortization of $2,290 and $2,209,
4,149
4,086
respectively
Other assets
9,270
8,325
Total Assets
$
42,333
$
42,448
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable
$
835
$
834
Settlement obligations
1,594
1,399
Restricted security deposits held for customers
1,772
1,845
Accrued litigation
525
723
Accrued expenses
8,007
8,517
Short-term debt
1,086
1,337
Other current liabilities
1,775
1,609
Total current liabilities
15,594
16,264
Long-term debt
14,519
14,344
Deferred income taxes
337
369
Other liabilities
4,401
4,474
Total Liabilities
34,851
35,451
Commitments and Contingencies
Redeemable Non-controlling Interests
22
22
Stockholders' Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,403 and 1,402 shares
issued and 919 and 927 shares outstanding, respectively
-
-
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 shares issued and
outstanding
-
-
Additional paid-in-capital
6,089
5,893
Class A treasury stock, at cost, 485 and 475 shares, respectively
(65,067)
(60,429)
Retained earnings
67,604
62,564
Accumulated other comprehensive income (loss)
(1,205)
(1,099)
Mastercard Incorporated Stockholders' Equity
7,421
6,929
Non-controlling interests
39
46
Total Equity
7,460
6,975
Total Liabilities, Redeemable Non-controlling Interests and Equity
$
42,333
$
42,448
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Consolidated Statement of Cash Flows (Unaudited)
Six Months Ended June 30,
2024
2023
(in millions)
Operating Activities
$
6,269
$
5,206
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
826
782
Amortization of customer incentives
Depreciation and amortization
441
383
(Gains) losses on equity investments, net
7
89
Share-based compensation
263
243
Deferred income taxes
(93)
24
Other
80
37
Changes in operating assets and liabilities:
(234)
(268)
Accounts receivable
Settlement assets
(284)
(108)
Prepaid expenses
(1,980)
(1,286)
Accrued litigation and legal settlements
(197)
(20)
Restricted security deposits held for customers
(73)
155
Accounts payable
9
(287)
Settlement obligations
199
31
Accrued expenses
(415)
(707)
Net change in other assets and liabilities
(8)
343
Net cash provided by operating activities
4,810
4,617
Investing Activities
(219)
(157)
Purchases of investment securities available-for-sale
Purchases of investments held-to-maturity
(81)
(31)
Proceeds from sales of investment securities available-for-sale
58
45
Proceeds from maturities of investment securities available-for-sale
139
102
Proceeds from maturities of investments held-to-maturity
306
91
Purchases of property and equipment
(272)
(190)
Capitalized software
(402)
(395)
Purchases of equity investments
(18)
(53)
Proceeds from sales of equity investments
23
44
Other investing activities
(2)
(71)
Net cash used in investing activities
(468)
(615)
Financing Activities
(4,631)
(5,294)
Purchases of treasury stock
Dividends paid
(1,231)
(1,086)
Proceeds from debt, net
983
1,550
Payment of debt
(1,000)
-
Tax withholdings related to share-based payments
(174)
(79)
Cash proceeds from exercise of stock options
115
172
Other financing activities
-
3
Net cash used in financing activities
(5,938)
(4,734)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash
(67)
57
equivalents
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
(1,663)
(675)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
10,465
9,196
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
$
8,802
$
8,521
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Non-GAAP Financial Information
Mastercard discloses the following non-GAAP financial measures: adjusted operating expenses, adjusted operating margin, adjusted other income (expense), adjusted effective income tax rate, adjusted net income and adjusted diluted earnings per share (as well as related applicable growth rates versus the comparable period in the prior year). As described more fully below, these non-GAAP financial measures exclude the impact of gains and losses on the Company's equity investments which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. These non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts. The Company excludes these special items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items.
In addition, the Company presents growth rates adjusted for the impact of currency, which is a non-GAAP financial measure. Currency-neutral growth rates are calculated by remeasuring the prior period's results using the current period's exchange rates for both the translational and transactional impacts on operating results, as well as removing the related impact of the Company's foreign exchange derivative contracts designated as cash flow hedging instruments (specifically those that manage the impact of foreign currency variability on anticipated revenues and expenses). The impact of currency translation represents the effect of translating operating results where the functional currency is different from the Company's U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from the Company's foreign exchange derivative contracts designated as cash flow hedging instruments (specifically those that manage the impact of foreign currency variability on anticipated revenues and expenses) is recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings.
The Company believes that the non-GAAP financial measures presented facilitate an understanding of operating performance and provide a meaningful comparison of its results between periods. The Company's management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation.
The Company includes reconciliations of the requisite non-GAAP financial measures to the most directly comparable GAAP financial measures. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the Company's related financial results prepared in accordance with GAAP.
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Disclaimer
MasterCard Inc. published this content on 31 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2024 14:01:03 UTC.