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Mastercard Manages To Beat Both Top And Bottom Line Estimates

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Mastercard Manages To Beat Both Top And Bottom Line Estimates

Mastercard Inc. (NYSE: MA) just reported its third quarter earnings, announcing that increased revenues drove an increase in profits, exceeding both top and bottom-line estimates. The company's shares have jumped 46% since the beginning of the year, more than double than 21% increase of Standard & Poor's 500 index. And now, increased consumer spending is driving its revenues and profits despite the fact that its acquisition strategies are getting more costly, increasing expenses.

But customers have clearly shaken off fears regarding a yet another economic downturn as they decided to spend more using their debit and credit cards, boosting revenue for the world's second largest payment processor. In pre-market trading, Mastercard shares were up 1.5 percent yesterday, reaching $280.3.

Strong Quarter Results

Revenue amounted to $4.47 billion whereas Wall Street expected $4.42 billion, resulting in adjusted earnings per share were $2.15 beating the estimate of $2.01. During the same quarter last year, revenue came to $3.9 billion so that's more than solid revenue growth.

The dollar value of all processed transactions came to $1.7 trillion, a 14% jump from last year's quarter that amounted to $1.5 trillion. But more interestingly, despite the weakening US demand in September as retail sales dropped 0.3% during last month, domestic dollar volume still increased overall from $442 billion in the same quarter last year to $494 billion. The European segment also did well with a 16% increase from last year's quarter, amounting to $507 billion. And consequently, net revenue increased 15% comparing to that quarter, but not only due to dollar volume but also due to an increase in cross-border volumes. Expenses also increased due to acquisitions but they ended up being lower than what the company expected so therefore, they are expected to incur in the next, last quarter of the fiscal year.

Competitors

Visa Inc (NYSE: V) who Mastercard has been battling with for decades has also outperformed and "joined" PayPal Holdings Inc (NASDAQ: PYPL) by reporting better than ‘feared' earnings. It delivered a strong double-digit earnings and revenue growth, implying a similar guidance for 2020. Overall, investors seem encouraged with the company's longer-term opportunities.

So, both Visa's and Mastercard's earnings seem resilient to the economic downturn with their digital transactions competitor PayPal's stock even popping after its faster than expected growth and by being the first foreign financial company that secured a place in the Chinese market pie. So, financial payment providers are doing great despite intense competition and the weakening macroeconomic surrounding.

Outlook

Although costly, acquisitions have not altered the company's outlook for the year. The company is making efforts to enhance its cyber security as well as customer loyalty to join its rival Visa in offering more client-luring initiatives. Also, it is committed to expand its business relationships with HSBC Holdings Plc (NYSE: HSBC) and Bank of America Corp (NYSE: BAC), among others, who are also investing heavily in safety as Bank of America revealed that they even created a position of an "Chief Brand Safety Officer". So, the entire industry is taking security issues seriously and these solid quarter results surely show that Mastercard's executive strategy is successfully guiding the company in this direction, despite a weakening global economy.

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Image Sourced from Pixabay. Credit: Alina Kuptsova

Posted-In: IAM Newswire Mastercard Inc.Earnings News

 

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