Mastercard earnings tops estimates as firm broadens services

MASTERCARD reported earnings that beat estimates as the firm diversifies beyond its traditional payment network into anti-fraud services, data analysis and global money movement.

Adjusted net income of US$3.5 billion, or US$3.82 a share, in the fourth quarter beat analysts’ estimates of US$3.69 a share. Global purchase volume – the aggregate dollar amount of purchases made with Mastercard-branded cards – grew to US$2.11 trillion, matching forecasts.

Mastercard has been working to differentiate itself through services it offers customers outside its global payment network, which boosted net revenue 16 per cent on a currency-neutral basis to US$7.5 billion for the three-month period. 

Mastercard’s largest rival is Visa, the world’s biggest payment network, which also offers ancillary services. 

“Our diverse capabilities in payments and services and solutions – including the acquisition of Recorded Future this quarter – set us apart and position us well for long-term growth,” chief executive officer Michael Miebach said in a statement on Thursday.

In December, Mastercard bought the cyber-defense firm Recorded Future for US$2.65 billion to boost its ability to protect its global-payments system.

“Cyber criminals have been around for decades, but attacks and fraud attempts are increasing at high levels as commerce increasingly moves online and as AI becomes more prevalent,” Miebach said on a call with analysts on Thursday. “Our investments, both organic and inorganic, are key to fighting fraud and protecting the ecosystem.”

Shares of the firm were up 4.2 per cent to US$571.63 at 10.52 am in New York.

Cross-border volume growth topped estimates for the three-month period, growing 20 per cent on a local-currency basis, compared with a 17.5 per cent estimate. 

In November, at Mastercard’s first investor day since 2021, the Purchase, New York-based firm predicted that net revenue would grow annually by a percentage in the “high end of low double digits” in the 2025-to-2027 time period. That was a slower growth rate than the firm had predicted for 2022 to 2024.

The company said in a presentation Thursday that its net revenue for the full year is predicted to increase by a percentage in the low double digits.

Mastercard also highlighted growth opportunities linked to global remittances and expansion in China at the investor day. Cryptocurrency is also an area for expansion, via a “well-planned, balanced” strategy, Miebach said on the call.

He pointed to partnerships with the trading platform Crypto.com and digital-wallet provider MetaMask signed last year as part of that strategy. Cross-border, business-to-business stablecoin transactions are also attractive for the firm, and may gain traction as cryptocurrency goes mainstream and attracts political support in Washington, he said.

“We’re in the business of stablecoin transactions,” Miebach said. “We have long believed that this is an interesting space for us.” BLOOMBERG