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01/09 22:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with strategic growth initiatives in place, including innovations in payments and strategic partnerships. The Q&A session highlights positive revenue trends, effective cost management, and strategic expansions, despite some uncertainties in consumer data fees. Overall, the guidance is optimistic, and the stock buyback plan further supports a positive sentiment. The lack of market cap data suggests a moderate reaction, leading to a 'Positive' stock price prediction in the 2% to 8% range.
Net Revenue Net revenue was up 16% year-over-year, driven by growth in the payment network and value-added services and solutions. Acquisitions contributed 1 percentage point to this growth. The growth exceeded expectations due to higher-than-expected revenue from FX volatility.
Operating Expenses Operating expenses increased 14% year-over-year, including a 1 percentage point increase from acquisitions. The increase was primarily driven by spending on strategic initiatives such as technology infrastructure, geographic diversification, and product enhancements.
Net Income and EPS Net income increased 12% and EPS increased 14% year-over-year, primarily due to strong operating income growth. This was partially offset by a higher effective tax rate due to the global minimum tax rules implemented at the start of the year. EPS was $4.15, including a $0.09 contribution from share repurchases.
Gross Dollar Volume (GDV) Worldwide GDV increased 9% year-over-year. In the U.S., GDV grew 6% (credit growth of 6% and debit growth of 7%). Outside the U.S., GDV grew 10% (credit growth of 9% and debit growth of 11%). Growth in the U.S. was impacted by the lapping of the citizens debit portfolio migration to Mastercard.
Cross-Border Volume Cross-border volume increased 15% year-over-year, reflecting growth in both travel and non-travel-related cross-border spending. Pricing in international markets was offset by mix, as lower-yielding intra-Europe cross-border volumes grew faster than higher-yielding ex intra-Europe cross-border volumes.
Switched Transactions Switched transactions grew 10% year-over-year. Card-present growth was supported by increased contactless penetration, which now represents 75% of all in-person switched purchase transactions.
Value-Added Services & Solutions Revenue Revenue from value-added services and solutions increased 22% year-over-year. Acquisitions contributed approximately 4 percentage points to this growth. The remaining growth was driven by demand for consumer acquisition and engagement services, scaling of security and digital authentication solutions, and pricing.
Share Repurchases During the quarter, Mastercard repurchased $2.3 billion worth of stock, with an additional $1 billion repurchased through July 28, 2025.
Exclusive partnership with American Airlines: Extended partnership to optimize card proposition and enhance travel rewards program.
New credit card with Walmart: Launched in partnership with OnePay and Synchrony, available across the U.S.
Expansion with Uber: Extended exclusive Uber Pro card portfolios in the U.S. and Canada, with new programs in the U.K.
PayPal partnership: Extended card issuing partnership in the U.S., with new agreements in the U.K. and Germany.
Afterpay partnership: Exclusive prepaid and credit card issuing deal in Australia.
Mercado Libre partnership: Renewed consumer prepaid deals and launched new credit card programs in Argentina.
Sicoob partnership: Renewed partnership across credit, debit, and commercial in Brazil.
Transit acceptance expansion: Over 60 new public transport operators onboarded globally, including Shanghai Metro in China.
Insurance payments: New agreements with Adyen, Checkout.com, Stripe, Transcard, and Worldpay to enable card payments for insurance premiums and claims.
Stored value wallets: Partnerships with Alipay and GCash to enable cross-border payments through 36 local e-wallets.
Click to Pay adoption: Significant growth in Europe and Australia, with mass market adoption initiatives.
Small business navigator: Launched in the U.S. to provide cybersecurity, analytics, and partner tools for SMEs.
Fleet card integration: New capability to integrate fleet cards into digital wallets for U.S. issuers.
Virtual card technology: Scaled proprietary technology with eight leading B2B platforms.
Receivables Manager platform: Deployed globally to streamline virtual card acceptance and payment reconciliation.
Agentic Commerce and stablecoins: Scaling Agent Pay globally and exploring stablecoin opportunities for interoperability and trust.
Account-to-account protect: New fraud prevention and dispute resolution framework launched in the U.K., with plans for global expansion.
Macroeconomic Uncertainty: Ongoing geopolitical tensions and government actions contribute to macroeconomic uncertainty, which could impact consumer spending and overall business performance.
Regulatory Changes: The implementation of global minimum tax rules has led to a higher effective tax rate, which could affect net income and financial performance.
Cross-Border Travel Growth Moderation: Moderation in cross-border travel growth in certain regions, such as the Middle East and Africa, due to tougher comparisons, enforcement of Mastercard rules, and geopolitical conflicts.
Portfolio Lapping Effects: Lapping of portfolios won in 2024 has impacted growth metrics, including switched volume and cross-border travel growth.
Geopolitical Conflicts: Ratcheting up of geopolitical conflicts late in the quarter has affected cross-border travel and could pose risks to other business areas.
Economic Uncertainty: Economic uncertainty remains a concern, with potential impacts on consumer and business spending.
Operational Costs: Increased spending to support strategic initiatives, including technology infrastructure and geographic diversification, has led to higher operating expenses.
Revenue Growth: Mastercard expects net revenues to grow at the low teens range on a currency-neutral basis, excluding acquisitions, for the full year 2025. Acquisitions are expected to add 1 to 1.5 percentage points to this growth, with a tailwind of 1 to 2 percentage points from foreign exchange.
Operating Expenses: Operating expenses for the full year 2025 are expected to grow at the low end of a low double-digit range on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to increase the operating expense growth rate by 4 to 5 percentage points, with a headwind of 0 to 1 percentage points from foreign exchange.
Q3 2025 Revenue Growth: Year-over-year net revenue growth for Q3 2025 is expected to be at the high end of a low double-digit range on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to add 1 to 1.5 percentage points to this growth rate, with a tailwind of 1 to 2 percentage points from foreign exchange.
Q3 2025 Operating Expenses: Operating expense growth for Q3 2025 is expected to be at the low end of a low double-digit range versus a year ago, on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecasted to add approximately 5 percentage points to this growth, with a headwind of 0 to 1 percentage points from foreign exchange.
Cross-Border Volumes: Cross-border volumes are expected to continue growing in the mid-teens range, supported by strong consumer spending and a diversified portfolio across geographies and travel and non-travel spend.
Consumer Spending Outlook: Consumer spending is expected to remain healthy, supported by low unemployment rates and wage growth outpacing inflation. However, ongoing geopolitical and economic uncertainty persists.
Share Repurchase: During the quarter, we repurchased $2.3 billion worth of stock and an additional $1 billion through July 28, 2025.
Despite some positive factors like increased softwood sawlog pricing and higher net income, the overall sentiment is negative due to reduced timber sales, operational challenges, contractor capacity issues, elevated fire risk, and economic uncertainties. The negative EBITDA in Maine, reduced volumes, and higher costs further contribute to the negative outlook. The Q&A section did not provide clarity or positive sentiment shifts. The market reaction is expected to be negative, with potential stock price decline between -2% to -8% over the next two weeks.
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