Mastercard (MA) Q4 Earnings Beat on Consumer Spending Recovery | Digital Marketing Technology| Digital Marketing Trends

today is Sep 25, 2022

Mastercard Inc.'s ( MA - Free Report) fourth-quarter 2021 earnings of $2.35 per share beat the Zacks Consensus Estimate of $2.19. The same was up 43% from $1.64 per share a year ago.

This leading payment network company’s net revenues of $5,216 million surpassed the Zacks Consensus Estimate of $5,133 million and increased from $4,120 million a year ago.

The strong fourth-quarter results were heavily supported by a significant recovery in consumer spending, thanks to relaxed COVID-related restrictions. Increased usage of the company’s cards, Switched transactions and cross-border volumes buoyed the results.

It expects the spending to further improve in the coming days. With consumers, governments, businesses and other market stakeholders adapting fast to the changing environment, MA expects more growth in 2022. The planned acquisition of Dynamic Yield is expected to add to its service capabilities across digital channels.

Q4 Operational Performance

Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) rose 23% from the prior-year quarter to $2.1 trillion. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) grew 53% on a local-currency basis, with cross-border spending above pre-pandemic levels. The increase in international travel played a crucial role in this regard.

Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, were up 27% year over year to 31,371 million. This shows that customers used MA cards more frequently in the quarter.

Other revenues grew 28% year over year. This included a 9% increase from acquisitions. The remaining growth was driven primarily by Cyber Intelligence and Data Services solutions. Rebates and incentives grew 37%, driven by higher growth in volume and transactions and new and renewed deals, which partially offset the growth in net revenues.

Clients issued 3 billion Mastercard and Maestro-branded cards as of Dec 31, 2021.

Total operating expenses for the fourth quarter jumped to $2,389 million from the year-ago figure of $2,062 million, primarily due to increased general and administrative as well as advertising and marketing costs.

Operating income for the December quarter was $2,827 million, up from $2,058 million a year ago. Adjusted operating margin increased to 54.2% for the fourth quarter from the year-ago period’s 51%.

2021 Cash Flow

The company’s full-year 2021 operating cash flow was $9,463 million, significantly up from $7,224 million in 2020.

Boosting Shareholder Value

During the fourth quarter, Mastercard bought back 3.7 million shares for $1.3 billion and paid out $434 million worth of dividend. It currently has $11.4 billion remaining under the share buyback program.

Balance Sheet (As of Dec 31, 2021)

Total assets of $37,669 million were up from $35,410 million at third quarter-end.

Its cash and cash equivalents of $7,421 million jumped sequentially from $6,406 million. The figure is way above the current portion of the long-term debt of $792 million. Long-term debt of $13,109 million was down sequentially from $13,211 million. MA’s long-term debt to capitalization was 64%.


For the 2022-2024 period, the company expects net revenues to witness high-teens CAGR. During this time period, it expects annual operating margin to be minimum 50% and earnings per share to witness low-twenties CAGR.

Zacks Rank Key Picks

Mastercard currently has a Zacks Rank #3 (Hold). Some better-ranked players in the Business Services space include Affirm Holdings, Inc. ( AFRM - Free Report) , Vasta Platform Limited ( VSTA - Free Report) and Palantir Technologies Inc. ( PLTR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Headquartered in San Francisco, CA, Affirm Holdings provides a platform for digital and mobile-first commerce for clients located in the United States and Canada. The Zacks Consensus Estimate for AFRM’s earnings suggests an increase of 4.7% year over year. The consensus mark for Affirm Holdings’ revenues for the current year indicates a 45.7% year-over-year rise.

Vasta Platform is a provider of educational and digital solutions in schools in a specific sector in Brazil. Based in Sao Paulo, VSTA’s Digital Platform business offers physical and digital e-commerce platform services. The Zacks Consensus Estimate for Vasta Platform’s bottom line indicates 27.3% year-over-year growth. The consensus mark for revenues is pegged at $177.6 million.

Palantir Technologies develops software platforms for the defense and intelligence sectors. The consensus mark for Denver, CO-based PLTR’s bottom line for 2022 implies a jump of 46.7% year over year. In the last four quarters, Palantir Technologies beat earnings estimates twice and met the same on the other two occasions, with an average surprise of 70.8%.

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