Mastercard Profit, Revenue Growth Could Decelerate to Slowest Rate in Years

Key Takeaways

  • Mastercard will likely post fourth-quarter adjusted EPS of $2.58 vs. $2.35 in the prior-year quarter.
  • Revenue probably grew 11% to $5.8 billion.
  • Gross dollar volume likely climbed 4.7% to $2.2 trillion.
  • Consumers have leaned on credit cards for payments as inflation has raised prices on many goods.

Mastercard Inc. (MA), America’s No. 2 payment processing company, will probably say profit rose at the slowest pace in almost two years as it faces scrutiny for allegedly restricting competition on online payments.

Mastercard’s net income likely rose 4% year-over-year to $2.5 billion, or a 9.8% increase in adjusted earnings per share (EPS) to $2.58, according to estimates from Visible Alpha. Revenue is expected ton have risen 11% to $5.8 billion. Mastercard reports results before markets open on Jan. 26.

Consumers increasingly relied on credit cards in past year as prices for goods and services jumped, leading to the highest-ever card balances by this month. Interest rate hikes by the Federal Reserve, meantime, contributed to higher annual percentage rates (APR) on cards. Those were among factors that helped Mastercard beat analyst profit estimates in the last six quarters.

Yet those were offset by a slowdown in consumer spending in the second half of 2022. Mastercard has also run into trouble with the FTC, which in December took the first steps to order the company to stop blocking competing debit card payment networks. While the FTC actions won’t impact fourth-quarter results, they will be a factor in future quarters.

Mastercard shares rose 9% in the last year, compared with a drop of almost 14% for the S&P 500 Information Technology Index.

Source: TradingView.
Mastercard Key Stats
  Estimate for Q4 FY 2022 Actual for Q4 FY 2021 Actual for Q4 FY 2020
Adjusted Earnings Per Share ($) 2.58 2.35 1.64
Revenue ($B) 5.8 5.2 4.1
Gross Dollar Volume ($B) 2,214.1 2,114.0 1,747.0

Source: Visible Alpha

The Key Metric: Gross Dollar Volume

A key measure of Mastercard’s business is gross dollar volume (GDV), the total dollar amount of purchases made and cash disbursements obtained using Mastercard-branded cards. This figure is a rough metric of the company’s use and popularity worldwide.

Analysts expect Mastercard’s GDV for the fourth quarter rose 4.7% year-over-year to $2.2 trillion. GDV growth has slowed in the last several quarters after reaching an annualized rate of 37.7% in mid-2021.

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