KBW Offers Insight on Mobile Payments Leader Mastercard’s Results

August 2, 2019         By: Steven Anderson

Since Mastercard both serves as the basis of many mobile wallet systems and also could be considered a mobile payment system in its own right, paying attention to what’s going on in its market is often worth doing. Our friends at Keefe, Bruyette & Woods (KBW) dropped word our way on its own analysis of Mastercard’s second-quarter figures, and the news looks good for Mastercard.

The initial look over the field offered noteworthy results. Earnings per share (EPS) figures of $2.00, and operating EPS figures of $1.89, did well against KBW’s own estimate of $1.82 and the consensus estimate of $1.83.

Operating figures benefited on several fronts, including rebates and incentives, which gave back $0.04 per share, and lower operational expense, which yielded $0.01 per share. A slightly higher tax rate forced a reduction of $0.01 per share, but this was quickly offset by the other cost reductions and then some.

Mastercard itself, meanwhile, reiterated its guidance for the year, KBW noted, and it also noted higher third-quarter expenses likely to come. Gross revenue was in line with expectations, and though there was some softness in domestic figures, this was offset by hefty growth in cross-border operations. In fact, cross-border volume growth was up 16 percent in year-to-year comparisons, up from the first quarter’s change of just 13 percent.

Perhaps the best news was that even Mastercard’s bad news was defanged. While it was expecting higher operational expense growth, KBW suggests that this is mostly timing-related, and the full year guidance is unchanged, which is excellent news overall.

So at the roots, Mastercard’s figures looked great this quarter and are likely to continue looking good into the rest of the year. With the holiday shopping season still ahead, things are looking reasonably bright for Mastercard going forward. Even if there’s a certain amount of fiscal restraint showing up thanks to a softer job market or overall economic outlook going into the fourth quarter, there still should be sufficient gains to make Mastercard’s fortunes look solid.

In the end, it’s been a good quarter for Mastercard, and with plenty of shopping days left until Christmas, so to speak, the rest of the year should end up reasonably well as well.