International Fee Growth Leads Mastercard's Expected Profit Gain

Payment network revenue likely slowed from prior quarter amid economic downturn
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Key Takeaways

  • Mastercard Inc. is expected to report a 14% increase in earnings year-over-year when the company reports results next week.
  • Mastercard's cross-border fee revenue surged at double the rate of domestic fees, according to projections.
  • The company's earnings and revenue likely fell on a sequential basis from the third quarter, reflecting a slowing economy.
Continued growth in both payments processing and value-added services is likely to propel Mastercard Inc.'s fourth-quarter earnings to solid gains when the company reports on Jan. 31, analysts say.

The company's net income during the quarter likely increased 14% to $2.88 billion, or $3.07 per share, according to consensus estimates of analysts surveyed by Visible Alpha. In the same period a year ago, Mastercard earned $2.53 billion, or $2.62 per share. Revenue is expected to rise 11% to $6.47 billion.

Mastercard's Quarterly Earnings Outlook
   Analyst Estimates for Q4 2023  Q3 2023  Q4 2022
 Revenue  $6.47 billion  $6.53 billion  $5.82 billion
 (Diluted) Earnings Per Share  $3.07  $3.39  $2.62
 Net Income  $2.88 billion  $3.20 billion  $2.53 billion
Source: Visible Alpha

Key Metric

Mastercard is expected to report growth across its business lines from the same period a year ago. But the firm received a particular boost from its international payments unit, according to Visible Alpha's projection. Revenue from cross-border volume fees likely grew 23% to $2.2 billion, about double the expected rate of its domestic fee growth.

Business Spotlight

Overall payment network revenue at Mastercard fell marginally on a sequential basis from the third quarter, estimates project, reflecting a slowing economy.

Visible Alpha predicts that revenue segment will decline again in the current first quarter, during which U.S. fee revenue likely will remain flat for the fourth straight quarter and cross-border volume fees likely will drop. Forecasts predict a broad net revenue rebound beginning in the second quarter.

Shares of Mastercard have risen about 16% in the past 12 months, with the bulk of those gains occurring in the past three months.

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