MA Financial Analysis

Analysis Date: 1/31/2025

Business Model

Mastercard generates revenue primarily through payment network fees and value-added services/solutions

Revenue Sources

• Payment Network Revenue (59% of Q4 2024 revenue) - Includes domestic assessments, cross-border assessments, transaction processing
• Value-Added Services & Solutions (41% of Q4 2024 revenue) - Includes cyber security, data analytics, consulting, loyalty solutions

Revenue Distribution by Channel

• Payment Network: $4.4B (59% of Q4 revenue)
• Value-Added Services: $3.1B (41% of Q4 revenue)

Income Statement Analysis

• Net revenue up 14% YoY driven by payment network growth and value-added services
• Operating expenses increased 12% due to higher general and administrative expenses
• Operating margin improved to 52.6% from 51.5% in prior year

Balance Sheet Analysis

• Strong balance sheet with $8.4B in cash and equivalents
• Total assets increased 13.3% YoY to $48.1B
• Total liabilities increased 17.2% YoY primarily due to higher debt levels

Cash Flow Analysis

• Strong operating cash flow of $14.8B, up 23.4% YoY
• Higher investing cash outflow due to acquisitions including Recorded Future
• Returned $13.5B to shareholders through dividends and share repurchases

Capital Allocation

Mastercard maintains a balanced capital allocation approach focused on organic investment, strategic M&A, and returning capital to shareholders. In Q4 2024, the company repurchased $3.4B of stock and paid $606M in dividends. For full year 2024, returned $13.5B to shareholders through $11.0B in share repurchases and $2.4B in dividends.

Management Commentary

Strong Q4 with 16% currency-neutral revenue growth and continued momentum across business

Healthy consumer spending with strong labor market and moderating inflation

Cross-border volumes remain robust with 20% growth in Q4

Geopolitical concerns remain as external risk factor

Overall Sentiment: Positive and confident about growth outlook while maintaining awareness of macro risks

Recommendation

Rating: Buy

Reason for Rating: Strong execution, robust growth across segments, and expanding opportunities in services

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 4:49:59 AM