Mastercard Inc.’s fourth-quarter earnings beat analysts’ forecasts even as operating expenses grew more than analysts expected.
Adjusted earnings came in at $3.18 a share, higher than estimates of $3.08, while net income of $2.79 billion missed expectations of $2.89 billion. Operating expenses surged 21% to $3.18 billion, compared with forecasts of $2.91 billion.
The Purchase, New York-based company said US consumer spending on the company’s cards is continuing to perform well, which helped fourth-quarter results. Rival Visa Inc. similarly cited strong US spending as a boost to earnings in the period.
“We delivered strong earnings and revenue growth for the full year 2023, driven by healthy consumer spending, cross-border volume growth of 24% and the solid execution of our strategy,” Mastercard Chief Executive Officer Michael Miebach said in a statement Wednesday.
A joint venture with NetsUnion Clearing Corp. was granted a bank card clearing license by the People’s Bank of China in November, giving Mastercard a competitive edge over competitors.
“Needless to say, we’re thrilled about China – it’s a massive economy and we feel well-positioned to serve it,” Miebach said on conference call with analysts Wednesday. Mastercard is continuing to have conversations with banks and other parties in China around officially rolling out payments capabilities, he said, but the firm is already in a good place given its existing relationships.
In an interview, Chief Financial Officer Sachin Mehra declined to forecast how much growth opportunities in China will add to earnings.
“We remain optimistic about the contributions from a revenue standpoint,” he said.
Mastercard expects net revenue percentage growth in the high end of the low double digits for all of 2024, according to the firm’s earnings presentation. Operating expenses, meanwhile, are expected to grow in the mid-single digits.
The payments company also sees wider adoption of contactless transactions as a growth opportunity, Miebach said, with the popularity of tap-to-pay for mass transit spurring additional smaller-value purchases elsewhere.
Other highlights from the fourth-quarter results:
The firm’s operating margin came in at 51.5%, compared with estimates of 55.9%.
Purchase volume totaled $1.92 trillion, matching estimates.
Cross-border volumes rose 18% from a year earlier, compared with estimates of 18.3%.
