MasterCard (NYSE : MA) is one of the biggest financial technology companies in the world. The company has established itself as a force to reckon with in its sector and has grown itself substantially over the past decade. The company has just over 25% market share of credit card issuers worldwide.
MasterCard has been a market darling having multiplied it’s market capitalization over ten times over the past decade and even made it’s way into market maven Warren Buffett’s Berkshire Hathaway’s portfolio (0.48% stake).
In these troubled times where the coronavirus pandemic has demolished the economy, the stock has proved its mettle by not only beating estimates but also posting YoY revenue growth. Last week, MasterCard declared its Q1 2020 results and surprised the market with revenues of $4 billion (up 2.8% YoY) and an EPS of $1.83, beating estimates by $0.1.
The company posted an 8% jump in dollar revenue and a 13% increase in transactions processed, again beating estimates of 6% and 11%, and these increases were the main drivers behind the revenue growth.
Mastercard Inc reported that card-not-present(Online) transactions made up 50% of total revenue, up 25% YoY, and well above expectations of 36%, as customers remain confined to their homes shift to online shopping. It was not all good news though as the company reported a 50% dip in cross border transactions as most of that component of revenue was made up of travel-related expenditures.
The company also specified that card-not-present cross border transactions were down only 25% and that their cross border transaction would be up 20% YoY if travel and entertainment relate expenditures were excluded from revenues.
The company also stated that tap-to-pay(contactless) transactions were up 40% from last quarter as the pandemic paranoia sets into consumers, in response the company decided to increase it’s contactless payment limits and announced an initiative with rival Visa to introduce more Contactless cards in the US. The company also reported a 26% growth in other revenues.(Seeking Alpha)
Given the current situation of the economy and a looming recession, MasterCard’s performance for the quarter are a testament to the quality of its business and management. The stock is currently trading 10% of it’s all-time high and will surely break that high as the economy starts recovering towards the end of the year. Hence, the stock makes an attractive and safe long-term opportunity for patient investors.