Effervescent Growth for Mastercard

Wide-moat

Growth continued globally, with gross dollar volumes expanding by double-digit rates in all markets, helped a bit by currency movements. Debit volume expanded faster than credit volumes. Profitable cross-border volume, which expanded at 21%, was a major contributor to revenue growth. Despite increasing competition at the margin in various local markets, we think Mastercard’s ubiquitious international presence will be very difficult to replicate. Furthermore, the rise of e-commerce should enable even more spending across international borders, benefiting the firm.

Operating margin fell slightly, and we continue to believe that investments will continue at a healthy rate as the firm targets newer markets (B2B, for example) and payment technology advances at a rapid rate. We thus think margin expansion will be somewhat limited in the near term.

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