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Mastercard’s Net Revenues Rose Year-over-Year in 4Q17

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Total net revenues

Mastercard (MA) generated total net revenues of $3.3 billion in 4Q17 compared to $2.7 billion in 4Q16, which implies an increase of 18.0% on a currency-neutral basis. This year-over-year rise consists of the improvement of ~3.0% on the back of its acquisitions. 

Also, the favorable momentum in the total net revenues was due to a significant rise in the company’s volumes, transactions, and services.

Mastercard witnessed a substantial 23.0% rise on a currency-neutral basis in rebates and incentives in 4Q17 on a year-over-year basis. This rise was due to increased incentives as well as volumes related to renewed and new deals.

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Domestic assessments

Mastercard (MA) generated net revenues of ~$1.4 billion in 4Q17 compared to ~$1.1 billion in 4Q16 from its domestic assessments. That trend reflected the rise of 19.0% on a currency-neutral basis. 

The company’s cross-border volume fees in 4Q17 stood at $1.1 billion compared to $910.0 million in 4Q16, which represents a 19.0% increase on a currency-neutral basis.

Mastercard generated other revenues of $851.0 million in 4Q17 compared to $724.0 million in 4Q16. The company’s transaction processing fees in 4Q17 stood at $1.6 billion compared to $1.3 billion in 4Q16. This improvement was mainly due to upward momentum in the company’s switched transactions. However, revenues generated from service offerings also contributed to this increase.

Mastercard’s free-cash-flow (or FCF) yield stood at ~1.7% on an LTM (last-12-months) basis. Among its peers (XLF), Euronet Worldwide (EEFT), Western Union (WU), and Global Payments (GPN) have FCF yields of ~4.4.0%, 0.45.0%, and ~3.4.0%, respectively, on an LTM basis.

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