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Mastercard: Q2 beat, guidance nudged upwards

Mastercard’s strong second quarter was supported by robust growth in payment volumes and services revenue.
Credit card / Mastercard-share-research

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Mastercard’s second quarter net revenue came in slightly ahead of market forecasts, rising 16% to $8.1bn before currency moves. Payment network revenue was up 13% with value-added services up 22%.

Underlying operating profit grew 17% to $4.9bn. Free cash flow was up by 49% to $6.8bn reflecting improved conversion of operating profit into cash. Net debt stood at $9.9bn.

Mastercard returned $3.0bn to shareholders in dividends and buybacks.

Full year revenue growth guidance was upped from low teens to the high end of mid-teens.

The shares closed up 1.3% on the day.

Our view

Mastercard’s positive momentum continued into the second quarter providing management with the confidence for a small upgrade.

Despite fierce competition in the rest of the payments world, the card networks remain dominated by two giants: Visa and Mastercard. These networks enable banks to issue credit and debit cards without either network having to take any credit risk.

Notwithstanding the emergence of competing payment methods, card usage continues to grow and the model has proved its resilience through multiple economic ups and downs. In fact, Mastercard has grown revenue in all but one year since 2006. But with geopolitical uncertainty riding high, it’s impossible to rule out another dip in fortunes.

Despite the proliferation of payment methods, many of the newer kids on the block, such as Apple Pay and PayPal, still rely on cards for a big chunk of their transactions. The rise of cryptocurrencies is another potential threat, but it’s not something Mastercard is ignoring, choosing to partner with some key players in the space.

Services are also an important and faster-growing part of the business and one where Mastercard appears to be stealing an edge over its rivals. Growth is being driven by demand for cybersecurity and data analytics. That’s also helping Mastercard to steal more market share in the United States, winning key partnerships with key merchants like American Airlines, in what is now a mature market. Cash-to-card migration has all but run its course across the pond.

In an effort to win over more customers, rebates and incentives are also on the rise. Strong cashflows mean these are commitments Mastercard can currently afford. Despite this added layer of cost Mastercard’s strong customer proposition still leaves further scope to improve its already robust margins.

However, Mastercard has a more even geographical mix than its main rival, which is particularly dominant in the United States. That gives it more exposure to overseas markets where there’s still an underlying tailwind blowing in Mastercard’s favour.

We think Mastercard’s growth prospects look better than much of the competition, due to some of the structural differences discussed above. That’s reflected in its valuation sitting at the top end of the peer group on a price-to-earnings basis, adding pressure to deliver, and leaving the stock vulnerable to a downturn in economic activity.

Mastercard key facts

All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment.No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.Non - independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place(including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.Please see our full non - independent research disclosure for more information.
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Written by
Derren Nathan
Derren Nathan
Head of Equity Research

Derren leads our Equity Research team with more than 15 years of experience in his field. Thriving in a passionate environment, Derren finds motivation in intellectual challenges and exploring diverse ideas within his writing.

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Article history
Published: 1st August 2025