Mastercard (MA) shares slide on Q1 revenue miss, updated guidance

Mastercard (NYSE: MA) shares opened lower Wednesday following the company’s print for the fiscal Q1, where it reported worse-than-expected revenue and operating margin.

The payments processing giant posted Q1 earnings per share (EPS) of $3.31, ahead of the consensus estimates of $3.24. However, the company's revenue of $6.3 billion fell slightly short of the projected $6.34 billion.

The operating margin for the quarter was 56.8%, below the expected 58.3%.

Gross Dollar Volume also missed expectations, totaling $2.29 trillion compared to the forecasted $2.32 trillion.

Looking ahead, MasterCard now expects Q2 net revenue to reach the high end of high-single-digit growth.

For the full year, it anticipates net revenue growth at the low end of low-double-digits.

“Our momentum continued this quarter, as we delivered strong revenue and earnings growth powered by healthy consumer spending, strong cross-border volume growth of 18%1 year-over-year, and new deal wins in every region,” said Michael Miebach, CEO of Mastercard.

“We are driving growth in electronic payments by scaling innovative technologies like tokenization. That’s why people choose Mastercard - for a simple, seamless and secure way to pay.”

Following the earnings release, an analyst at Mizuho said in research note that overall, results were solid with April US payments volumes decelerating slightly less than Visa. However, they noted fresh FX headwinds in 2Q and the full-year are driving GAAP guidance lower vs. the prior outlook, which is weighing on the stock today. Even so, Mizuho reiterated its Buy rating on MA.

Elsewhere, Goldman Sachs said that while MA reported an EPS beat on lower expenses,mwith net revenue roughly in line, they expected a muted reaction to the results, as MA "saw a deceleration in ROW volumes and incentives came in higher than expected."

"We see the main driver of modestly weaker trends at MA vs Visa as the higher exposure to weaker trends in Asia as well as the greater exposure to foreign currencies," said Goldman. "So given the modest outperformance vs V year-to-date and the incrementally higher exposure to some of the pockets of weaker spending / macro around the world, shares could be a bit weaker on the back of results."

By Vahid Karaahmetovic

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