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Stock Analysis on Net

Mastercard Inc. (NYSE:MA)

This company has been moved to the archive! The financial data has not been updated since April 27, 2023.

Common-Size Income Statement

Mastercard Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net revenue 100.00 100.00 100.00 100.00 100.00
General and administrative -36.33 -37.53 -38.62 -34.13 -34.61
Advertising and marketing -3.55 -4.74 -4.29 -5.53 -6.07
Depreciation and amortization -3.37 -3.84 -3.79 -3.09 -3.07
Provision for litigation -1.60 -0.50 -0.48 0.00 -7.55
Operating expenses -44.85% -46.61% -47.19% -42.76% -51.29%
Operating income 55.15% 53.39% 52.81% 57.24% 48.71%
Investment income 0.27 0.06 0.16 0.57 0.82
Gains (losses) on equity investments, net -0.65 3.42 0.20 0.99 0.00
Interest expense -2.12 -2.28 -2.48 -1.33 -1.24
Other income (expense), net 0.10 0.00 0.03 0.16 -0.09
Other income (expense) -2.39% 1.19% -2.10% 0.40% -0.52%
Income before income taxes 52.76% 54.58% 50.72% 57.64% 48.19%
Income tax expense -8.10 -8.58 -8.82 -9.55 -9.00
Net income 44.66% 46.00% 41.90% 48.08% 39.19%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

The financial performance from 2018 to 2022 exhibits a general trend of margin expansion and improved operational efficiency. Operating income as a percentage of net revenue rose from 48.71% in 2018 to 55.15% in 2022, indicating a stronger ability to convert revenue into operating profit over the five-year period.

Operating Expense Management
Total operating expenses decreased from 51.29% of net revenue in 2018 to 44.85% in 2022. This improvement was driven largely by a reduction in advertising and marketing expenditures, which declined steadily from 6.07% to 3.55%. General and administrative expenses remained the primary cost driver, fluctuating between 34.13% and 38.62%, with a notable peak in 2020.
Litigation and Non-Recurring Impacts
The provision for litigation showed significant volatility, representing a substantial 7.55% of net revenue in 2018 before stabilizing at lower levels between 0.48% and 1.60% from 2020 to 2022. The sharp decline in these provisions contributed significantly to the expansion of operating margins observed after 2018.
Non-Operating Items and Financing
Investment income showed a downward trend, decreasing from 0.82% in 2018 to 0.27% in 2022. Interest expenses increased as a proportion of revenue, moving from 1.24% in 2018 to 2.12% in 2022, though they peaked at 2.48% in 2020. Gains and losses on equity investments remained inconsistent, with a notable peak of 3.42% in 2021 followed by a loss of 0.65% in 2022.
Net Profitability and Taxation
Net income margins remained robust throughout the period, starting at 39.19% in 2018 and ending at 44.66% in 2022, with a peak of 48.08% in 2019. The effective tax rate remained relatively stable, with income tax expenses fluctuating within a narrow band between 8.10% and 9.55% of net revenue.

Overall, the analysis reveals a company that has successfully optimized its cost structure, particularly regarding marketing and litigation provisions, resulting in a consistently high net profit margin despite fluctuations in non-operating income and interest costs.

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