Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Mastercard Inc., MVA calculation
US$ in millions
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).
1 Fair value of debt. See details »
2 Invested capital. See details »
Market Value Added (MVA) demonstrated a sharp increase between 2018 and 2019, followed by a phase of relative stability through 2022. The consistently wide gap between the fair market value and the invested capital indicates that the market attributes significant value to the organization's intangible assets and future earnings potential far exceeding its tangible capital investments.
- Market Value Trajectory
- An upward trend in market value was observed from 2018 to 2021, rising from US$ 231,734 million to a peak of US$ 376,513 million. A slight contraction occurred in 2022, with the value adjusting to US$ 365,412 million.
- Invested Capital Growth
- Invested capital grew steadily from US$ 11,243 million in 2018 to US$ 22,365 million in 2021, nearly doubling the capital base over the four-year period. A modest reduction to US$ 21,548 million was recorded in 2022.
- MVA Performance and Dynamics
- MVA surged by approximately 52.8% between 2018 and 2019, moving from US$ 220,491 million to US$ 336,913 million. In the subsequent years, MVA remained resilient, maintaining a range between US$ 333,701 million and US$ 354,148 million. The sustained high level of MVA relative to the invested capital suggests an exceptionally high rate of value creation and strong investor confidence in the company's strategic direction.
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MVA Spread Ratio
Mastercard Inc., MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 343,864) | 354,148) | 333,701) | 336,913) | 220,491) | |
| Invested capital2 | 21,548) | 22,365) | 19,854) | 14,672) | 11,243) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 1,595.80% | 1,583.49% | 1,680.77% | 2,296.30% | 1,961.07% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 442.58% | 739.74% | — | — | — | |
| Adobe Inc. | 658.07% | 1,033.13% | 1,082.99% | — | — | |
| AppLovin Corp. | 60.64% | 260.37% | — | — | — | |
| Cadence Design Systems Inc. | 1,302.22% | 1,110.87% | — | — | — | |
| Datadog Inc. | 1,772.59% | 5,219.74% | — | — | — | |
| International Business Machines Corp. | 60.62% | 55.46% | — | — | — | |
| Intuit Inc. | 406.80% | 1,175.12% | — | — | — | |
| Microsoft Corp. | 956.02% | 1,383.21% | — | — | — | |
| Oracle Corp. | 224.95% | 260.27% | — | — | — | |
| Palantir Technologies Inc. | 488.89% | 829.78% | — | — | — | |
| Palo Alto Networks Inc. | 559.30% | 573.51% | — | — | — | |
| Salesforce Inc. | 150.31% | 270.75% | — | — | — | |
| ServiceNow Inc. | 1,276.86% | 1,798.18% | — | — | — | |
| Synopsys Inc. | 565.55% | 707.79% | 468.10% | — | — | |
| Workday Inc. | 655.74% | 908.31% | — | — | — | |
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).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 343,864 ÷ 21,548 = 1,595.80%
4 Click competitor name to see calculations.
The financial trajectory from 2018 to 2022 demonstrates a substantial expansion in market value added and invested capital, though the efficiency of value creation relative to capital investment experienced a notable correction after 2019.
- Market Value Added (MVA)
- A significant increase in MVA is observed between 2018 and 2019, rising from 220,491 million US$ to 336,913 million US$. Following this surge, the value remained relatively stable over the subsequent three years, reaching a peak of 354,148 million US$ in 2021 before experiencing a slight contraction to 343,864 million US$ by the end of 2022.
- Invested Capital
- Invested capital exhibited a consistent upward trend for the majority of the period. The capital base grew from 11,243 million US$ in 2018 to 22,365 million US$ in 2021, representing nearly a twofold increase. A minor reduction occurred in 2022, with the figure adjusting to 21,548 million US$.
- MVA Spread Ratio
- The MVA spread ratio peaked in 2019 at 2,296.30%, indicating a period of exceptional value creation relative to the capital employed. However, a downward trend followed, with the ratio falling to 1,680.77% in 2020 and further to 1,583.49% in 2021. This decline is attributable to the growth in invested capital outpacing the growth in MVA during this timeframe. The ratio showed signs of stabilization in 2022, ending the period at 1,595.80%.
Overall, while the absolute market value added remains high, the compression of the MVA spread ratio suggests a shift in the relationship between the capital invested in the business and the incremental value recognized by the market.
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MVA Margin
Mastercard Inc., MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | 343,864) | 354,148) | 333,701) | 336,913) | 220,491) | |
| Net revenue | 22,237) | 18,884) | 15,301) | 16,883) | 14,950) | |
| Add: Increase (decrease) in deferred revenue | 20) | 164) | 154) | 25) | 72) | |
| Adjusted net revenue | 22,257) | 19,048) | 15,455) | 16,908) | 15,022) | |
| Performance Ratio | ||||||
| MVA margin2 | 1,544.97% | 1,859.24% | 2,159.18% | 1,992.62% | 1,467.79% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Accenture PLC | 213.17% | 379.26% | — | — | — | |
| Adobe Inc. | 766.46% | 1,287.44% | 1,554.19% | — | — | |
| AppLovin Corp. | 113.54% | 521.30% | — | — | — | |
| Cadence Design Systems Inc. | 1,299.21% | 1,128.47% | — | — | — | |
| Datadog Inc. | 1,226.04% | 4,145.45% | — | — | — | |
| International Business Machines Corp. | 105.00% | 105.45% | — | — | — | |
| Intuit Inc. | 782.89% | 1,489.94% | — | — | — | |
| Microsoft Corp. | 916.17% | 1,148.11% | — | — | — | |
| Oracle Corp. | 412.88% | 514.72% | — | — | — | |
| Palantir Technologies Inc. | 820.15% | 1,366.76% | — | — | — | |
| Palo Alto Networks Inc. | 651.61% | 771.73% | — | — | — | |
| Salesforce Inc. | 417.33% | 620.94% | — | — | — | |
| ServiceNow Inc. | 1,026.11% | 1,555.49% | — | — | — | |
| Synopsys Inc. | 796.87% | 1,126.17% | 803.94% | — | — | |
| Workday Inc. | 888.92% | 1,185.07% | — | — | — | |
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).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted net revenue
= 100 × 343,864 ÷ 22,257 = 1,544.97%
3 Click competitor name to see calculations.
Between 2018 and 2022, a general upward trajectory in both absolute market value and operational revenue was observed, although the relationship between these two metrics shifted over the period. While the total value added to the company increased significantly from the baseline year, the efficiency of this value creation relative to revenue reached a peak in 2020 before entering a period of compression.
- Market Value Added (MVA)
- MVA experienced substantial growth from 2018 to 2021, rising from US$ 220,491 million to a peak of US$ 354,148 million. This represents a significant increase in the market's valuation of the company above its invested capital. A slight contraction occurred in 2022, with the value settling at US$ 343,864 million, indicating a stabilization of market sentiment after several years of rapid expansion.
- Adjusted Net Revenue
- Revenue patterns exhibited a period of volatility followed by strong expansion. After growing from US$ 15,022 million in 2018 to US$ 16,908 million in 2019, a temporary decline to US$ 15,455 million was recorded in 2020. This was followed by a robust recovery and accelerated growth, reaching US$ 19,048 million in 2021 and peaking at US$ 22,257 million by the end of 2022.
- MVA Margin
- The MVA margin demonstrated an inverse trend to revenue in the latter half of the period. The margin grew from 1,467.79% in 2018 to a maximum of 2,159.18% in 2020. Despite the continued growth in adjusted net revenue through 2022, the MVA margin declined steadily to 1,859.24% in 2021 and further to 1,544.97% in 2022. This suggests that while the company successfully scaled its revenue, the market valuation did not grow proportionally to these revenue gains, leading to a decrease in the value added per dollar of revenue.
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