Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Mastercard Inc., profitability ratios
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).
An analysis of the profitability metrics from 2018 to 2022 reveals a period of high financial performance characterized by significant margins and exceptional returns on invested capital. While a temporary decline in performance is evident across all ratios in 2020, a consistent recovery and subsequent growth trend are observed through 2022.
- Profit Margins
- Operating profit margins showed a general upward trajectory, rising from 48.71% in 2018 to 55.15% in 2022. A peak of 57.24% was reached in 2019, followed by a contraction to 52.81% in 2020. Net profit margins followed a similar pattern, increasing from 39.19% in 2018 to a peak of 48.08% in 2019, before settling at 44.66% in 2022. The close correlation between these two margins suggests that non-operating expenses remained relatively stable relative to operating performance.
- Return on Equity (ROE)
- ROE levels are exceptionally high, starting at 108.60% in 2018 and escalating to 157.67% by 2022. Although there was a notable decrease to 100.31% in 2020, the subsequent growth indicates an aggressive and efficient increase in the returns generated on shareholder equity.
- Return on Assets (ROA)
- ROA demonstrated resilience, beginning at 23.57% in 2018 and ending at 25.64% in 2022. A dip to 19.09% occurred in 2020, marking the lowest point in the five-year period, but the metric recovered steadily in 2021 and 2022, reflecting a strong ability to utilize assets for profit generation.
The convergence of these trends indicates a highly efficient operational model with strong pricing power. The ability to maintain net profit margins above 40% and an ROE exceeding 100% throughout the period underscores a robust financial position and a high capacity for value creation despite the volatility observed in 2020.
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Operating Profit Margin
Mastercard Inc., operating profit 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) | ||||||
| Operating income | 12,264) | 10,082) | 8,081) | 9,664) | 7,282) | |
| Net revenue | 22,237) | 18,884) | 15,301) | 16,883) | 14,950) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 55.15% | 53.39% | 52.81% | 57.24% | 48.71% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Accenture PLC | 15.21% | 15.08% | — | — | — | |
| Adobe Inc. | 34.64% | 36.76% | 32.93% | — | — | |
| AppLovin Corp. | -1.70% | 5.37% | — | — | — | |
| Cadence Design Systems Inc. | 30.15% | 26.07% | — | — | — | |
| Datadog Inc. | -3.50% | -1.86% | — | — | — | |
| International Business Machines Corp. | 13.50% | 11.97% | — | — | — | |
| Intuit Inc. | 20.20% | 25.95% | — | — | — | |
| Microsoft Corp. | 42.06% | 41.59% | — | — | — | |
| Oracle Corp. | 25.74% | 37.58% | — | — | — | |
| Palantir Technologies Inc. | -8.46% | -26.66% | — | — | — | |
| Palo Alto Networks Inc. | -3.43% | -7.15% | — | — | — | |
| Salesforce Inc. | 2.07% | 2.14% | — | — | — | |
| ServiceNow Inc. | 4.90% | 4.36% | — | — | — | |
| Synopsys Inc. | 22.87% | 17.48% | 16.83% | — | — | |
| Workday Inc. | -2.27% | -5.76% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Software & Services | 27.20% | 28.02% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 26.23% | 26.58% | — | — | — | |
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 2022 Calculation
Operating profit margin = 100 × Operating income ÷ Net revenue
= 100 × 12,264 ÷ 22,237 = 55.15%
2 Click competitor name to see calculations.
The financial trajectory between 2018 and 2022 reflects a period of overall expansion characterized by a temporary contraction in 2020 followed by a strong recovery in operational efficiency and revenue generation.
- Revenue and Operating Income Trends
- Net revenue grew from US$ 14,950 million in 2018 to US$ 22,237 million by 2022. Operating income followed a similar trajectory, increasing from US$ 7,282 million in 2018 to US$ 12,264 million in 2022. A synchronized decline is observed in 2020, where net revenue fell to US$ 15,301 million and operating income dropped to US$ 8,081 million, before resuming a steep growth trend through 2022.
- Operating Profit Margin Analysis
- The operating profit margin exhibited volatility during the five-year period. Starting at 48.71% in 2018, the margin expanded significantly to 57.24% in 2019. This was followed by a compression to 52.81% in 2020. A steady recovery was recorded thereafter, with the margin rising to 53.39% in 2021 and reaching 55.15% in 2022.
- Operational Efficiency and Resilience
- A high baseline of profitability is evident, as the operating profit margin remained above 50% from 2019 through 2022. The ability to maintain margins above 55% by 2022, despite the 2020 dip, indicates that the growth in net revenue was supported by scalable operational costs, enabling a partial return to the peak efficiency levels seen in 2019.
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Net Profit Margin
Mastercard Inc., net profit 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) | ||||||
| Net income | 9,930) | 8,687) | 6,411) | 8,118) | 5,859) | |
| Net revenue | 22,237) | 18,884) | 15,301) | 16,883) | 14,950) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 44.66% | 46.00% | 41.90% | 48.08% | 39.19% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Accenture PLC | 11.17% | 11.69% | — | — | — | |
| Adobe Inc. | 27.01% | 30.55% | 40.88% | — | — | |
| AppLovin Corp. | -6.84% | 1.27% | — | — | — | |
| Cadence Design Systems Inc. | 23.84% | 23.29% | — | — | — | |
| Datadog Inc. | -2.99% | -2.02% | — | — | — | |
| International Business Machines Corp. | 2.71% | 10.01% | — | — | — | |
| Intuit Inc. | 16.23% | 21.41% | — | — | — | |
| Microsoft Corp. | 36.69% | 36.45% | — | — | — | |
| Oracle Corp. | 15.83% | 33.96% | — | — | — | |
| Palantir Technologies Inc. | -19.61% | -33.75% | — | — | — | |
| Palo Alto Networks Inc. | -4.85% | -11.72% | — | — | — | |
| Salesforce Inc. | 5.45% | 19.16% | — | — | — | |
| ServiceNow Inc. | 4.49% | 3.90% | — | — | — | |
| Synopsys Inc. | 19.38% | 18.02% | 18.03% | — | — | |
| Workday Inc. | 0.57% | -6.54% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Software & Services | 21.55% | 25.12% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 22.27% | 23.48% | — | — | — | |
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 2022 Calculation
Net profit margin = 100 × Net income ÷ Net revenue
= 100 × 9,930 ÷ 22,237 = 44.66%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by a general upward trajectory in both net revenue and net income, despite a temporary contraction in 2020. Net revenue grew from US$ 14,950 million in 2018 to US$ 22,237 million in 2022, while net income increased from US$ 5,859 million to US$ 9,930 million over the same period.
- Net Profit Margin Trends
- The net profit margin exhibited notable volatility, starting at 39.19% in 2018 and peaking at 48.08% in 2019. A contraction was observed in 2020, with the margin declining to 41.90%, which aligns with the reduction in net revenue recorded during that fiscal year.
- Recovery and Stabilization
- A recovery phase occurred in 2021, as the net profit margin rose to 46.00%, followed by a slight moderation to 44.66% in 2022. Despite these fluctuations, the margin remained consistently above the 2018 baseline, indicating a sustained increase in profitability levels over the five-year horizon.
- Operational Efficiency
- The ability to maintain a net profit margin exceeding 40% throughout the entire period suggests a robust operational structure. The correlation between the recovery in net revenue and the subsequent rise in net income from 2021 to 2022 demonstrates an effective scaling of earnings relative to growth.
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Return on Equity (ROE)
Mastercard Inc., ROE 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) | ||||||
| Net income | 9,930) | 8,687) | 6,411) | 8,118) | 5,859) | |
| Total Mastercard Incorporated stockholders’ equity | 6,298) | 7,312) | 6,391) | 5,893) | 5,395) | |
| Profitability Ratio | ||||||
| ROE1 | 157.67% | 118.80% | 100.31% | 137.76% | 108.60% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Accenture PLC | 31.11% | 30.25% | — | — | — | |
| Adobe Inc. | 33.85% | 32.59% | 39.66% | — | — | |
| AppLovin Corp. | -10.13% | 1.66% | — | — | — | |
| Cadence Design Systems Inc. | 30.93% | 25.39% | — | — | — | |
| Datadog Inc. | -3.56% | -1.99% | — | — | — | |
| International Business Machines Corp. | 7.47% | 30.38% | — | — | — | |
| Intuit Inc. | 12.57% | 20.89% | — | — | — | |
| Microsoft Corp. | 43.68% | 43.15% | — | — | — | |
| Oracle Corp. | — | 262.43% | — | — | — | |
| Palantir Technologies Inc. | -14.57% | -22.71% | — | — | — | |
| Palo Alto Networks Inc. | -127.14% | -78.63% | — | — | — | |
| Salesforce Inc. | 2.48% | 9.81% | — | — | — | |
| ServiceNow Inc. | 6.46% | 6.22% | — | — | — | |
| Synopsys Inc. | 17.85% | 14.31% | 13.54% | — | — | |
| Workday Inc. | 0.65% | -8.62% | — | — | — | |
| ROE, Sector | ||||||
| Software & Services | 30.78% | 35.91% | — | — | — | |
| ROE, Industry | ||||||
| Information Technology | 38.03% | 41.64% | — | — | — | |
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 2022 Calculation
ROE = 100 × Net income ÷ Total Mastercard Incorporated stockholders’ equity
= 100 × 9,930 ÷ 6,298 = 157.67%
2 Click competitor name to see calculations.
Between 2018 and 2022, the organization exhibited a strong overall growth trajectory in profitability, characterized by high capital efficiency and significant fluctuations in the equity base.
- Net Income Performance
- Net income experienced a general upward trend, growing from US$ 5,859 million in 2018 to US$ 9,930 million by 2022. A temporary contraction was observed in 2020, where earnings decreased to US$ 6,411 million, followed by a sharp recovery in 2021 and continued expansion in 2022.
- Stockholders' Equity Dynamics
- Total stockholders' equity increased steadily from US$ 5,395 million in 2018 to a peak of US$ 7,312 million in 2021. A reversal occurred in 2022, during which equity declined to US$ 6,298 million, suggesting a possible increase in share repurchases or other distributions to shareholders.
- Return on Equity (ROE) Interpretation
- ROE remained exceptionally high throughout the five-year period, consistently exceeding 100%. The ratio fluctuated from 108.60% in 2018 to a low of 100.31% in 2020, before ascending to a peak of 157.67% in 2022. The substantial increase in ROE in 2022 is attributable to the combination of record net income and a reduced equity base, indicating intensified profitability relative to shareholder investment.
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Return on Assets (ROA)
Mastercard Inc., ROA 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) | ||||||
| Net income | 9,930) | 8,687) | 6,411) | 8,118) | 5,859) | |
| Total assets | 38,724) | 37,669) | 33,584) | 29,236) | 24,860) | |
| Profitability Ratio | ||||||
| ROA1 | 25.64% | 23.06% | 19.09% | 27.77% | 23.57% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Accenture PLC | 14.55% | 13.68% | — | — | — | |
| Adobe Inc. | 17.51% | 17.70% | 21.66% | — | — | |
| AppLovin Corp. | -3.30% | 0.58% | — | — | — | |
| Cadence Design Systems Inc. | 16.53% | 15.87% | — | — | — | |
| Datadog Inc. | -1.67% | -0.87% | — | — | — | |
| International Business Machines Corp. | 1.29% | 4.35% | — | — | — | |
| Intuit Inc. | 7.45% | 13.29% | — | — | — | |
| Microsoft Corp. | 19.94% | 18.36% | — | — | — | |
| Oracle Corp. | 6.15% | 10.48% | — | — | — | |
| Palantir Technologies Inc. | -10.80% | -16.02% | — | — | — | |
| Palo Alto Networks Inc. | -2.18% | -4.87% | — | — | — | |
| Salesforce Inc. | 1.52% | 6.14% | — | — | — | |
| ServiceNow Inc. | 2.44% | 2.13% | — | — | — | |
| Synopsys Inc. | 10.45% | 8.66% | 8.27% | — | — | |
| Workday Inc. | 0.28% | -3.24% | — | — | — | |
| ROA, Sector | ||||||
| Software & Services | 11.32% | 12.19% | — | — | — | |
| ROA, Industry | ||||||
| Information Technology | 14.33% | 14.52% | — | — | — | |
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 2022 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 9,930 ÷ 38,724 = 25.64%
2 Click competitor name to see calculations.
The financial performance from 2018 through 2022 reflects a period of substantial growth in both net income and total assets, although the efficiency of asset utilization experienced a temporary contraction. While net income and total assets followed an overall upward trajectory, the return on assets exhibited volatility, specifically reflecting an impact during the 2020 fiscal year.
- Net Income Performance
- Net income grew from US$ 5,859 million in 2018 to US$ 9,930 million in 2022. This progression was interrupted in 2020, when income decreased to US$ 6,411 million from the 2019 level of US$ 8,118 million, before recovering and reaching its five-year peak in 2022.
- Asset Base Expansion
- Total assets demonstrated a consistent and steady increase throughout the analyzed period. Assets rose from US$ 24,860 million in 2018 to US$ 38,724 million in 2022, indicating a continuous expansion of the company's resource base without any annual decreases.
- Return on Assets (ROA) Analysis
- The ROA fluctuated between a peak of 27.77% in 2019 and a trough of 19.09% in 2020. The decline observed in 2020 resulted from the divergence between falling net income and increasing total assets. Since 2020, a recovery trend is evident, with the ratio climbing to 23.06% in 2021 and further improving to 25.64% in 2022, signaling a return to high asset productivity.
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