Fantastic article. I think the most important thing here is how long and what rate the growth will continue in the future. I think if one took 10 year view and crunched the numbers we would probably come to a 10 year compounded average growth of 6-7%? So it would be interesting to know what were the levers of growth for last 10 years and are these levers slowing down and at what rate?
The business has been compounding at much higher than 6-7% and consistently so. Here are the 10 year compounding rates for this business:
REVENUE 11.64%
EPS. 16.5%
DIVs. 32.2%
The drivers of growth for Mastercard are all relatively straightforward - a secular move to cashless transactions across the world, obviously hypercharged by the pandemic. I expect those volumes to continue to strengthen as more and more of that transforms worldwide - even in relatively stable cashless societies, the gross value of cashless transactions is only growing, either due to more merchants coming onboard, or due to inflation in the prices.
More importantly, services has become a great driver for revenue for Mastercard. In 2012 (10 years ago), it reported 1,154M as "Other Revenues" of a total revenue base of $7,391 (after adjusting for rebates and incentives), some 15.61%. That number today is at $7,879 of the $22,237 - some 35%. This is obviously a huge driver for growth in the coming years.
Payments have only grown at 8.6% and I suspect that will likely slow down over the next 10 years - perhaps to about 6% or so, unless acquisitions provide a tailwind. However, services have compounded at 21.2% in the same period and I expect it to continue to do so, perhaps at a slightly moderated rate in the next 10 years. That's where I expect the growth rates to be sustained.
Fantastic article. I think the most important thing here is how long and what rate the growth will continue in the future. I think if one took 10 year view and crunched the numbers we would probably come to a 10 year compounded average growth of 6-7%? So it would be interesting to know what were the levers of growth for last 10 years and are these levers slowing down and at what rate?
The business has been compounding at much higher than 6-7% and consistently so. Here are the 10 year compounding rates for this business:
REVENUE 11.64%
EPS. 16.5%
DIVs. 32.2%
The drivers of growth for Mastercard are all relatively straightforward - a secular move to cashless transactions across the world, obviously hypercharged by the pandemic. I expect those volumes to continue to strengthen as more and more of that transforms worldwide - even in relatively stable cashless societies, the gross value of cashless transactions is only growing, either due to more merchants coming onboard, or due to inflation in the prices.
More importantly, services has become a great driver for revenue for Mastercard. In 2012 (10 years ago), it reported 1,154M as "Other Revenues" of a total revenue base of $7,391 (after adjusting for rebates and incentives), some 15.61%. That number today is at $7,879 of the $22,237 - some 35%. This is obviously a huge driver for growth in the coming years.
Payments have only grown at 8.6% and I suspect that will likely slow down over the next 10 years - perhaps to about 6% or so, unless acquisitions provide a tailwind. However, services have compounded at 21.2% in the same period and I expect it to continue to do so, perhaps at a slightly moderated rate in the next 10 years. That's where I expect the growth rates to be sustained.
Hope this helps.