Analyzing Mastercard’s 4Q17 Operating Expenses
Total operating expenses
Mastercard (MA) incurred total operating expenses of $1.6 billion in 4Q17 compared to $1.3 billion in 4Q16. This trend implies a 15.0% increase on a currency-neutral basis, which was above expectations because the company experienced foreign exchange hedging losses.
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This YoY (year-over-year) rise includes an 8.0% impact from Mastercard’s recent acquisitions. However, the VocaLink acquisition had the greatest impact. The remaining increase is primarily due to deployments with respect to strategic initiatives.
The company incurred depreciation and amortization expenses of $115.0 million in 4Q17 compared to $92.0 million in 4Q16. This trend implies a 25.0% increase on a currency-neutral basis.
Fiscal 2017 expenses
Mastercard (MA) incurred total adjusted operating expenses of $5.7 billion in 2017 compared to $4.9 billion in 2016, representing a 16.0% rise (excluding special items) on a currency-neutral basis. This increase consists of the 6.0% impact of its acquisitions, led by the VocaLink acquisition. However, foreign-exchange charges and deployments with respect to strategic initiatives were also significant contributors.
In 4Q17, Mastercard incurred general and administrative expenses of $1.1 billion compared to $983.0 million in 4Q16, which reflects a 19.0% rise a currency-neutral basis. The company’s advertising and marketing expenses stood at $311.0 million in 4Q17 compared to $308.0 million in 4Q16.
Mastercard’s dividend yield stood at 0.52% on an LTM (last-12-months) basis. Among its peers (XLF), Western Union (WU), Discover Financial Services (DFS), and Global Payments (GPN) have dividend yields of ~3.5%, ~1.7%, and 0.05%, respectively, on an LTM basis.