MasterCard Q3 Profit Up 15%, Results Beat View

(RTTNews) - MasterCard, Inc. (MA) on Thursday reported a 15 percent increase in profit for the third quarter from last year, reflecting double-digit revenue growth as shoppers increasingly used credit and debit cards for payments. Both earnings per share and quarterly revenues topped analysts' expectations.

Ajay Banga, president and CEO of MasterCard, said, "We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment. We also continue to invest and partner to make payments safer, easier and faster."

The Purchase, New York-based world's second-largest payment network reported net income of $1.02 billion or $0.87 per share for the third quarter, up from $879 million or $0.73 per share in the prior-year quarter.

On average, 32 analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net revenues for the quarter grew 13 percent to $2.50 billion from $2.22 billion in the same quarter last year, and topped analysts' consensus estimate of $2.45 billion.

The company attributed the revenue growth to a 12 percent increase in gross dollar volume, on a local currency basis, to $1.2 trillion, 15 percent growth in cross-border volumes, and a 10 percent increase in processed transactions to 11 billion.

However, the company added that these factors were partially offset by an increase in rebates and incentives. Acquisitions contributed 3 percentage points to total net revenue growth.

Meanwhile, global purchase volumes grew 11 percent on a local currency basis from last year to $843 billion. As of the end of the third quarter, MasterCard said its customers had issued 2.1 billion MasterCard and Maestro-branded cards.

Total operating expenses increased 12 percent from last year to $1.08 billion, primarily driven by investments in strategic initiatives including acquisitions, which contributed 9 percentage points to the growth.

Operating income improved 14 percent from the year-ago period to $1.42 billion.

Banga added, "We also continue to invest and partner to make payments safer, easier and faster. Within the past two months alone, we opened our new technology hub in New York City, delivered our technology and security protocols as part of the launch of Apple Pay and partnered with the Transport for London to deliver contactless payments system-wide."

On Wednesday, Mastercard's peer Visa Inc. (V) reported a 10 percent decline in profit for the fourth quarter from last year, hurt mainly by a hefty litigation provision even as revenue increased 9 percent. However, results for the quarter beat analysts' expectations.

Visa processed 16.9 billion transactions during the fourth quarter, up 9 percent from a year earlier.

MA is currently trading at $80.72, up $4.73 or 6.22 percent on a volume of 1.13 million shares.