MasterCard Tops Estimates As Shoppers Choose Plastic

(RTTNews) - Mastercard, Inc. (MA) reported Thursday a profit for the third quarter that grew 14 percent from last year, as shoppers increasingly used credit cards instead of cash to make purchases.

Both adjusted earnings per share and quarterly revenues topped analysts' expectations.

MasterCard and its larger peer Visa Inc. (V) are benefiting from transaction fees amid increased adoption of electronic payments across the globe.

"We had another good quarter with growth across all geographies," President and CEO Ajay Banga said in a statement.

The Purchase, New York-based payments company reported net income of $879 million or $7.27 per share for the third quarter, higher than $772 million or $6.17 per share in the prior-year quarter.

On average, 32 analysts polled by Thomson Reuters expected the company to report earnings of $6.95 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net revenues for the quarter grew 16 percent to $2.22 billion from $1.92 billion in the same quarter last year, and topped twenty-nine Wall Street analysts' consensus estimate of $2.13 billion. Adjusted for currency, net revenues grew only 15 percent.

The company attributed the revenue growth to a 15 percent rise in gross dollar volume, on a local currency basis, to just over $1 trillion, a 19 percent rise in cross-border volumes and an 16 percent increase in processed transactions to 10.0 billion.

Meanwhile, global purchase volumes also grew 14 percent on a local currency basis to $763 billion from last year.

As of the end of the third quarter, MasterCard's customers had issued nearly 2.0 billion MasterCard and Maestro-branded cards.

Total operating expenses increased 145 percent to $970 million, primarily driven by higher personnel and marketing expenses in support of strategic initiatives.

Operating income for the quarter increased 17 percent to $1.25 billion, and operating margin improved 80 basis points to 56.3 percent from last year's 55.5 percent.

Meanwhile, Visa reported Wednesday a profit for the third quarter that declined from last year, due mainly to the hefty tax benefit recorded last year, but matched analysts' expectations. Meanwhile, revenues grew 9 percent on higher processing volume but fell short of expectations.

In Wednesday's regular trading session, MA is currently trading at $725.68, down $8.31 on a volume of 0.56 million shares. In the past 52-week period, the stock has been trading in a broad range of $453.57 to $737.83.