Image via WikipediaMasterCard Incorporated Reports
Third-Quarter 2010 Financial Results
- Third-quarter net income of $518 million, or $3.94 per diluted share
- Third-quarter net revenue increase of 4.7%, to $1.4 billion
- Third-quarter gross dollar volume up 8.5% and purchase volume up 7.9%
PURCHASE, N.Y.--(BUSINESS WIRE)--MasterCard Incorporated (NYSE:MA) today announced financial results for the third quarter 2010. The company reported net income of $518 million, up 14.6%, and earnings per diluted share of $3.94, up 14.2%, in each case versus the year-ago period.
“Our year-to-date net income is up over 22%, aided by strong volume growth from markets outside of the U.S.”
Net revenue for the third quarter of 2010 was $1.4 billion, a 4.7% increase versus the same period in 2009. On a constant currency basis, net revenue increased 7.3% compared to the same period in 2009, driven by the revenue impact of the following:
- An increase in cross-border volumes of 15.4%; and
- An 8.5% increase in GDV on a local currency basis, to $685 billion.
In addition, a pricing contribution of approximately 7 percentage points, including the effect of cross-border rebates, was offset by a net increase in rebates and incentives due to new and renewed customer agreements.
Worldwide purchase volume during the quarter was up 7.9% on a local currency basis versus the third quarter of 2009, to $514 billion. The number of processed transactions increased 0.6% compared to the same period in 2009, to 5.8 billion. As of September 30, 2010, the company’s customers had issued 1.6 billion MasterCard and Maestro-branded cards.
"Consumers and businesses around the world continue to recognize the benefits of electronic payments and MasterCard remains at the heart of this evolution," said Ajay Banga, MasterCard president and chief executive officer. "Our year-to-date net income is up over 22%, aided by strong volume growth from markets outside of the U.S."
Banga commented, “Leveraging our global presence and differentiated assets, we continued to win new deals and execute against our three strategic pillars to grow, diversify and build MasterCard’s business. We are growing our global debit portfolio with new agreements that include Sovereign Bank, Chevy Chase (now part of Capital One) and Delta Air Lines in the U.S., Barclaycard in Germany and Qatar Islamic Bank. We are expanding our presence in new markets and channels, reflected in our memorandum of understanding with China Union Pay and an agreement with Singtel, one of the larger mobile operators in Asia. We also completed our acquisition of DataCash which enhances our e-Commerce capabilities."
Total operating expenses decreased 4.1%, to $662 million, during the third quarter of 2010 compared to the same period in 2009. Excluding currency fluctuations, operating expenses were down 2.6%. The decrease in total operating expenses was driven by a 6.7% reduction in general and administrative expenses, or 5.2% on a constant currency basis. This was due to lower personnel expense driven by decreased severance and compensation versus the year-ago quarter, primarily as a result of workforce reductions in 2009.
Advertising and marketing expenses increased $8 million, or 4.7%, in the third quarter of 2010 versus the third quarter of 2009. Excluding currency fluctuations, advertising and marketing expenses increased 6.2%.
Operating margin was 53.6% for the third quarter of 2010, up 4.2 percentage points over the year-ago period.
MasterCard's effective tax rate was 32.3% in the third quarter of 2010, versus a rate of 32.9% in the comparable period in 2009. The decrease was due primarily to benefits from the repatriation of foreign earnings and a lower state tax rate, partially offset by the impact of discrete adjustments in each of the three-month periods ending September 30, 2009 and September 30, 2010.
Year-to-Date 2010 Results
For the nine months ended September 30, 2010, MasterCard reported net income of $1.4 billion, or $10.89 per diluted share.
Net revenue for the nine months ended September 30, 2010 was $4.1 billion, an increase of 7.9% versus the same period in 2009. On a constant currency basis, net revenue increased 8.4%.
Cross-border volume growth of 13.9%, gross dollar volume growth of 8.5%, and the net impact of pricing changes of approximately 6 percentage points, including the effect of cross-border rebates, contributed to the net revenue growth in the year-to-date period. These factors were partially offset by a net increase in rebates and incentives due to new and renewed customer agreements.
Total operating expenses decreased 4.5%, to $1.9 billion, for the nine-month period compared to the same period in 2009. Excluding currency fluctuations, total operating expenses decreased 4.3%.
Operating margin was 53.2% for the nine months ending September 30, 2010, up 6.0 percentage points over the year-ago period.
Total other expense was $8 million for the nine-month period versus $32 million for the same period in 2009. The decrease was primarily due to a decrease in interest accretion on litigation settlements.
MasterCard’s effective tax rate was 34.2% in the nine months ended September 30, 2010, versus a rate of 33.6% in the comparable period in 2009. The increase in the effective tax rate was primarily due to the impact of discrete adjustments in each of the nine-month periods ended September 30, 2009 and September 30, 2010, partially offset by benefits from repatriation of foreign earnings and a lower state tax rate.
Third-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its third-quarter financial results.
The dial-in information for this call is 800-561-2718 (within the U.S.) and 617-614-3525 (outside the U.S.) and the passcode is 39627109. A replay of the call will be available for one week thereafter. The replay can be accessed by dialing 888-286-8010 (within the U.S.) and 617-801-6888 (outside the U.S.) and using passcode 88723546.
The live call and the replay, along with supporting materials, can also be accessed through the Investor Relations section of the company’s website at www.mastercard.com.
About MasterCard Incorporated
As a leading global payments company, MasterCard Incorporated prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2009, $2.5 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 22 billion transactions each year and has the capacity to handle 140 million transactions per hour, with an average network response time of 140 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard®, Maestro®, and Cirrus®; its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass™ and MasterCard inControl™. MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com.
