MasterCard Earnings Video Technical Analysis Commentary
Stock Trading Video MasterCard Earnings MA MasterCard beats by $0.16 misses on revs MasterCard (NYSE: MA) reports Q2 EPS of $3.49, vs $3.33. Revenue for the quarter was $1.37 billion, which compares to the estimate of $1.38 billion.
MasterCard Incorporated (NYSE:MA) today announced financial results for the second quarter 2010. The company reported net income of $458 million, or $3.49 per diluted share. Net revenue for the second quarter of 2010 was $1.4 billion, a 6.7% increase versus the same period in 2009.
On a constant currency basis, net revenue increased 7.9% compared to the same period in 2009. The higher net revenue this quarter was driven by: An increase in cross-border volumes of 15.2%; Growth in MasterCard’s gross dollar volume, which increased 8.5% on a local currency basis, to $656 billion; and The net impact of pricing changes of approximately 4 percentage points, including the effect of cross-border rebates.
These factors were partially offset by additional rebates and incentives primarily due to new and renewed customer agreements. Worldwide purchase volume during the quarter was up 7.9% on a local currency basis versus the second quarter of 2009, to $493 billion. The number of processed transactions increased 0.1% compared to the same period in 2009, to 5.6 billion.
As of June 30, 2010, the company’s financial-institution customers had issued 1.6 billion MasterCard and Maestro-branded cards. “We are pleased with our performance in the second quarter,” said Ajay Banga, MasterCard president and chief executive officer.
“Solid GDV growth, particularly in markets outside the U.S., continued momentum in worldwide cross-border volumes, and thoughtful expense management all contributed to good financial results this quarter.” Banga commented, “No matter where you are in the world, people seek fast, secure, and efficient payment experiences, and MasterCard is delivering payment innovations that will make life easier for all.
For example, in Latin America, we reached an agreement for a co-brand deal with Telefonica, which will target Telefonica's mobile subscribers across 11 markets. We launched MasterCard MoneySend with the Bank of China, marking the 19th country where our person-to-person money transfer program is enabled. In the U.S., we worked closely with the MTA, PATH and NJ TRANSIT to expand our contactless PayPass pilot that will ultimately make commuting faster and easier for everyone involved.” Banga concluded, “As a result of programs such as these, MasterCard remains well positioned for long-term growth.”
Total operating expenses decreased 10.4%, to $648 million, during the second quarter of 2010 compared to the same period in 2009. Excluding currency fluctuations, operating expenses were down 9.7%. The decrease in total operating expenses was driven by a 14.5% decrease in general and administrative expenses, or 13.8% on a constant currency basis. This decrease was primarily due to lower personnel expense driven by decreased severance and compensation versus the year-ago quarter as a result of workforce reductions in 2009. Depreciation and amortization decreased $1 million, or 3.8%, in the second quarter versus the same period a year ago.
Advertising and marketing expenses were essentially flat, down 0.3%, in the second quarter of 2010 versus the second quarter of 2009. Excluding currency fluctuations, advertising and marketing expenses increased 0.2%. Operating margin was 52.6% for the second quarter of 2010, up 9.1 percentage points over the year-ago period. Total other expense was $4 million in the second quarter of 2010 versus $21 million in the second quarter of 2009.
The decrease was driven by lower interest expense primarily due to a reduction in interest accretion on litigation settlements. MasterCard's effective tax rate was 35.7% in the second quarter of 2010, versus a rate of 35.0% in the comparable period in 2009. The increase was due primarily to discrete adjustments in the second quarter of 2010. Year-to-Date 2010 Results For the six months ended June 30, 2010, MasterCard reported net income of $913 million, or $6.95 per diluted share. Net revenue for the six months ended June 30, 2010 was $2.7 billion, an increase of 9.7% versus the same period in 2009.
On a constant currency basis, net revenue increased 9.0%. Cross-border volume growth of 13.1%, gross dollar volume growth of 8.4%, and the net impact of pricing changes of approximately 5 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 additional rebates and incentives primarily due to new and renewed customer agreements.
Total operating expenses decreased 4.7%, to $1.3 billion, for the six-month period compared to the same period in 2009. Excluding currency fluctuations, total operating expenses decreased 5.1% for the first half of the year versus the first half of 2009. Operating margin was 53.0% for the six months ending June 30, 2010, up 7.1 percentage points over the year-ago period.
Total other expense was $9 million for the six-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 35.1% in the six months ended June 30, 2010, versus a rate of 34.1% 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 six-month periods ended June 30, 2009 and June 30, 2010.
Second-Quarter Financial Results Conference Call Details At 9:00 a.m. ET today, the company will host a conference call to discuss its second-quarter financial results. The dial-in information for this call is 866-730-5764 (within the U.S.) and 857-350-1588 (outside the U.S.) and the passcode is 69722810. 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 82339202.
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 MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide.
As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 22 billion transactions each year, and provides industry-leading analysis and consulting services to financial-institution customers and merchants. Powered by the MasterCard Worldwide Network and through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories.
For more information go to www.mastercard.com.
Statements in this press release which are not historical facts, including statements about MasterCard’s plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company’s ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation, our ability to execute on programs that drive MasterCard’s long-term growth. Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in the company’s filings with the Securities and Exchange Commission (SEC), including the company’s Annual Report on Form 10-K for the year ended December 31, 2009, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2010, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company’s results to differ materially from expected results.
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