28 November 2014

MasterCard Q2 net income rises 10%

31 July 2014  |  1445 views  |  0 Source: MasterCard Incorporated

MasterCard Incorporated (NYSE: MA) today announced financial results for the second quarter of 2014.

The company reported net income of $931 million, up 10%, or 9% adjusted for currency, and earnings per diluted share of $0.80, up 14%, in each case versus the year-ago period. Acquisitions had no impact on earnings per diluted share.

Net revenue for the second quarter of 2014 was $2.4 billion, a 13% increase versus the same period in 2013, both as-reported and adjusted for currency. Net revenue growth was driven by the impact of the following:

  • A 13% increase in gross dollar volume, on a local currency basis, to $1.1 trillion;
  • An increase in cross-border volumes of 16%; and
  • An increase in processed transactions of 12%, to 10.6 billion.

These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.

Worldwide purchase volume during the quarter was up 13% on a local currency basis versus the second quarter of 2013, to $821 billion.  As of June 30, 2014, the company's customers had issued 2 billion MasterCard and Maestro-branded cards.

"We are pleased with another quarter of solid performance, driven by healthy volume and revenue growth," said Ajay Banga, president and CEO, MasterCard.  "We continue to invest in our strategic initiatives, including acquisitions, while strengthening partnerships with banks, merchants, governments and mobile operators to grow and improve our business and theirs."

Total operating expenses increased 15%, or 14% after adjusting for currency, to $994 million, during the second quarter of 2014 compared to the same period in 2013. Excluding the impact of acquisitions, total operating expenses increased 12%, or 11% after adjusting for currency.  The increase was primarily driven by higher investments in people to support strategic initiatives.

Operating income for the second quarter of 2014 increased 13% over the year-ago period and the company delivered an operating margin of 58.2%.

MasterCard reported other expense of $10 million in the second quarter of 2014 versus other income of $5 million in the second quarter of 2013. The change was mainly driven by higher interest expense related to the company's inaugural debt issuance in late March.

MasterCard's effective tax rate was 32.2% in the second quarter of 2014, versus a rate of 31.2% in the comparable period in 2013. The increase was primarily due to a less favorable geographic mix of taxable earnings.

During the second quarter of 2014, MasterCard repurchased approximately 15.7 million shares of Class A common stock at a cost of approximately $1.2 billion.  Quarter-to-date through July 24, the company repurchased an additional 1.4 million shares at a cost of approximately $106 million, with$728 million remaining under the current repurchase program authorization. 

Year-to-Date 2014 Results 

For the six months ended June 30, 2014, MasterCard reported net income of $1.8 billion, up 12%, or 11% adjusted for currency, compared to the first half of 2013.  Earnings per diluted share was $1.53, up 16%, from the first half of 2013, both including and excluding the impact of acquisitions.

Net revenue for the six months ended June 30, 2014 was $4.6 billion, an increase of 14%, or 13% adjusted for currency, versus the same period in 2013.  Gross dollar volume growth of 13%, transaction processing growth of 13% and cross-border volume growth of 16% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives.

Total operating expenses increased 13%, both before and after adjusting for currency, to $1.9 billion, for the six months ended June 30, 2014, compared to the same period in 2013. Excluding the impact of acquisitions, total operating expenses increased 11%, or 10% after adjusting for currency.  The increase was primarily due to higher personnel costs related to strategic initiatives.

Operating income increased 14% for the first half of 2014 versus the first half of 2013, delivering an operating margin of 58.6%.

MasterCard's effective tax rate was 32.1% in the six months ended June 30, 2014, versus a rate of 30.9% in the same period in 2013.  The increase was primarily due to a less favorable geographic mix of taxable earnings. 

Full figures available here.

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