MasterCard Q1 profit jumps

The company reported net income of $455 million, or $3.46 per diluted share.

Net revenue for the first quarter of 2010 was $1.3 billion, a 13.1% increase versus the same period in 2009. On a constant currency basis, net revenue increased 10.2% compared to the same period in 2009. The higher net revenue this quarter benefited from:

* An increase in cross border volumes of 10.9%;
* Growth in MasterCard's gross dollar volume, which increased 8.3% on a local currency basis, to $631 billion;
* An increase in processed transactions of 4.6%; and
* Pricing changes of approximately 5 percentage points.

Worldwide purchase volume during the quarter was up 8.7% on a local currency basis versus the first quarter of 2009, to $473 billion. The number of processed transactions increased 4.6% compared to the same period in 2009, to 5.4 billion. As of March 31, 2010, the company's financial-institution customers had issued 1.6 billion MasterCard and Maestro-branded cards.

"We are starting the year with strength across several of our business drivers, including healthy cross-border volumes, which contributed to our solid first quarter results," said Robert W. Selander, MasterCard chief executive officer. "We also made a number of announcements that position MasterCard well for continued success, including signing a long-term agreement for HSBC's global mass affluent Premier credit business, and the ongoing adoption of MasterCard inControl with Fifth Third, J.P. Morgan and First National Bank of Omaha."

MasterCard president and chief operating officer, Ajay Banga, further remarked, "We're making important investments in innovation, like MasterCard Marketplace, our eCommerce shopping portal, and the launch of MasterCard Labs, a critical component of our global research and development efforts." Banga stated, "We are committed to play a significant role in the evolution of payments to better meet the needs of consumers, merchants, businesses and governments around the world, and look forward to bringing even more developments to the market."

Total operating expenses increased 2.2%, to $608 million, during the first quarter of 2010 compared to the same period in 2009. Excluding currency fluctuations, operating expenses were up 0.5%. The increase in total operating expenses was driven by:

•
A 2.1% increase in general and administrative expenses, or 0.7% on a constant currency basis. This increase was primarily due to higher personnel expense driven by increased payroll taxes related to the vesting of equity compensation awards; and

•
A 13.3% increase in depreciation and amortization, primarily due to increased investments in data center equipment and capitalized software.
The increase in total operating expenses was partially offset by a 0.7% decrease in advertising and marketing expenses versus the year-ago period. Excluding currency fluctuations, advertising and marketing expenses declined 3.8%.

The operating margin was 53.5% for the first quarter of 2010, up 4.9 percentage points over the year-ago period.

Total other expense was $5 million in the first quarter of 2010 versus $11 million in the first 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 34.6% in the first quarter of 2010, versus 33.2% in the comparable period in 2009. The increase was due primarily to an adjustment to the balance of deferred taxes in the first quarter of 2009, partially offset by lower state tax rates and more favorable geographic distribution of earnings in the first quarter of 2010.

There were no special items for the first quarter of 2009 or 2010.

View the figures here: