MasterCard Incorporated today reported double-digit revenue growth for the third quarter of 2005. MasterCard's revenue grew 18.6% to $792 million and its net income grew 8.2% to $106 million or $1.06 per share on a basic and diluted basis from the same period in 2004.
For the nine months ended September 30, 2005, revenue grew approximately 16.3% to $2,222 million and net income grew 35.0% to $320 million or $3.20 on a basic and diluted basis, from the same period in 2004.
Revenue growth in the three months ended September 30, 2005 was not significantly impacted by currency fluctuations. The impact of currency fluctuations contributed 1% to revenue growth in the nine months ended September 30, 2005.
Driving the revenue growth in the third quarter was: growth in MasterCard's gross dollar volume, which increased 12.5%, on a local currency basis, to $424.4 billion; a 16.2% increase in the number of transactions processed globally by MasterCard; higher cross-border travel by cardholders using our cards; and, certain pricing changes that went into effect in the second quarter of 2005. Worldwide purchase volume rose 14.5%, on a local currency basis, during the quarter to $300 billion driven by increased cardholder spending on a growing number of MasterCard cards. As of September 30, 2005, MasterCard's customer banks issued 725.2 million MasterCard cards, an increase of 10.6% over the same period in 2004.
"We are achieving success by implementing our customer-focused strategy globally and delivering innovative products and value-added processing, information and related services," said Robert W. Selander, president and chief executive officer. "We believe the trend within the global payments industry of moving away from paper-based forms of payment such as cash and checks toward electronic forms of payment creates opportunities for continued growth in our business."
Commenting on the company's financial performance, Chris McWilton, MasterCard's chief financial officer noted that "the third quarter of 2005 represents the seventh consecutive quarter of double-digit revenue growth for MasterCard."
Operating expenses as a percentage of total revenues increased to 81% from 78% in the three months ended September 30, 2005, and decreased to 78% from 81% in the nine months ended September 30, 2005, in each case from the comparable period in 2004. Operating expenses increased 24.3% and 12.1% respectively in the three and nine months ended September 30, 2005 versus the same period in 2004. Operating expenses in the third quarter of 2005 included a $48 million pre-tax charge in connection with our currency conversion litigation and a $19 million pre-tax adjustment to costs related to the accounting for the company's performance award programs. Operating expense growth in the three months ended September 30, 2005 was not significantly impacted by currency fluctuations. Foreign currency fluctuations contributed 1% to overall operating expense growth in the nine months ended September 30.
In the third quarter of 2005, the company also recognized $17 million of other income relating to the settlement of a contractual dispute with a customer.
MasterCard's effective tax rate was 35.3%, up from 30.7%, and 35.5%, up from 31.3%, in the three and nine months ending September 30, 2005 respectively, from the comparable periods in 2004. The rates in 2004 were lower than 2005 primarily due to the settlement and reassessment of various tax audit matters.Download the document now 30.9 kb (Adobe Acrobat Document)