MasterCard 1Q Profits Rise 17 Percent

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The FINANCIAL — MasterCard Incorporated on April 29 announced financial results for the first quarter of 2015. The company reported net income of $1.0 billion, an increase of 17% or 24% adjusted for currency, and earnings per diluted share of $0.89, up 22% or 29% adjusted for currency, in each case versus the year-ago period. 

Acquisitions had a $0.02 dilutive impact on earnings per diluted share, according to MasterCard.

Net revenue for the first quarter of 2015 was $2.2 billion, a 3% increase versus the same period in 2014 as-reported and an 8% increase adjusted for currency.  Net revenue growth was driven by the impact of the following:

An increase in cross-border volumes of 19%;
A 12% increase in gross dollar volume, on a local currency basis, to $1.1 trillion; and
An increase in processed transactions of 12%, to 11.0 billion.

These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.  Acquisitions contributed 2 percentage points to total net revenue growth.

Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the first quarter of 2014, to $783 billion. As of March 31, 2015, the company’s customers had issued 2.2 billion MasterCard and Maestro-branded cards.

“We are managing well, despite a mixed economic environment and challenging currency situation,” said Ajay Banga, president and CEO, MasterCard. “The underlying fundamentals of our business remain unchanged, driving our ability to sign new agreements with Citi and Itaú, work with digital giants and expand our support of the merchant community. This, combined with our focus on costs, allowed us to continue to deliver solid results in the first quarter.”

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Total operating expenses decreased 1%, or increased 3% when adjusted for currency, to $879 million during the first quarter of 2015 compared to the same period in 2014. While the company continued to make strategic investments, foreign exchange gains and ongoing cost management helped to moderate overall expenses, despite the 9 percentage points contributed by acquisitions. The foreign exchange gains related to currency hedging and balance sheet remeasurement, including the impact of devaluation of the Venezuelan Bolivar.

Operating income for the first quarter of 2015 increased 5%, or 12% adjusted for currency, versus the year-ago period and the company delivered an operating margin of 60.6%.

MasterCard reported other expense of $11 million in the first quarter of 2015 versus $4 million in the first quarter of 2014. The change was mainly driven by higher interest expense related to the company’s inaugural debt issuance in March 2014.

MasterCard’s effective tax rate was 23.9% in the first quarter of 2015, versus a rate of 32.0% in the comparable period in 2014.  The decrease was primarily due to the recognition of a discrete U.S. foreign tax credit benefit, a larger repatriation benefit and a more favorable mix of taxable earnings.

During the first quarter of 2015, MasterCard repurchased approximately 11 million shares of Class A common stock at a cost of approximately $947 million. Quarter-to-date through April 22nd, the company repurchased an additional 2.7 million shares at a cost of approximately $240 million, with $2.8 billion remaining under the current repurchase program authorization.


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