MasterCard Incorporated Reports First-Quarter 2010 Financial Results
• First-quarter net income of $455 million, or $3.46 per diluted share
• First-quarter net revenue increase of 13.1%, to $1.3 billion
• First-quarter gross dollar volume up 8.3% and purchase volume up 8.7%
Purchase, NY - MasterCard Incorporated (NYSE:MA) today announced financial results for the first quarter 2010. 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.
Detailed financial tables are attached above.
First-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its first-quarter financial results.
The dial-in information for this call is 866-362-4831 (within the U.S.) and 617-597-5347 (outside the U.S.) and the passcode is 28812181. 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 39875611.
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.
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:
* The company’s expectation that recent business agreements will translate into continued success; and
* The company’s continued ability to bring an increasing number of new developments to market.
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 and Current Reports on Form 8-K that were 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.
About MasterCard Worldwide
MasterCard Worldwide 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.
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