- First-quarter net income of $959
million, or $0.86 per diluted share
- First-quarter net revenue increase
of 10%, to $2.4 billion
- First-quarter gross dollar volume up
13% and purchase volume up 12%
MasterCard Incorporated (NYSE:MA) today announced financial
results for the first quarter of 2016. The company reported net
income of $959 million, a decrease of 6%, or 2% on a
currency-neutral basis, and earnings per diluted share of $0.86,
down 3%, or up 1% on a currency-neutral basis, versus the year-ago
period. As expected, earnings per diluted share were unfavorably
impacted by $0.08 due to the non-recurrence of a discrete tax
credit and balance sheet remeasurement related to Venezuela in last
year’s first quarter.
Net revenue for the first quarter of 2016 was $2.4 billion, a
10% increase versus the same period in 2015. On a currency-neutral
basis, net revenue increased 14%. Net revenue growth was driven by
the impact of the following:
- An increase in processed transactions
of 14%, to 12.6 billion;
- A 13% increase in gross dollar volume,
on a local currency basis, to $1.1 trillion; and
- An increase in cross-border volumes of
12%.
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 12% on a
local currency basis versus the first quarter of 2015, to $838
billion. As of March 31, 2016, the company’s customers had
issued 2.3 billion MasterCard and Maestro-branded cards.
“The year is off to a good start with solid growth in revenue
due to strong volume and transaction levels this quarter,” said
Ajay Banga, president and CEO, MasterCard. “We continue to deliver
against our strategy, looking to our investments and acquisitions
to create a better cardholder experience, supported by a relentless
commitment to security. Our encryption and token services are
helping to support new ways to pay in an increasingly digital
world, while our APT and Pinpoint businesses are helping to drive
stronger connections between merchants and their customers.”
Total operating expenses increased 25%, or 29% on a
currency-neutral basis, to $1.1 billion during the first quarter of
2016 compared to the same period in 2015. The increase was
primarily due to the difference between foreign exchange gains
related to currency hedging and balance sheet remeasurement which
occurred in last year’s first quarter versus foreign exchange
losses on currency hedging in the first quarter of 2016.
Additionally, this year’s period included the impact of higher
investments to support our strategic initiatives.
Operating income for the first quarter of 2016 was flat, or up
4% on a currency-neutral basis, versus the year-ago period. The
company delivered an operating margin of 55.1%.
MasterCard reported other expense of $11 million in the first
quarter of 2016, the same as the first quarter of 2015.
MasterCard’s effective tax rate was 28.3% in the first quarter
of 2016, versus a rate of 23.9% in the comparable period in 2015.
The increase was primarily due to the non-recurrence of a discrete
U.S. foreign tax credit benefit which occurred in the first quarter
of 2015.
During the first quarter of 2016, MasterCard repurchased
approximately 15 million shares of Class A common stock at a
cost of almost $1.4 billion. Quarter-to-date through
April 21st, the company repurchased an additional 3.0 million
shares at a cost of $288 million, with $2.9 billion remaining under
current repurchase program authorizations.
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 866-393-4306 (within
the U.S.) and 734-385-2616 (outside the U.S.), and the passcode is
81063498. A replay of the call will be available for 30 days and
can be accessed by dialing 855-859-2056 (within the U.S.) and
404-537-3406 (outside the U.S.), and using passcode 81063498.
This call can also be accessed through the Investor Relations
section of the company’s website at
www.mastercard.com/investor.
Non-GAAP Financial Information
The presentation of growth rates on a currency-neutral basis
represent a non-GAAP measure and are calculated by remeasuring the
prior period’s results using the current period’s exchange rates
for both the translational and transactional impacts in our
operating results.
About MasterCard Incorporated
MasterCard (NYSE: MA), www.mastercard.com, is a technology
company in the global payments industry. We operate the world’s
fastest payments processing network, connecting consumers,
financial institutions, merchants, governments and businesses in
more than 210 countries and territories. MasterCard’s products and
solutions make everyday commerce activities - such as shopping,
traveling, running a business and managing finances - easier, more
secure and more efficient for everyone. Follow us on Twitter
@MasterCardNews, join the discussion on the Beyond the Transaction
Blog and subscribe for the latest news on the Engagement
Bureau.
Forward-Looking Statements
This press release contains forward-looking statements pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. All statements other than statements of
historical facts may be forward-looking statements. When used in
this press release, the words “believe”, “expect”, “could”, “may”,
“would”, “will”, “trend” and similar words are intended to identify
forward-looking statements. Examples of forward-looking statements
include, but are not limited to, statements that relate to the
MasterCard’s future prospects, developments and business
strategies. We caution you to not place undue reliance on these
forward-looking statements, as they speak only as of the date they
are made. 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.
Many factors and uncertainties relating to our operations and
business environment, all of which are difficult to predict and
many of which are outside of our control, influence whether any
forward-looking statements can or will be achieved. Any one of
those factors could cause our actual results to differ materially
from those expressed or implied in writing in any forward-looking
statements made by MasterCard or on its behalf, including, but not
limited to, the following factors:
- payments system-related legal and
regulatory challenges (including interchange fees, surcharging and
the extension of current regulatory activity to additional
jurisdictions or products);
- the impact of preferential or
protective government actions;
- regulation to which we are subject
based on our participation in the payments industry;
- regulation of privacy, data protection
and security;
- the impact of competition in the global
payments industry (including disintermediation and pricing
pressure);
- the challenges relating to rapid
technological developments and changes;
- the impact of information security
failures, breaches or service disruptions on our business;
- issues related to our relationships
with our customers (including loss of substantial business from
significant customers, competitor relationships with our customers
and banking industry consolidation);
- the impact of our relationships with
stakeholders, including issuers and acquirers, merchants and
governments;
- exposure to loss or illiquidity due to
settlement guarantees and other significant third-party
obligations;
- the impact of global economic and
political events and conditions, including global financial market
activity, declines in cross-border activity; negative trends in
consumer spending and the effect of adverse currency
fluctuation;
- reputational impact, including impact
related to brand perception, account data breaches and fraudulent
activity;
- issues related to acquisition
integration, strategic investments and entry into new businesses;
and
- potential or incurred liability and
limitations on business resulting from litigation.
For additional information on these and other factors that could
cause MasterCard’s actual results to differ materially from
expected results, please see the company’s filings with the
Securities and Exchange Commission, including the company’s Annual
Report on Form 10-K for the year ended December 31, 2015 and
any subsequent reports on Forms 10-Q and 8-K.
MASTERCARD INCORPORATED CONSOLIDATED STATEMENT OF
OPERATIONS (UNAUDITED)
Three Months Ended March 31, 2016
2015 (in millions, except per share
data) Net Revenue $ 2,446 $
2,230
Operating Expenses General and
administrative 868 650 Advertising and marketing 135 142
Depreciation and amortization 95 87 Total operating
expenses 1,098 879 Operating income 1,348 1,351
Other Income (Expense) Investment income 10 9 Interest
expense (20 ) (17 ) Other income (expense), net (1 ) (3 ) Total
other income (expense) (11 ) (11 ) Income before income taxes 1,337
1,340 Income tax expense 378 320
Net Income $
959 $ 1,020
Basic Earnings per Share $
0.86 $ 0.89 Basic
Weighted-Average Shares Outstanding 1,109 1,148
Diluted Earnings per Share $ 0.86
$ 0.89 Diluted
Weighted-Average Shares Outstanding 1,112 1,152
MASTERCARD INCORPORATED CONSOLIDATED
BALANCE SHEET (UNAUDITED)
March 31,2016
December 31,2015
(in millions, except per share data) ASSETS Cash and
cash equivalents $ 4,894 $ 5,747 Restricted cash for
litigation settlement 542 541 Investments 1,314 991 Accounts
receivable 1,186 1,079 Settlement due from customers 1,020 1,068
Restricted security deposits held for customers 937 895 Prepaid
expenses and other current assets 713 663
Total
Current Assets 10,606 10,984 Property, plant and equipment, net
of accumulated depreciation of $526 and $491, respectively 669 675
Deferred income taxes 353 317 Goodwill 1,886 1,891 Other intangible
assets, net of accumulated amortization of $871 and $816,
respectively 788 803 Other assets 1,603 1,580
Total Assets $ 15,905 $ 16,250
LIABILITIES AND EQUITY Accounts payable $ 409 $ 472
Settlement due to customers 849 866 Restricted security deposits
held for customers 937 895 Accrued litigation 710 709 Accrued
expenses 2,876 2,763 Other current liabilities 659 564
Total Current Liabilities 6,440 6,269 Long-term debt
3,333 3,268 Deferred income taxes 76 79 Other liabilities 545
572
Total Liabilities 10,394 10,188
Commitments and Contingencies Stockholders’ Equity
Class A common stock, $0.0001 par value;
authorized 3,000 shares, 1,372 and 1,370 shares
issued and 1,082 and 1,095
outstanding, respectively
— —
Class B common stock, $0.0001 par value;
authorized 1,200 shares, 20 and 21 issued and
outstanding, respectively
— — Additional paid-in-capital 4,009 4,004 Class A treasury stock,
at cost, 291 and 275 shares, respectively (14,882 ) (13,522 )
Retained earnings 16,972 16,222 Accumulated other comprehensive
income (loss) (620 ) (676 )
Total Stockholders’ Equity 5,479
6,028 Non-controlling interests 32 34
Total
Equity 5,511 6,062
Total Liabilities and
Equity $ 15,905 $ 16,250
MASTERCARD INCORPORATED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
Three Months Ended March 31, 2016
2015 (in millions) Operating
Activities Net income $ 959 $
1,020 Adjustments to reconcile net income to net cash
provided by operating activities: Amortization of customer and
merchant incentives 204 184 Depreciation and amortization 95 87
Share-based payments (40 ) (53 ) Deferred income taxes (20 ) 37
Other (15 ) (37 )
Changes in operating assets and
liabilities: Accounts receivable (87 ) (30 ) Income taxes
receivable (3 ) (63 ) Settlement due from customers 69 (108 )
Prepaid expenses (180 ) (57 ) Accrued litigation and legal
settlements 6 (40 ) Accounts payable (75 ) 1 Settlement due to
customers (41 ) 158 Accrued expenses 27 (214 ) Net change in other
assets and liabilities 109 26 Net cash provided by
operating activities 1,008 911
Investing
Activities Purchases of investment securities
available-for-sale (446 ) (691 ) Purchases of other short-term
investments held-to-maturity (60 ) — Proceeds from sales of
investment securities available-for-sale 69 84 Proceeds from
maturities of investment securities available-for-sale 55 166
Proceeds from maturities of investment securities held-to-maturity
80 — Acquisition of businesses, net of cash acquired — (12 )
Purchases of property, plant and equipment (37 ) (31 ) Capitalized
software (38 ) (26 ) Other investing activities (8 ) (9 ) Net cash
used in investing activities (385 ) (519 )
Financing
Activities Purchases of treasury stock (1,357 ) (947 )
Dividends paid (212 ) (184 ) Tax benefit for share-based payments
22 27 Cash proceeds from exercise of stock options 4 10 Other
financing activities (2 ) (6 ) Net cash used in financing
activities (1,545 ) (1,100 ) Effect of exchange rate changes on
cash and cash equivalents 69 (222 ) Net decrease in cash and
cash equivalents (853 ) (930 ) Cash and cash equivalents -
beginning of period 5,747 5,137 Cash and cash
equivalents - end of period $ 4,894 $
4,207
Non-Cash Investing and
Financing Activities Fair value of assets acquired, net of cash
acquired $ — $ 13
Fair value of liabilities assumed related to acquisitions $
— $ —
MASTERCARD INCORPORATED OPERATING
PERFORMANCE
For the 3 Months ended March 31, 2016 All
MasterCard Credit, GDV Growth
Growth
PurchaseVolume
Growth
Purchase Trans.
CashVolume
Growth
CashTrans.
Accounts Cards Charge
and Debit Programs (Bil.) (USD)
(Local) (Bil.)
(Local)
(Mil.)
(Bil.) (Local)
(Mil.) (Mil.)
(Mil.) APMEA $350 6.1% 13.2% $234 12.5% 3,261 $117 14.9%
1,219 535 572 Canada 29 -2.0% 8.6% 27 9.5% 446 2 -4.6% 5 42 49
Europe 316 10.8% 17.7% 218 14.5% 4,857 99 25.4% 796 401 416 Latin
America
73
-8.7% 14.4%
42
15.0%
1,482
31
13.6%
238
152
174
Worldwide less United States 769 6.0% 15.0% 521 13.4% 10,046 248
18.5% 2,259 1,131 1,210 United States
372
9.8% 9.8%
316
10.3%
5,773
56
7.0%
337
346
383
Worldwide 1,141 7.2% 13.2% 838 12.2% 15,819 303 16.2% 2,596 1,477
1,593
MasterCard Credit and Charge Programs Worldwide
less United States 423 0.6% 9.1% 387 9.9% 5,774 36 2.1% 178 526 588
United States
170
11.5% 11.5%
162
11.2%
1,843
7
19.0%
9
161
195
Worldwide 593 3.5% 9.8% 549 10.2% 7,617 44 4.5% 187 687 783
MasterCard Debit Programs Worldwide less United States 345
13.5% 23.0% 134 24.7% 4,272 211 21.9% 2,081 605 622 United States
203
8.5% 8.5%
154
9.5%
3,930
49
5.4%
329
185
188
Worldwide 548 11.6% 17.2% 289 16.1% 8,201 260 18.4% 2,409 790 810
For the 3 Months ended March 31, 2015 All
MasterCard Credit, GDV Growth Growth
PurchaseVolume
Growth
PurchaseTrans.
CashVolume
Growth
Cash
Trans.
Accounts Cards Charge and Debit Programs
(Bil.) (USD)
(Local) (Bil.)
(Local) (Mil.)
(Bil.) (Local)
(Mil.) (Mil.)
(Mil.) APMEA $330 8.9% 15.1% $220 15.2% 2,681 $110 15.0%
1,025 465 498 Canada 30 2.2% 15.0% 28 17.2% 393 2 -9.6% 5 38 44
Europe 285 -8.5% 15.0% 200 13.1% 3,938 85 19.8% 671 365 382 Latin
America
80
-2.9% 15.0%
48
19.2%
1,338
32
9.3%
214
137
157
Worldwide less United States 725 -0.1% 15.1% 496 14.8% 8,350 229
15.6% 1,915 1,005 1,081 United States
339
6.5% 6.5%
287
7.0%
5,117
52
3.7%
326
321
356
Worldwide 1,064 1.9% 12.2% 783 11.8% 13,467 281 13.2% 2,241 1,326
1,436
MasterCard Credit and Charge Programs Worldwide
less United States 421 -1.7% 10.9% 382 12.3% 5,160 39 -1.2% 179 506
569 United States
152
5.3% 5.3%
146
6.1%
1,609
6
-10.2%
7
151
182
Worldwide 573 0.1% 9.4% 528 10.5% 6,770 45 -2.5% 186 658 752
MasterCard Debit Programs Worldwide less United States 304
2.1% 21.3% 114 24.1% 3,190 190 19.8% 1,736 499 512 United States
187
7.5% 7.5%
141
8.0%
3,507
46
5.9%
319
170
173
Worldwide 491 4.1% 15.7% 255 14.7% 6,697 236 16.8% 2,055 669 685
APMEA = Asia Pacific / Middle East / Africa Note that the figures
in the preceding tables may not sum due to rounding; growth
represents change from the comparable year-ago period
Footnote
The tables set forth the gross dollar volume (“GDV”), purchase
volume, cash volume and the number of purchase transactions, cash
transactions, accounts and cards on a regional and global basis for
MasterCard®-branded and MasterCard Electronic™-branded cards.
Growth rates over prior periods are provided for volume-based
data.
Debit transactions on Maestro® and Cirrus®-branded cards
and transactions involving brands other than MasterCard are not
included in the preceding tables.
For purposes of the table: GDV represents purchase volume plus
cash volume and includes the impact of balance transfers and
convenience checks; “purchase volume” means the aggregate dollar
amount of purchases made with MasterCard-branded cards for the
relevant period; and “cash volume” means the aggregate dollar
amount of cash disbursements obtained with MasterCard-branded cards
for the relevant period. The number of cards includes virtual
cards, which are MasterCard-branded payment accounts that do not
generally have physical cards associated with them.
The MasterCard payment product is comprised of credit, charge
and debit programs, and data relating to each type of program is
included in the tables. Debit programs include MasterCard-branded
debit programs where the primary means of cardholder validation at
the point of sale is for cardholders either to sign a sales receipt
or enter a PIN. The tables include information with respect to
transactions involving MasterCard-branded cards that are not
processed by MasterCard and transactions for which MasterCard does
not earn significant revenues.
Information denominated in U.S. dollars is calculated by
applying an established U.S. dollar/local currency exchange rate
for each local currency in which MasterCard volumes are reported.
These exchange rates are calculated on a quarterly basis using the
average exchange rate for each quarter. MasterCard reports
period-over-period rates of change in purchase volume and cash
volume on the basis of local currency information, in order to
eliminate the impact of changes in the value of foreign currencies
against the U.S. dollar in calculating such rates of change.
The data set forth in the GDV, purchase volume, purchase
transactions, cash volume and cash transactions columns is provided
by MasterCard customers and is subject to verification by
MasterCard and partial cross-checking against information provided
by MasterCard’s transaction processing systems. The data set forth
in the accounts and cards columns is provided by MasterCard
customers and is subject to certain limited verification by
MasterCard. A portion of the data set forth in the accounts and
cards columns reflects the impact of routine portfolio changes
among customers and other practices that may lead to over counting
of the underlying data in certain circumstances. All data is
subject to revision and amendment by MasterCard’s customers
subsequent to the date of its release.
In 2015 Q3, several customers purged inactive MasterCard cards
and accounts. Data for the comparable periods has been revised to
be consistent with this approach.
Performance information for prior periods can be found in the
“Investor Relations” section of the MasterCard website at
www.mastercard.com/investor.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005927/en/
MasterCard IncorporatedInvestor Relations:Barbara Gasper or Matt
Lanford, 914-249-4565investor.relations@mastercard.comorMedia
Relations:Seth
Eisen, 914-249-3153Seth.Eisen@mastercard.com
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