Mastercard (MA) Q1 Earnings & Revenues Beat, Increase Y/Y

Mastercard Incorporated (NYSE:MA) reported first-quarter 2017 earnings of $1.01 per share, which surpassed the Zacks Consensus Estimate of 94 cents by 7.4%. Also, earnings improved 17.4% year over year.

The quarter witnessed robust growth in bottom line and top line, fueled by strong transaction and volume levels.

Net income was $1.1 billion, up 12.7% from the prior-year quarter.

Behind the First-Quarter Headlines

MasterCard posted revenues of $2.73 billion for the reported quarter, which topped the Zacks Consensus Estimate of $2.64 billion. On a year-over-year basis, revenues increased 11.8%. The upside was primarily driven by a 17% rise in the number of switched transactions to 14.7 billion along with a 13% increase in cross-border volumes. These were partially offset by higher rebates and incentives, mainly due to new and renewed agreements and increased volumes.

During the reported quarter, worldwide purchase volume was $862 billion. About 2.4 billion MasterCard and Maestro branded cards were issued as of Mar 31, 2017.

MasterCard witnessed a year-over-year increase of 11.8% in total operating expenses to $1.23 billion owing to higher cost components like general and administrative expenses, advertising and marketing costs as well as provision for litigation settlement. The increase was attributable to continued investments in strategic initiatives as well as higher advertising and marketing spend.

Operating income was $1.5 billion in the reported quarter, up 11.7% year over year. Interest expenses jumped to $39 million from $20 million in the prior-year quarter.

The company delivered an adjusted operating margin of 55.6%.

Financial Update

As of Mar 31, 2017, the company’s cash and cash equivalents were $6 billion, down 10.6% from $6.7 billion at year-end 2016. Long-term debt inched up 0.7% to $5.22 billion from $5.18 billion as of Dec 31, 2016. Total equity dipped 0.8% to $5.64 billion from $5.68 billion at Dec 31, 2016.

Share Repurchase Update

During the reported quarter, Mastercard repurchased around 9 million shares of Class A common stock worth $1 billion.

Zacks Rank

MasterCard currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Financial Transaction Service Providers

Among the other financial transaction service providers that have reported first-quarter earnings so far, the bottom line at American Express Company (NYSE:AXP) , Discover Financial Services (NYSE:DFS) and Visa Inc. (NYSE:V) beat their respective Zacks Consensus Estimate.

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