Mastercard stock falls despite Q2 earnings beat

A marked increase in revenues lifted Mastercard’s (MA) earnings, which surpassed analysts’ forecast in the second quarter. However, shares of the payment services provider slipped from an all-time high following the announcement Thursday amidst concerns over the continuing squeeze on portability from rising expenses.

Adjusted earnings were $1.7 billion or $1.66 per share, higher than $1.2 billion or $1.10 per share recorded in the second quarter of 2017. Earnings came in above estimates.

On an unadjusted basis, earnings of the New York-based financial services provider rose to $1.50 per share from $1.10 per share a year earlier. While the bottom line benefitted from a 20% rise in revenues, a sharp increase in operating expenses restricted the growth.

At $3.7 billion, revenues were slightly above Wall Street estimates. The upturn is attributable to an increase in switched transactions, cross-border volumes and gross dollar volume, which was partially offset by higher rebates and incentives. Excluding the effect of the new revenue recognition rules and acquisitions, revenue increased 14%.

Revenues benefitted from an increase in switched transactions, cross-border volumes and gross dollar volume

“We continue to invest for the long term and are pleased with the progress we are making in expanding our customer relationships and advancing our secure digital solutions. We believe our strategy of providing choice to our customers positions us well to expand our core business and address new opportunities,” said Mastercard CEO Ajay Banga.

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During the three months ended June, Mastercard repurchased around 8.3 million shares for $1.5 billion.

The company has been quite successful in closing the gap with rival and industry leader Visa (V) in recent years, taking advantage of the new opportunities being offered by the payment solutions sector.

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After gaining 41% since January, Mastercard stock ended the last trading session at a record high but lost nearly 3% in early trading Thursday following the earnings release.

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