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Mastercard thrives on consumer spending; reports record Q3 results

Revenues of Mastercard (MA) rose sharply and hit a record high in the third quarter as cardholders spent more on merchandise and services, encouraged by the growing economy and buoyant market sentiment. The results topped Wall Street estimates, sending the company’s shares higher in the pre-market Tuesday.

Mastercard Q3 2018 Earnings Infographic

Adjusted earnings climbed to $1.9 billion or $1.78 per share in the September quarter from $1.4 billion or $1.34 per share in the prior-year quarter, far exceeding Wall Street estimates. On an unadjusted basis, earnings of the New York-based credit card firm rose to $1.82 per share from $1.34 per share a year earlier.

Revenues increased 15% to $3.9 billion, surpassing the forecast.  The underlying revenue growth was driven mainly by double-digit growth in switched transactions, cross-border volumes and gross dollar volume. Overall, operations continued to benefit from investments in digital technology and the management’s initiatives to broaden the bank’s co-branding partner network. Meanwhile, rebates and incentives weighed down on the bottom-line performance.

The results benefitted from investments in digital technology and the management’s initiatives to broaden the co-branding partner network

“We had another very strong quarter, delivering solid top- and bottom-line growth. Our business wins and new partnerships, strengthened by our differentiated services offerings, are helping drive our global momentum,” said CEO Ajay Banga.

During the September quarter, Mastercard repurchased about 5.6 million shares for $1.2 billion and paid $260 million in dividends.

The payment industry, which remains largely unaffected by the tariff-induced trade disruptions and political uncertainties, witnessed hectic activity this year owing to the improving economic conditions and positive consumer sentiment – factors that brighten the prospects of credit card service providers.

Mastercard stock falls despite Q2 earnings beat

Last week, industry leader Visa (V) reported above-consensus profit and in-line revenues for its fourth quarter. Earnings jumped about 30% to $1.23 per share and revenues gained 12%. Amex (AXP) posted a 22% earnings growth for the most recent quarter when revenues rose 9% to around $10 billion.

Shares of Mastercard rose 2% after Tuesday’s earnings report, recovering from the loss suffered in the previous trading session. The stock has registered a 20% growth since the beginning of the year.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text

Categories: Earnings Finance
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