MasterCard (MA) Tops Q3 EPS Views

MasterCard (NYSE: MA) reported Q3 EPS of $0.89, $0.11 better than the analyst estimate of $0.78. Revenue for the quarter came in at $2.5 billion versus the consensus estimate of $2.45 billion.

Worldwide purchase volume during the quarter was up 11% on a local currency basis versus the third quarter of 2013, to $843 billion. As of September 30, 2014, the company’s customers had issued 2.1 billion MasterCard and Maestro-branded cards.

"We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment,” said Ajay Banga, president and CEO, MasterCard. “We also continue to invest and partner to make payments safer, easier and faster. Within the past two months alone, we opened our new technology hub in New York City, delivered our technology and security protocols as part of the launch of Apple Pay and partnered with the Transport for London to deliver contactless payments system-wide. Through our commitment to innovation, we are making it safer and simpler for people to pay and get paid – today and in the future.”

Total operating expenses increased 12%, both as-reported and adjusted for currency, to $1.1 billion, during the third quarter of 2014 compared to the same period in 2013. The increase was primarily driven by investments in strategic initiatives including acquisitions, which contributed 9 percentage points to the growth.

Operating income for the third quarter of 2014 increased 14% over the year-ago period, or 13% adjusted for currency, and the company delivered an operating margin of 56.7%.

MasterCard reported other expense of $2 million in the third quarter of 2014 versus other income of $6 million in the third quarter of 2013. The change was mainly driven by higher interest expense related to the company’s inaugural debt issuance in late March.

MasterCard's effective tax rate was 28.5% in the third quarter of 2014 versus a rate of 29.9% in the comparable period in 2013. The decrease was primarily due to the impact of higher discrete tax benefits recognized in this year’s quarter.

During the third quarter of 2014, MasterCard repurchased approximately 5.3 million shares of Class A common stock at a cost of $404 million. Quarter-to-date through October 23, the company repurchased an additional 1.7 million shares at a cost of $121 million, with $310 million remaining under the current repurchase program authorization.

For earnings history and earnings-related data on MasterCard (MA) click here.

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