10-KPeriod: FY2007

Mastercard Inc Annual Report, Year Ended Dec 31, 2007

Filed February 21, 2008For Securities:MA

Summary

Mastercard Inc. (MA) reported strong financial performance for the fiscal year ended December 31, 2007, with net income reaching $1.1 billion, or $8.00 per diluted share, a significant increase from $50.2 million in 2006. This growth was driven by a 22.3% increase in net revenue, primarily due to higher transaction volumes and pricing adjustments. The company's strategy to expand its role in higher-growth segments of the global payments industry, coupled with investments in customer relationships and brand enhancement, continues to yield positive results. Despite facing ongoing legal and regulatory challenges, particularly concerning interchange fees in various jurisdictions, and intense competition, Mastercard demonstrated resilience. The company maintained a strong liquidity position with $3.0 billion in cash, cash equivalents, and available-for-sale securities as of December 31, 2007. The report highlights the company's global reach and its ongoing efforts to adapt to a dynamic market, focusing on innovation in payment solutions like contactless technology and expanding its commercial payment offerings.

Financial Highlights

31 data points
Beta

Revenue

$4.07B

Net Income

$1.09B

26.7% Net Margin

EPS (Diluted)

$0.80

Cash & Equivalents

$1.66B

Free Cash Flow

$688.27M

Financial Statements
Beta
Revenue$4.07B
Operating Expenses$2.96B
Operating Income$1.11B
Interest Expense$57.28M
Net Income$1.09B
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)1.35B
Shares Outstanding (Diluted)1.35B

Key Highlights

  • 1Net income for 2007 was $1.1 billion, or $8.00 per diluted share, a substantial increase from $50.2 million in 2006.
  • 2Net revenue grew by 22.3% to $4.07 billion, driven by increased transaction volumes and pricing adjustments.
  • 3Gross Dollar Volume (GDV) on MasterCard-branded cards increased by 18.4% to $2.28 trillion in 2007.
  • 4Operating expenses decreased by 4.4% to $2.96 billion, partly due to a favorable foreign currency impact and reduced litigation settlement expenses.
  • 5The company ended 2007 with a strong liquidity position, holding $3.0 billion in cash, cash equivalents, and available-for-sale securities.
  • 6MasterCard is actively engaged in expanding its presence in key growth areas such as debit cards, commercial payments, and contactless payment solutions (MasterCard PayPass).

Frequently Asked Questions

Mastercard's revenue growth in 2007 was primarily driven by an increase in transaction volumes, which grew by 16.2% compared to 2006, and a 22.3% increase in net revenue. Pricing adjustments and growth in cross-border transactions also contributed to the revenue increase.

Mastercard faced significant legal and regulatory scrutiny, particularly concerning interchange fees in various jurisdictions, including decisions from the European Commission and investigations by the Office of Fair Trading in the UK. The company was also involved in several private litigations related to its past business practices and currency conversion methods, with potential for substantial damages or changes to business practices.

The company continued to invest in technology, including enhancing its debit processing capabilities and promoting contactless payment solutions like MasterCard PayPass. As of December 31, 2007, over 23 million PayPass cards/devices were issued globally, accepted at more than 95,000 merchant locations. The company also noted ongoing investments in its global processing systems.