10-QPeriod: Q1 FY2011

Mastercard Inc Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 3, 2011For Securities:MA

Summary

Mastercard Inc. (MA) reported strong financial results for the first quarter ended March 31, 2011. Net income attributable to the company surged by 23.6% year-over-year to $562 million, translating to a diluted EPS of $4.29, up from $3.46 in the prior year. This performance was driven by a robust 14.8% increase in net revenues to $1.501 billion, largely fueled by higher transaction volumes and pricing adjustments. The company's balance sheet remains solid, with total assets of $8.502 billion and total equity of $5.202 billion. Liquidity is strong, evidenced by $2.954 billion in cash and cash equivalents. Mastercard also demonstrated a commitment to returning capital to shareholders, repurchasing $654 million worth of its common stock during the quarter and announcing an expanded $2 billion share repurchase program. The acquisition of Travelex's prepaid card program management operations (CPM) for approximately $481 million, completed in April 2011, is expected to expand Mastercard's offerings in the prepaid segment, particularly in markets outside the United States.

Financial Highlights

50 data points
Beta

Revenue

$1.50B

Net Income

$562.00M

37.4% Net Margin

EPS (Diluted)

$0.43

Total Assets

$8.50B

Cash & Equivalents

$2.95B

Free Cash Flow

$345.00M

Financial Statements
Beta
Revenue$1.50B
Operating Expenses$665.00M
Operating Income$836.00M
Interest Expense$10.00M
Net Income$562.00M
EPS (Basic)$0.43
EPS (Diluted)$0.43
Shares Outstanding (Basic)1.30B
Shares Outstanding (Diluted)1.31B

Key Highlights

  • 1Net income increased 23.6% to $562 million, or $4.29 per diluted share.
  • 2Net revenues grew 14.8% to $1.501 billion, driven by increased transaction volumes and pricing changes.
  • 3Gross Dollar Volume (GDV) on a U.S. dollar converted basis increased 15.2% year-over-year.
  • 4Operating expenses increased 9.4%, primarily due to higher general and administrative and advertising/marketing expenses.
  • 5The company repurchased $654 million of its Class A common stock in the first quarter of 2011.
  • 6Acquisition of Travelex's prepaid card program management operations (CPM) for approximately $481 million completed in April 2011.
  • 7Strong operating cash flow of $355 million for the quarter.

Frequently Asked Questions

Mastercard's revenue growth was primarily driven by an increase in the dollar volume of activity on cards carrying its brands (GDV), higher transaction volumes, and implemented pricing changes. Specifically, GDV increased by 15.2% on a U.S. dollar converted basis, and processed transactions grew by 11.1%.

Mastercard maintains a strong liquidity position with $2.954 billion in cash and cash equivalents as of March 31, 2011. The company also demonstrated its commitment to shareholder returns by repurchasing $654 million of its Class A common stock during the quarter and announced an expanded share repurchase program of $2 billion. Additionally, the company declared a quarterly cash dividend of $0.15 per share.

The acquisition of Travelex's prepaid card program management operations (CPM) for approximately $481 million, completed in April 2011, represents an expansion of Mastercard's business into program management services. This acquisition is intended to enable Mastercard to offer end-to-end prepaid card solutions, initially focusing on the travel sector and markets outside the United States.

Mastercard faces several significant legal and regulatory proceedings, including antitrust litigation related to interchange fees, currency conversion, and past business practices. The company is actively managing these matters, some of which involve substantial potential liabilities, but the ultimate outcomes are uncertain. The Dodd-Frank Act also introduced new regulatory considerations for the payments industry.