01—Abstract
Summary
Summary of the 10-Q filed August 3, 2011. Cited figures are marked; the original filing is the authoritative source.
Mastercard Inc. reported strong financial performance for the second quarter and the first half of 2011.
Net revenues saw a significant increase of 22.1%a and 18.5% respectively, driven by higher transaction volumes and pricing changes. The company also benefited from favorable foreign currency movements, particularly against the Euro and Brazilian Real. This robust revenue growth translated into substantial net income increases of 32.8% for the quarter and 28.2% for the first half of the year, leading to improved earnings per share.
Operationally, Mastercard successfully integrated the acquisition of Access Prepaid Worldwide, contributing to revenue growth. The company continued its aggressive share repurchase program, demonstrating confidence in its financial position and commitment to returning value to shareholders. Despite ongoing legal and regulatory scrutiny, particularly concerning interchange fees globally, Mastercard's core business demonstrated resilience and strong execution, positioning it well for continued growth in the evolving payments landscape.
02—Key points
Key Highlights
- Net revenues increased by 22.1% year-over-year for the three months ended June 30, 2011, reaching $1.67 billion.
- Net income attributable to MasterCard for the second quarter of 2011 was $608 million, a 32.8% increase from the prior year.
- Diluted Earnings Per Share (EPS) for the quarter was $4.76, up 36.4% compared to $3.49 in the second quarter of 2010.
- Acquisition of Access Prepaid Worldwide, completed on April 15, 2011, contributed to revenue growth and expanded service offerings.
- MasterCard repurchased approximately 4.1 million shares of Class A common stock for $1 billion during the first six months of 2011, demonstrating a strong commitment to share buybacks.
- Gross Dollar Volume (GDV) increased by 23.6% on a U.S. dollar converted basis for the quarter, indicating strong underlying transaction growth.
- Operating income margin remained robust at 53.1% for the quarter, reflecting efficient operations despite increased operating expenses.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed August 3, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $1.67B$1.36B | +22.1% |
| Operating Expenses | $782.00M$648.00M | +20.7% |
| Operating Income | $885.00M$717.00M | +23.4% |
| Interest Expense | $2.00M$17.00M | −88.2% |
| Net Income | $608.00M$458.00M | +32.8% |
| EPS (Basic) | $0.48$0.35 | +36.3% |
| EPS (Diluted) | $0.48$0.35 | +36.4% |
| Shares Outstanding (Basic) | 1.27B1.31B | −3.1% |
| Shares Outstanding (Diluted) | 1.28B1.31B | −2.3% |
05—Questions
Frequently Asked Questions
How did the acquisition of Access Prepaid Worldwide impact the company's financial performance?
The acquisition of Access Prepaid Worldwide, completed on April 15, 2011, contributed to revenue growth. Recent acquisitions, including Access, added approximately 3 and 2 percentage points to net revenue growth for the three and six months ended June 30, 2011, respectively. Operating expenses also saw an increase attributed to these acquisitions, contributing approximately 7 and 5 percentage points to the rise in operating expenses for the same periods.
What is the company's stance on its share repurchase program?
MasterCard has an active share repurchase program. In April 2011, the Board of Directors authorized an additional $1 billion for repurchases, bringing the total authorization to $2 billion. During the first six months of 2011, the company repurchased approximately 4.1 million shares for $1 billion. This demonstrates a strong commitment to returning capital to shareholders and confidence in the company's financial health.
What are the key drivers behind the revenue growth in this quarter?
Revenue growth was primarily driven by an increase in the dollar volume of activity on cards carrying MasterCard's brands and a higher number of processed transactions. Specifically, processed transactions increased by 17.4% for the quarter, and Gross Dollar Volume (GDV) increased by 23.6% on a U.S. dollar converted basis. Pricing changes and favorable foreign currency impacts also contributed to the revenue growth.
How is the company managing its legal and regulatory risks, particularly concerning interchange fees?
MasterCard faces ongoing legal and regulatory scrutiny globally, especially regarding interchange fees and antitrust matters. The company is actively engaged in these proceedings, and while many matters are uncertain, management believes it has strong defenses. Note 19 provides extensive detail on these legal and regulatory proceedings. Despite these challenges, the company's core business operations and financial performance remain strong.
06—Continue