01—Abstract
Summary
Summary of the 10-Q filed November 2, 2011. Cited figures are marked; the original filing is the authoritative source.
Mastercard Inc. reported strong financial performance for the nine months ended September 30, 2011, with net income increasing by 31.9% year-over-year to $1,887 million and diluted earnings per share rising to $14.66a.
This growth was driven by a substantial 21.6%b increase in net revenues, primarily fueled by higher transaction volumes and dollar spending on cards bearing its brands. The company also successfully integrated the acquisition of Access Prepaid Worldwide, expanding its prepaid card program management capabilities. Despite a challenging global economic environment, Mastercard demonstrated resilience and strategic expansion.
Key financial highlights include robust revenue growth across domestic assessments, cross-border volume fees, and transaction processing fees. The company maintained healthy operating margins and generated significant cash flow from operations, underscoring its financial strength. Management expressed confidence in its liquidity and capital resources to meet future obligations, including potential litigation outcomes, while actively returning capital to shareholders through share repurchases and dividends.
02—Key points
Key Highlights
- Net income for the nine months ended September 30, 2011, increased by 31.9% to $1,887 million compared to the same period in 2010.
- Net revenues grew by 21.6% to $4,986 million for the nine months ended September 30, 2011, driven by increased transaction volumes and dollar spending.
- Diluted earnings per share rose significantly to $14.66 for the nine months ended September 30, 2011, up from $10.89 in the prior year period.
- The company successfully acquired Access Prepaid Worldwide on April 15, 2011, expanding its presence in program management services for prepaid cards.
- Operating expenses increased by 18.0% to $2,263 million for the nine months ended September 30, 2011, largely due to increased general and administrative expenses, including acquisition-related costs.
- Mastercard generated $1,900 million in net cash from operating activities for the nine months ended September 30, 2011, indicating strong operational cash generation.
- The company's Board of Directors authorized an incremental $1 billion share repurchase program, increasing the total authorization to $2 billion, with $1.1 billion repurchased year-to-date as of September 30, 2011.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed November 2, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $1.82B$1.43B | +27.3% |
| Operating Expenses | $816.00M$662.00M | +23.3% |
| Operating Income | $1.00B$766.00M | +30.8% |
| Interest Expense | $6.00M$11.00M | −45.5% |
| Net Income | $717.00M$518.00M | +38.4% |
| EPS (Basic) | $0.57$0.40 | +42.7% |
| EPS (Diluted) | $0.56$0.39 | +42.9% |
| Shares Outstanding (Basic) | 1.27B1.31B | −3.1% |
| Shares Outstanding (Diluted) | 1.27B1.31B | −3.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Mastercard's revenue growth in the nine months ended September 30, 2011?
Mastercard's revenue growth was primarily driven by an increase in the dollar volume of activity on cards carrying its brands and a higher number of processed transactions. This was supported by growth in domestic assessments, cross-border volume fees, and transaction processing fees.
How did the acquisition of Access Prepaid Worldwide impact Mastercard's financial results?
The acquisition of Access Prepaid Worldwide, completed on April 15, 2011, contributed to revenue growth and increased operating expenses, particularly in general and administrative costs, due to integration and personnel expenses. It expanded Mastercard's offerings in prepaid card program management.
What is the status of Mastercard's share repurchase program?
Mastercard's Board of Directors authorized a total share repurchase program of $2 billion. As of September 30, 2011, the company had repurchased approximately 4.3 million shares for $1.1 billion during the nine months ended that date. The company indicated that the timing and amount of future repurchases would depend on market conditions and other factors.
What are the significant legal and regulatory risks facing Mastercard?
Mastercard faces ongoing legal and regulatory scrutiny globally, particularly concerning interchange fees, antitrust litigation, and compliance with new regulations like the Dodd-Frank Act in the U.S. While the company believes it has strong defenses, adverse outcomes in these proceedings could materially impact its results of operations, financial condition, or cash flows. The filing details numerous ongoing legal and regulatory matters across various jurisdictions.
06—Continue