10-QPeriod: Q3 FY2011

Mastercard Inc Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 2, 2011For Securities:MA

Summary

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 $14.66. This growth was driven by a substantial 21.6% 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.

Financial Highlights

50 data points
Beta

Revenue

$1.82B

Net Income

$717.00M

39.4% Net Margin

EPS (Diluted)

$0.56

Total Assets

$9.67B

Cash & Equivalents

$3.75B

Free Cash Flow

$991.00M

Financial Statements
Beta
Revenue$1.82B
Operating Expenses$816.00M
Operating Income$1.00B
Interest Expense$6.00M
Net Income$717.00M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)1.27B
Shares Outstanding (Diluted)1.27B

Key Highlights

  • 1Net income for the nine months ended September 30, 2011, increased by 31.9% to $1,887 million compared to the same period in 2010.
  • 2Net 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.
  • 3Diluted 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.
  • 4The company successfully acquired Access Prepaid Worldwide on April 15, 2011, expanding its presence in program management services for prepaid cards.
  • 5Operating 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.
  • 6Mastercard generated $1,900 million in net cash from operating activities for the nine months ended September 30, 2011, indicating strong operational cash generation.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.