01—Abstract
Summary
Summary of the 10-Q filed October 31, 2012. Cited figures are marked; the original filing is the authoritative source.
MasterCard Inc. reported solid financial performance for the nine months ended September 30, 2012, demonstrating continued revenue growth and strong profitability.
Net revenues increased by 10% year-over-year to $5.5 billiona, driven by a 16% increase in local currency gross dollar volume and a 27% rise in processed transactions. This top-line growth translated into a 14% increase in net income attributable to MasterCard, reaching $2.15 billion for the period, with diluted earnings per share rising to $17.07. The company maintained healthy operating margins, reflecting efficient cost management, although general and administrative expenses saw an increase due to personnel and strategic initiatives.
MasterCard also continued its capital return strategy, actively repurchasing shares under a new $1.5 billionb program and increasing its quarterly dividend. The company maintains a strong liquidity position with over $5.6 billion in cash and cash equivalents and current available-for-sale securities.
02—Key points
Key Highlights
- Net revenues increased by 10% year-over-year to $5.496 billion for the nine months ended September 30, 2012.
- Net income attributable to MasterCard grew by 14% to $2.154 billion for the nine months ended September 30, 2012.
- Diluted earnings per share increased by 16% to $17.07 for the nine months ended September 30, 2012.
- Gross Dollar Volume (GDV) increased by 11% on a U.S. dollar converted basis, and processed transactions rose by 27% year-over-year for the nine months ended September 30, 2012.
- Operating income grew by 12% to $3.038 billion for the nine months ended September 30, 2012.
- MasterCard repurchased approximately 2.8 million shares for $1.1 billion during the nine months ended September 30, 2012, under its share repurchase programs.
- The company declared an increased quarterly cash dividend of $0.30 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed October 31, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $1.92B$1.82B | +5.5% |
| Operating Expenses | $854.00M$816.00M | +4.7% |
| Operating Income | $1.06B$1.00B | +6.2% |
| Interest Expense | $4.00M$6.00M | −33.3% |
| Net Income | $772.00M$717.00M | +7.7% |
| EPS (Basic) | $0.62$0.57 | +9.7% |
| EPS (Diluted) | $0.62$0.56 | +10.1% |
| Shares Outstanding (Basic) | 1.25B1.27B | −1.8% |
| Shares Outstanding (Diluted) | 1.25B1.27B | −1.5% |
05—Questions
Frequently Asked Questions
How did MasterCard's revenue perform in the third quarter and year-to-date periods?
For the three months ended September 30, 2012, net revenues increased by 5% to $1.918 billion compared to the same period in 2011. For the nine months ended September 30, 2012, net revenues increased by 10% to $5.496 billion compared to the same period in 2011. This growth was primarily driven by increased dollar volume of activity on cards and a higher number of processed transactions.
What is the company's stance on litigation and potential liabilities?
MasterCard has accrued a total of $790 million pre-tax for the settlement of U.S. merchant litigations, with $770 million recorded in Q4 2011 and an additional $20 million in Q2 2012. The company is also involved in other legal and regulatory proceedings globally, the outcomes of which are uncertain and could potentially have a material adverse effect, though MasterCard believes it has strong defenses.
How is the company managing its liquidity and returning capital to shareholders?
MasterCard maintains a strong liquidity position with $3.045 billion in cash and cash equivalents and $2.594 billion in investment securities available-for-sale as of September 30, 2012. The company actively returned capital through share repurchases, having bought back approximately 2.8 million shares for $1.1 billion in the first nine months of 2012 under new and prior programs. Additionally, the quarterly cash dividend was increased to $0.30 per share.
What was the impact of foreign currency fluctuations on MasterCard's results?
The strengthening of the U.S. dollar against the euro and Brazilian real negatively impacted reported results. For the nine months ended September 30, 2012, foreign currency translation reduced net revenues by approximately 4 percentage points and operating expenses by approximately 2 percentage points. This effect is also reflected in Gross Dollar Volume (GDV) growth, where local currency growth outpaced U.S. dollar converted growth.
06—Continue