10-QPeriod: Q1 FY2015

Mastercard Inc Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 29, 2015For Securities:MA

Summary

Mastercard Inc. (MA) reported a solid first quarter in 2015, with net income increasing by 17% year-over-year to $1.02 billion, or $0.89 per diluted share, up from $870 million, or $0.73 per diluted share, in the prior year. This growth was primarily driven by a 3% increase in net revenue to $2.23 billion and a significant improvement in the effective tax rate, which fell from 32.0% to 23.9%. The company's strategic focus on growing, diversifying, and building its business is yielding positive results, as evidenced by a 12% increase in processed transactions and a 12% increase in gross dollar volume (GDV) on a local currency basis. Despite a 5% negative impact from foreign currency translation on net revenue growth, driven by a strengthening U.S. dollar against the euro and Brazilian real, Mastercard demonstrated resilience. Operating expenses saw a modest 1% decrease, partly due to favorable foreign exchange impacts. The company also continued its strong commitment to capital returns, repurchasing $947 million in Class A common stock during the quarter and paying $184 million in dividends, underscoring its financial strength and confidence in future performance.

Financial Highlights

53 data points
Beta

Revenue

$2.23B

Net Income

$1.02B

45.7% Net Margin

EPS (Diluted)

$0.89

Total Assets

$14.63B

Cash & Equivalents

$4.21B

Free Cash Flow

$880.00M

Financial Statements
Beta
Revenue$2.23B
Operating Expenses$879.00M
Operating Income$1.35B
Interest Expense$17.00M
Net Income$1.02B
EPS (Basic)$0.89
EPS (Diluted)$0.89
Shares Outstanding (Basic)1.15B
Shares Outstanding (Diluted)1.15B

Key Highlights

  • 1Net income rose 17% to $1.02 billion, with diluted EPS increasing to $0.89 from $0.73 year-over-year.
  • 2Net revenue grew 3% to $2.23 billion, despite a 5% negative impact from foreign currency translation.
  • 3Processed transactions increased by 12%, and Gross Dollar Volume (GDV) grew by 12% on a local currency basis.
  • 4Operating expenses decreased by 1%, benefiting from foreign exchange gains and lower general and administrative costs.
  • 5The effective income tax rate improved significantly, decreasing from 32.0% to 23.9%.
  • 6Mastercard repurchased $947 million of its Class A common stock and paid $184 million in dividends during the quarter, demonstrating a commitment to shareholder returns.
  • 7The company ended the quarter with a strong cash position, including $4.2 billion in cash and cash equivalents, and a substantial remaining share repurchase authorization of $3.08 billion.

Frequently Asked Questions

Mastercard's net revenue increased by 3% to $2.23 billion in the first quarter of 2015, compared to $2.17 billion in the same period of 2014. This growth was primarily driven by increases across its revenue categories, partially offset by higher rebates and incentives and the negative impact of foreign currency translation.

The primary driver of the 17% increase in net income to $1.02 billion was higher net revenue and a significantly improved effective tax rate, which decreased from 32.0% in Q1 2014 to 23.9% in Q1 2015. This was partially offset by the negative impact of foreign currency translation and acquisitions.

The strengthening U.S. dollar against the euro and Brazilian real had a negative impact on Mastercard's results. For the first quarter of 2015, foreign currency translation negatively impacted net revenue growth by 5 percentage points and net income growth by 7 percentage points. However, operating expenses were favorably impacted by 4 percentage points due to foreign currency translation.

Mastercard is actively returning capital to shareholders. In the first quarter of 2015, the company repurchased approximately $947 million of its Class A common stock and paid $184 million in dividends. It also maintains a strong cash position, with $4.2 billion in cash and cash equivalents as of March 31, 2015.