01—Abstract
Summary
Summary of the 10-Q filed October 29, 2015. Cited figures are marked; the original filing is the authoritative source.
Mastercard Inc. reported its financial results for the nine months ended September 30, 2015.
While net revenue saw a modest increase of 2% year-over-year, reaching $7.15 billiona, the company's net income for the period was $2.92 billion, a 4% increase compared to the same period in 2014. This growth was driven by higher transaction volumes and an improved effective tax rate. However, operating expenses also increased by 8% due to acquisition activity and higher data processing costs, partially offset by favorable foreign currency translation.
Key financial developments include a significant increase in goodwill on the balance sheet due to acquisitions, a decrease in cash and cash equivalents, and substantial share repurchases totaling $2.7 billionb in the nine-month period. The company also continues to navigate several ongoing legal and regulatory proceedings, particularly related to interchange fees and merchant practices, which have provisions set aside. Investors should note the impact of foreign currency fluctuations, which negatively affected net revenue growth.
02—Key points
Key Highlights
- Net revenue increased by 2% to $7.15 billion for the nine months ended September 30, 2015.
- Net income rose by 4% to $2.92 billion for the nine months ended September 30, 2015, with diluted EPS at $2.56.
- Operating expenses increased by 8% to $3.18 billion, primarily driven by acquisitions and data processing costs.
- Mastercard repurchased approximately $2.7 billion of its Class A common stock during the nine months ended September 30, 2015.
- Goodwill increased significantly from $1.52 billion at the end of 2014 to $1.91 billion as of September 30, 2015, reflecting recent acquisitions.
- Cash and cash equivalents decreased from $5.14 billion at the end of 2014 to $3.88 billion as of September 30, 2015.
- The company has provisions for ongoing litigation, with $711 million set aside for U.S. merchant litigations as of September 30, 2015.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed October 29, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $2.53B$2.49B | +1.6% |
| Operating Expenses | $1.16B$1.07B | +8.5% |
| Operating Income | $1.37B$1.42B | −3.6% |
| Interest Expense | $15.00M$11.00M | +36.4% |
| Net Income | $977.00M$1.01B | −3.7% |
| EPS (Basic) | $0.86$0.88 | −2.3% |
| EPS (Diluted) | $0.86$0.87 | −1.1% |
| Shares Outstanding (Basic) | 1.13B1.16B | −2.3% |
| Shares Outstanding (Diluted) | 1.13B1.16B | −2.3% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of Mastercard for the nine months ended September 30, 2015?
Mastercard reported a 2% increase in net revenue to $7.15 billion and a 4% increase in net income to $2.92 billion for the nine months ended September 30, 2015. Diluted earnings per share were $2.56. While revenue grew modestly, operating expenses increased by 8%, primarily due to acquisitions and higher data processing costs.
How did acquisitions impact the company's financial statements?
Acquisitions played a significant role, contributing to a substantial increase in goodwill on the balance sheet from $1.52 billion to $1.91 billion. They also increased operating expenses, particularly general and administrative costs, and positively contributed to net revenue growth.
What is the company's stance on returning capital to shareholders?
Mastercard continued its share repurchase program, buying back approximately $2.7 billion of its Class A common stock during the first nine months of 2015. The company also paid quarterly cash dividends, totaling $548 million in the same period.
Are there any significant legal or regulatory issues affecting Mastercard?
Yes, Mastercard is involved in several ongoing legal and regulatory proceedings, notably U.S. merchant class litigation and European interchange fee investigations. The company has accrued $711 million for U.S. merchant litigations as of September 30, 2015. These proceedings pose potential risks to the company's operations and financial results.
06—Continue