MasterCard beats estimates on profit and revenue in Q1
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MasterCard beats estimates on profit and revenue in Q1

MasterCard, the world’s second-largest payments network, reported quarterly earnings this week that beat analysts’ expectations on revenue and profit. The company said that its net income rose by 12.7% to $1.08 billion in the first quarter. On an adjusted basis, MasterCard earned $1.01 per share, easily beating analysts’ estimates of $0.95. Total revenue was up 11.8% against the year-ago quarter to $2.73 billion, beating estimates of $2.65 billion.

MasterCard’s share price is up by 14% so far this year

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SOURCE: Yahoo Finance

MasterCard’s success in the last quarter is underpinned by a recovering global economy, and particularly a stronger U.S. economy. As the latter has seen improvements in both the labour market and wage growth, consumers have been more active when it comes to spending on credit and debit cards.

However, the company is at once a beneficiary of the Ecommerce trend and at threat from other players in the space that are trying to disrupt the big payment providers’ business model. Digital payments services that are geared directly to smartphone browsing are forcing MasterCard – and bigger rival Visa – to improve its e-wallet offering, and spend more on marketing and advertising. In the first quarter, MasterCard said that it spent $170 million on these segments of the business – a 26% increase from the same quarter a year ago – to help with the rollout of its own digital wallet service, Masterpass.

MasterCard said that adjusted gross dollar volumes on its platforms rose by 8% to $1.18 trillion for the quarter, and cross-border volumes increased by 13% on a local currency basis.

Disclosure

Dominion holds MasterCard in its Global Trends Ecommerce Fund.


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