Mastercard beats the Street on earnings and reiterates guidance
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Mastercard beats the Street on earnings and reiterates guidance

Payments titan Mastercard reported earnings this week, beating the Street’s prediction on the bottom line, and meeting it on the top. It was a three month-period typified by high spending on innovation, partnership, and marketing – but that spending paid off… and, according to CEO Ajay Banga, it will continue to do so. Unsurprisingly, the company’s share price climbed as a result of these strong results.

Mastercard’s share price has appreciated by 37% year to date

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Source: Yahoo Finance

The company said revenue for the quarter came in at $3.9 billion – a 13% rise, year on year, and in-line with consensus estimates. However, Mastercard was able to milk more profit out of this figure, delivering earnings of $1.80 per share. That’s a 24% increase against the year-ago quarter (adjusted for currency fluctuations and excluding special items), and an easy beat against analysts’ predictions for earnings of $1.60 per share.

A major spending point for Mastercard in the quarter was towards the acquisition of cross-border payments capabilities. This is a strategic play for the company, but one that didn’t outperform over the quarter for a number of reasons, including a strong dollar and trade issues. As a result, overseas spending on its networks rose by 13% - nothing to scoff at, perhaps, but still the slowest increase in at least two years of quarterly reports. In Mastercard’s favour, the company had previously warned investors that the macroeconomic realities at the start of 2019 would impact cross-border payments.

On an earnings call, Banga told analysts that the company was “off to a solid start this year” and said: “I think these results reflect our strong operational focus and our continued growth across each of our regions. And at the same time, we are continuing to invest in the business for the long term, as you probably noticed with some of our recent product and acquisition related announcements.”

Disclosure

Dominion holds Mastercard in its Global Trends Ecommerce Fund.


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