Earnings Review: Master Card Posts Another Strong Set Of Results
Master Card (NYSE: MA) posted an extremely strong set of third quarter results for the financial year 2016. The company reported an earnings per share (EPS) growth of 25.6% on a revenue growth of 13.8%. The company’s core performance continues to be extremely strong, in line with our expectations. The company posted strong growth across all business divisions, with transaction processing fees in the U.S. growing at 19% for the quarter. The only downside for the company was that client incentives and rebates grew faster than overall revenue growth at 20.2%. These trends are similar to what we witnessed in the previous quarters and in line with our expectations for the company. We’ve written about how increased spending on marketing and promotions will drive the company’s expense growth going forward and how the company can benefit from this trend.
As the table above shows, the company has become much more efficient with its spending, getting higher revenue growth per unit dollar spent compared to the same quarter in the previous fiscal year. This bodes well for the company as it aims to grow its transaction volumes both in the U.S. and internationally. Gross dollar volume (GDV) of processed transactions grew at 5% in the U.S. Cross border volumes grew at 12% on a local currency basis. The number of processed transactions grew at 18% globally,
Going forward, Master Card continues to be focused on expanding its network of co-branding partners and improving technology to compete in the rapidly growing online payments business segment. Recent deals with American Airlines, Bed, Bath & Beyond, PayPal in the U.S., Walmart in Canada and China, Axis Bank in India and Amadeus (an international travel company) will help the company on the first front. Thus, we expect the company to continue growing at a strong rate going forward.
Have more questions about MasterCard? See the links below:
- How Much Did MasterCard’s Revenue & Gross Profit Grow In The Last Five Years?
- How Much Can MasterCard’s Revenue Grow In The Next Five Years?
- What Is MasterCard’s Fundamental Value Based On Expected 2016 Results?
- How Has MasterCard’s Revenue Composition Changed In The Last Five Years?
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