MasterCard misses earnings estimates as volume sinks

Swiper, no swiping!

MasterCard’s quarterly revenue missed Wall Street estimates as worldwide purchase volume growth slowed to its lowest level in five quarters, sending the credit and debit card network’s shares down. Net income rose 15.1% to $700 million, or $5.55 per share, from $608 million, or $4.76 per share, a year earlier.

The card network also took a pre-tax charge of $20 million, related to its share of the settlement in the ‘swipe fee’ lawsuit. Excluding the charge, the company earned $5.65 per share.

Analysts on average had expected a profit of $5.58 per share. Revenue increased 9% to $1.82 billion, slightly missing expectations of $1.87 billion. The weaker-than-expected revenue was driven by an increase in rebate and incentive payments, which are paid to banks and merchants. The rebates grew 24% to $661 million.

MasterCard attributed the increase to new and renewed agreements and larger payments volumes. Cardholders made $661 billion of purchases worldwide, on a local currency basis, during the second quarter, up 13%. Worldwide purchase volume has grown at more than 15% for the last four quarter.

Outside the U.S., where MasterCard generates half its revenue, card payments grew 18.6%, in local currencies, compared to a 8.7% growth in its home market. The network has reported double-digit growth in U.S. card payments over the last year. In comparison, card rival American Express (AXP) indicated slowing spending growth when it reported results last month.

Mastercard (MA : NYSE : US$427.20), Net Change: -9.37, % Change: -2.15%, Volume: 2,171,183

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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