MasterCard Incorporated
today announced financial results for the second quarter 2010. The company
reported net income of $458 million, or $3.49 per diluted share.
Net
revenue for the second quarter of 2010 was $1.4 billion, a 6.7% increase versus
the same period in 2009. On a constant currency basis, net revenue increased
7.9% compared to the same period in 2009.
The
higher net revenue this quarter was driven by:
- An increase in cross-border
volumes of 15.2%;
- Growth in MasterCard’s gross
dollar volume, which increased 8.5% on a local currency basis, to $656
billion; and
- The net impact of pricing
changes of approximately 4 percentage points, including the effect of
cross-border rebates.
These
factors were partially offset by additional rebates and incentives primarily
due to new and renewed customer agreements.
Worldwide
purchase volume during the quarter was up 7.9% on a local currency basis
versus
the second quarter of 2009, to $493 billion. The number of processed
transactions
increased
0.1% compared to the same period in 2009, to 5.6 billion. As of June 30, 2010,
the
company’s financial-institution customers had issued 1.6 billion MasterCard and
Maestro-branded
cards.
“We
are pleased with our performance in the second quarter,” said Ajay Banga,
MasterCard president and chief executive officer. “Solid GDV growth,
particularly in markets outside the U.S., continued momentum in
worldwide cross-border volumes, and thoughtful expense management all
contributed to good financial results this quarter.”
Banga
commented, “No matter where you are in the world, people seek fast, secure, and
efficient payment experiences, and MasterCard is delivering payment innovations
that will make life easier for all. For example, in Latin
America, we reached an agreement for a cobrand deal with
Telefonica, which will target Telefonica's mobile subscribers across 11
markets. We launched MasterCard MoneySend with the Bank of China, marking the
19th country where our person-to-person money transfer program is
enabled. In the U.S.,
we worked closely with the MTA, PATH and NJ TRANSIT to expand our contactless
PayPass pilot that will ultimately make commuting faster and easier for
everyone involved.” Banga concluded, “As a result of programs such as these,
MasterCard remains well positioned for long-term growth.”
Total
operating expenses decreased 10.4%, to $648 million, during the second quarter
of 2010 compared to the same period in 2009. Excluding currency fluctuations,
operating expenses were down 9.7%. The decrease in total operating expenses was
driven by a 14.5% decrease in general and administrative expenses, or 13.8% on
a constant currency basis. This decrease was primarily due to lower personnel
expense driven by decreased severance and compensation versus the year-ago
quarter as a result of workforce reductions in 2009.
Depreciation
and amortization decreased $1 million, or 3.8%, in the second quarter versus
the same period a year ago. Advertising and marketing expenses were essentially
flat, down 0.3%, in the second quarter of 2010 versus the second quarter of
2009. Excluding currency fluctuations, advertising and marketing expenses
increased 0.2%.
Operating
margin was 52.6% for the second quarter of 2010, up 9.1 percentage points over
the year-ago period.
Total
other expense was $4 million in the second quarter of 2010 versus $21 million
in the second quarter of 2009. The decrease was driven by lower interest
expense primarily due to a reduction in interest accretion on litigation
settlements.
MasterCard's
effective tax rate was 35.7% in the second quarter of 2010, versus a rate of
35.0% in the comparable period in 2009. The increase was due primarily to
discrete adjustments in the second quarter of 2010.
Year-to-Date 2010 Results
For
the six months ended June 30, 2010, MasterCard reported net income of $913
million, or $6.95 per diluted share.
Net
revenue for the six months ended June 30, 2010 was $2.7 billion, an increase of
9.7% versus the same period in 2009. On a constant currency basis, net revenue
increased 9.0%. Cross-border volume growth of 13.1%, gross dollar volume growth
of 8.4%, and the net impact of pricing changes of approximately 5 percentage
points, including the effect of cross-border rebates, contributed to the net
revenue growth in the year-to-date period. These factors were partially offset
by additional rebates and incentives primarily due to new and renewed customer
agreements.
Total
operating expenses decreased 4.7%, to $1.3 billion, for the six-month period
compared to the same period in 2009. Excluding currency fluctuations, total
operating expenses decreased 5.1% for the first half of the year versus the
first half of 2009.
Operating
margin was 53.0% for the six months ending June 30, 2010, up 7.1 percentage
points over the year-ago period.
Total
other expense was $9 million for the six-month period versus $32 million for
the same period in 2009. The decrease was primarily due to a decrease in
interest accretion on litigation settlements.
MasterCard’s
effective tax rate was 35.1% in the six months ended June 30, 2010, versus a
rate of 34.1% in the comparable period in 2009. The increase in the effective
tax rate was primarily due to the impact of discrete adjustments in each of the
six-month periods ended June 30, 2009 and June 30, 2010.
MasterCard
