Mastercard reported third-quarter net revenue of $9.807 billion, up 14% from a year earlier on both a reported and a currency-neutral basis, and adjusted diluted earnings per share rose 21% to $5.31. Reported net income rose 18% and diluted earnings per share rose 22% to $5.28, according to the results release.
Revenue came in above the $9.67 billion expected in S&P analysts' consensus estimates. Adjusted net income rose 17% to $4.653 billion and adjusted operating income rose 15% to $5.935 billion, for an adjusted operating margin of 60.5%. A market commentary on the results said the business mix kept Mastercard above consensus on both lines for a sixth straight quarter.
VISA'S QUARTER
The results follow those of Visa, which reported its fiscal fourth quarter on 27 October. Visa's net revenue in that quarter rose 13% to $12.1 billion, driven by growth in payments volume, cross-border volume and processed transactions, taking its full-year net revenue to $45.9 billion, up 15%.
Visa said its payments volume for the three months to 30 September grew 9% on a constant-dollar basis and total cross-border volume rose 14%. Its client incentives rose 21% to $5.1 billion.
VOLUMES AND SERVICES
Mastercard's gross dollar volume rose 7% in local currency, while switched transactions increased 11% to 49.3 billion, according to a summary of the results.
Value-added services revenue grew 19%, outpacing the core payment network and absorbing an 18% jump in customer rebates and incentives, the market commentary said.
BELOW THE OPERATING LINE
Reported net income rose 18%, against 16% for operating income, while the effective tax rate fell to 19.4% from 21.5%. Year to date, net revenue rose 15%, or 13% on a currency-neutral basis, and net income rose 18%. The year-to-date operating margin was 59.5%, against 58.3% a year earlier.
Mastercard repurchased 5.3 million shares for $3 billion and paid $763 million in dividends during the quarter, with another $4.9 billion remaining under its share repurchase authorisation.
THE TGB VIEW
Set against Visa's fiscal fourth quarter, Mastercard grew net revenue slightly faster, 14% against 13%, on a smaller base of $9.807 billion against $12.1 billion. Incentives grew faster than revenue at both networks: Mastercard's customer rebates and incentives rose 18% and Visa's client incentives 21%. At Mastercard, value-added services revenue, up 19%, absorbed that rise, according to a market commentary, and the operating margin still widened to 59.8% from 58.8%.
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