MasterCard Incorporated Reports Second-Quarter 2015 Financial Results
Net revenue for the second quarter of 2015 was $2.4 billion, a 1% increase versus the same period in 2014. Adjusted for currency, net revenue increased 7%. Net revenue growth was driven by the impact of the following:
- An increase in cross-border volumes of 17%;
- A 13% increase in gross dollar volume, on a local currency basis, to $1.1 trillion; and
- An increase in processed transactions of 13%, to 12.0 billion.
These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes. Acquisitions contributed 2 percentage points to total net revenue growth.
Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the second quarter of 2014, to $841 billion. As of June 30, 2015, the company’s customers had issued 2.2 billion MasterCard and Maestro-branded cards.
“Our business continues to perform well with good transaction and volume growth, particularly in cross-border, despite the mixed global economic environment and foreign exchange headwinds,” said Ajay Banga, president and CEO, MasterCard. “We are executing on our strategy to grow our business by focusing on winning new deals in our core payments business, while building out our data analytics, processing and safety applications. A blend of acquisitions and organic investments in these spaces remain at the foundation of our strategy.”
Excluding the special item, total operating expenses increased 9%, or increased 14% when adjusted for currency, to $1.1 billion during the second quarter of 2015 compared to the same period in 2014. Acquisitions contributed 10 percentage points of the FX-adjusted growth, with the remainder primarily due to higher data processing and advertising & marketing expenses. Including the special item, total operating expenses increased 15%, or 21% when adjusted for currency, from the year-ago period.
Operating income for the second quarter of 2015 decreased 5%, or increased 2% adjusted for currency, versus the year-ago period, excluding the special item. The company delivered an operating margin of 54.9%.
MasterCard reported other expense of $10 million in the second quarter of 2015, unchanged from the second quarter of 2014.
MasterCard’s effective tax rate was 25.8% in the second quarter of 2015, versus a rate of 32.2% in the comparable period in 2014, excluding the special item. The decrease was primarily due to a larger repatriation benefit, the recognition of a discrete U.S. foreign tax credit benefit and a more favorable mix of taxable earnings.
During the second quarter of 2015, MasterCard repurchased approximately 9 million shares of Class A common stock at a cost of approximately $849 million. Quarter-to-date through July 22nd, the company repurchased an additional 1.9 million shares at a cost of approximately $182 million, with $2.0 billion remaining under the current repurchase program authorization.
Year-to-Date 2015 Results
For the six months ended June 30, 2015, excluding the special item, MasterCard reported net income of $2.0 billion, an increase of 10%, or 18% after adjusting for currency, and earnings per diluted share of $1.73, up 13%, or 21% adjusting for currency versus the year-ago period. Including the special item, net income was $1.9 billion and earnings per diluted share was $1.69. Acquisitions had a $0.06 dilutive impact on earnings per diluted share.
Net revenue for the first half of 2015 was $4.6 billion, an increase of 2%, or 8% after adjusting for currency, versus the same period in 2014. Gross dollar volume growth of 12%, transaction processing growth of 13% and cross-border volume growth of 18% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives. Acquisitions contributed 2 percentage points to total net revenue growth.
Excluding the special item, total operating expenses increased 4%, or 9% after adjusting for currency, to $2.0 billion, for the first half of 2015, compared to the same period in 2014. The increase was entirely due to the impact of acquisitions. Including the special item, total operating expenses increased 8%, or 12% after adjusting for currency.
Excluding the special item, operating income of $2.7 billion was essentially unchanged versus the first half of 2014 or increased 7% adjusted for currency, resulting in an operating margin of 57.7%.
MasterCard’s effective tax rate was 24.9% for the first half of 2015 versus a rate of 32.1% in the same period in 2014, excluding the special item. The decrease was primarily due to the recognition of a discrete U.S. foreign tax credit benefit, a larger repatriation benefit and a more favorable mix of taxable earnings.
Second-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its second-quarter financial results.
The dial-in information for this call is 866-393-4306 (within the U.S.) and 734-385-2616 (outside the U.S.), and the passcode is 66650115. A replay of the call will be available for 30 days and can be accessed by dialing 855-859-2056 (within the U.S.) and 404-537-3406 (outside the U.S.), and using passcode 66650115.
This call can also be accessed through the Investor Relations section of the company’s website at www.mastercard.com/investor.
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