Mastercard Inc. (MA)Â reported better-than-expected third-quarter results that topped Wall Street estimates on both the top and bottom lines.
All three major payment processing companies in the U.S. - Visa (V, Financial), PayPal (PYPL, Financial) and Mastercard - have now reported solid growth numbers for the third quarter, while also beating market estimates.
President and CEO Ajay Banga commented on Mastercard's performance:
“We are executing well on our strategy and are pleased to deliver another quarter of record results. These results reflect a continued momentum in strengthening and extending relationships with our partners and customers. As the world becomes more connected, we remain very focused on security. Our investments in technologies like biometrics, tokens, encryption and artificial intelligence are redefining the way both consumers and transactions are protected.”
Mastercard posted earnings per share of $1.34 on the back of $3.4 billion in revenue, beating EPS expectations of $1.23 and revenue estimates of $3.28 billion.
The company reported a gross volume increase of 10% and a cross-border volume increase of 15% from the prior-year quarter. Net revenue increased 17%, which includes a 2.5% benefit from acquisitions. Operating income expanded 16% while total operating expenses shot up 20%, with an 8% impact from acquisitions.
Mastercard repurchased approximately 6.4 million shares for $838 million during the third quarter and paid $235 million in dividends. The company still has $2 billion left under its share buyback program.
Visa, PayPal and MasterCard have all been experiencing strong surges in cross-border volume, each reporting double-digit increases in the most recent quarter. The increase in internet penetration and global trading, as well as higher consumer spending and better technological solutions, have helped expand global payments volumes. The market seems to have enough space to offer growth to all three companies over the short to medium term.
Mastercard’s net revenue has grown from $8 billion in the first nine months of last year to $9.2 billion this year. The 15% growth in the first nine months of the current year is much better than the 7% growth Mastercard reported in fiscal 2016. The stock price has shot up nearly 44% over the past 12 months, and the surge is likely to continue as long as Mastercard records double-digit volume expansion.
Disclosure: I have no positions in the stocks mentioned above and have no intentions of initiating a position in the next 72 hours.
