Cashless transaction giant Mastercard beat the Street on earnings this week, helping its share price to stay on a year-long trajectory that has it trading close to all-time highs. The company’s CEO, Ajay Banga, said that the strong June quarter was down to the development of Mastercard’s strategic plans, despite “ongoing trade negotiations and other economic and geopolitical factors” which were weighing down business sentiment around the world.
Mastercard’s share price has appreciated by 49% so far this year
Source: Yahoo Finance
Here’s the financial details: Mastercard met expectations on revenue. The Street had hoped to see a figure of $4.1 billion (a 15% increase against the year-ago quarter), and that’s exactly what the company returned. When it came to the bottom line, Mastercard did better. The company reported earnings of $1.89 per share (a 3.9% increase, year on year), beating out analysts’ expectations for earnings of $1.83 per share.
These figures are the result of a strong underlying business, which saw gross dollar volume rise by 13%, cross-border volumes increase 16% (on a local currency basis) and adjusted operating margin contract by 40 basis points. All of these figures are compared against the same quarter in the previous year.
On the company’s earnings call, CEO Ajay Banga summarised some of the quarter’s main wins, saying: “We continue to make good progress driving growth across our credit, debit, prepaid and commercial products, and we are expanding acceptance across both physical and digital channels. We expanded a number of important issuer relationships in the credit space, including National Commercial Bank, the largest bank in Saudi Arabia, where we secured full exclusivity across their credit, debit, prepaid and commercial business, along with flipping their credit portfolio.
“We also signed a new consumer and small business co-brand partnership in the US with Houzz, a rapidly growing online home remodeling marketplace. And we won a 10-year exclusive co-brand credit deal with Despegar, a leading online travel agency in Latin America in 5 new markets across the region, as with the many of our other co-brands, Despegar will integrate our loyalty program into their offering to deepen their customer engagement. In Germany, we have renewed our credit relationship with DZ Bank, the second largest retail banking group in the country and they represent hundreds of cooperative banks across the country and they will continue to issue Mastercard cards to their customers.”
Disclosure
Dominion holds Mastercard in its Global Trends Ecommerce Fund.
Author: Theo Leworthy
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