MasterCard (MC) posted a stunning 9% year-on-year (Y/Y) profit growth to $931 million. MC continues to outpace Visa returns on a number of fronts.
Worldwide payments volume growth, on a constant dollar basis, for the three months ended June 30th, rose 12.9% over the prior year at $1.124 trillion.
In the U.S. gross dollar volume (GDV) rose 9.2% to $339 billion, compared to $319 billion in the prior quarter, and $310 billion in the year ago quarter. U.S. purchase dollar volume (PDV) increased by 10.1% at $289 billion in Q2/14, compared to $263 billion in Q2/13 and $268 billion in Q1/14.
In the U.S. credit card segment purchase dollar volume (PDV) rose 10.3% to $155 billion, compared to $138 billion in the prior quarter, and $141 billion in the year ago quarter.
In the U.S. debit card segment purchase dollar volume (PDV) rose 9.8% to $134 billion, compared to $130 billion in the prior quarter, and $119 billion in the year ago quarter.
MasterCard notes worldwide purchase volume during the second quarter was up 13% on a local currency basis versus the second quarter of 2013, to $821 billion. As of June 30th the company’s customers had issued 2 billion MasterCard and Maestro-branded cards.
. Total operating expenses increased 15%, or 14% after adjusting for currency, to $994 million, during the second quarter of 2014 compared to the same period in 2013. Excluding the impact of acquisitions, total operating expenses increased 12%, or 11% after adjusting for currency. The increase was primarily driven by higher investments in people to support strategic initiatives.
Operating income for the second quarter of 2014 increased 13% over the year-ago period and the company delivered an operating margin of 58.2%.
MasterCard reported other expense of $10 million in the second quarter of 2014 versus other income of $5 million in the second quarter of 2013. The change was mainly driven by higher interest expense related to the company’s inaugural debt issuance in late March.
RAM Research projects MasterCard quarterly profits to top $1 trillion by the end of the year.
RESOURCES:
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NOTES:
MasterCard gross dollar volume (GDV), purchase volume, cash volume and the number of purchase transactions, cash transactions, accounts and cards on a regional and global basis for MasterCard®-branded and MasterCard Electronic-branded cards. Growth rates over prior periods are provided for volume-based data.
Debit transactions on Maestro and Cirrus-branded cards, Mondex transactions and transactions involving brands other than MasterCard are not included in the preceding tables.
GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; “purchase volume” means the aggregate dollar amount of purchases made with MasterCard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements obtained with MasterCard-branded cards for the relevant period. The number of cards includes virtual cards, which are MasterCard-branded payment accounts that do not generally have physical cards associated with them.
The MasterCard payment product is comprised of credit, charge and debit programs, and data relating to each type of program is included in the tables. Debit programs include MasterCard-branded debit programs where the primary means of cardholder validation at the point of sale is for cardholders either to sign a sales receipt or enter a PIN. The tables include information with respect to transactions involving MasterCard-branded cards that are not processed by MasterCard and transactions for which MasterCard does not earn significant revenues.
Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. MasterCard reports period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of foreign currencies against the U.S. dollar in calculating such rates of change.
The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is provided by MasterCard customers and is subject to verification by MasterCard and partial cross-checking against information provided by MasterCard’s transaction processing systems. The data set forth in the accounts and cards columns is provided by MasterCard customers and is subject to certain limited verification by MasterCard. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among customers and other practices that may lead to over counting of the underlying data in certain circumstances. All data is subject to revision and amendment by MasterCard’s customers subsequent to the date of its release.
In 2013/Q4, a large Maestro customer revised their number of Maestro cards to exclude inactive cards. Data for the comparable periods in 2013 and 2012 have been revised to be consistent with this approach. MasterCard revenue is not impacted from these historical changes.
