MasterCard Leads A Mixed Batch Of Week’s Industry Earnings

By Jeffrey Green (@epaymentsguy

Quarterly earnings released this week among some key payments industry players showed mixed results, with MasterCard among the top performers.

MasterCard on October 31 reported a 14 percent jump in third-quarter net income, to $879 million from $772 million a year ago, on net revenue of $2.21 billion, up 16 percent from $1.92 billion, driven by a 16 percent rise in processed transactions and a 15 percent boost in gross dollar volume. Cross-border volume also rose 19 percent. Increases in rebates and incentives offset some of the overall growth.

Purchase volume on all MasterCards globally for the quarter ended September 30 totaled $763 billion, up 12.7 percent from a year earlier, as purchase transaction volume rose 15.4 percent, to 11.72 billion. U.S. purchase volume rose 9.4 percent, to $267 billion, on purchase transaction volume of 4.84 billion, up 1 percent.

MasterCard’s stock price was up $2.27 (0.31 percent) in midday trading October 31, at $727.95 per share. Investors feel MasterCard, with its emphasis on international growth, is better insulated from U.S. card market exposure than is its chief rival Visa. Shares in Visa stock were down $7.59 (3.72 percent) in midday trading October 31, at $196.12, despite healthy growth in operating revenue from its data processing, international-transactions and service segments.

Visa on October 30 reported a large drop in net income attributable directly to the company for its fiscal fourth quarter ended September 30, to $1.19 billion, down 28 percent from $1.66 billion a year earlier. Operating revenues were up 9 percent, to $2.97 billion from $2.73 billion. The strengthening of the U.S. dollar impacted net operating revenues by approximately 1.5 percentage points of negative growth in the fiscal fourth quarter, Visa said.

Purchase volume on all Visa card globally for the quarter totaled $1.1 trillion, up 1 percent from a year earlier, as purchase transaction volume rose 12 percent, to 19 billion. U.S. purchase volume rose 10 percent, to $575 billion, on purchase transaction volume of 11.4 billion, up 11 percent.

The Western Union Co., which announced plans to significantly increase investments in compliance and regulatory capabilities, on October 29 reported third quarter revenue of $1.41 billion, down 1 percent from $1.42 billion a year earlier. Net income was $214.4 million, down 20 percent from $269.5 million.

Shares in the company’s stock were down 11 cents (0.65 percent), to $16.74, in midday trading October 31. Though the third-quarter results met the consensus estimate for revenues and beat the estimate on earnings per share, its stock got pounded early October 30 as the company’s profit outlook looked weak based on its need for greater investment in compliance.

Western Union branded consumer-to-consumer (C2C) transactions increased 10 percent in the third quarter. Total C2C transactions increased 9 percent, driven by “additional traction from the pricing investments, increased growth in non-priced corridors, and a less negative impact from the Vigo and Orlandi Valuta brands, which have been affected over the past year by compliance related actions implemented in the third quarter of 2012,” Western Union said in its earnings release.

Consumer-to-business (C2B) revenues increased 3 percent, or 9 percent constant currency, and Western Union Business Solutions revenues increased 6 percent, or 10 percent constant currency, the company said.

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