MasterCard 4Q Revenue Down, Cross Border Volumes Up 13%

Shares of global payments processor Mastercard were down roughly 2.8 percent in midday trading on Tuesday (Jan. 31), as the company beat earnings estimated in the December 2016 quarter but missed on the top line.

On an adjusted basis, net income came in at $0.86 per share, a penny above the Street’s estimate and 4.8 percent higher than last year’s fourth quarter, while holiday spending helped drive revenues up 9.5 percent year over year to $2.76 billion, falling just short of projections that the firm would earn $2.79 billion.

Gross dollar volume was up 9 percent to $1.2 trillion as measured in local currency, with the U.S. a significant (and, in fact, the largest) market, as it has been in the past, accounting for roughly a third of that. Within the U.S., the company said, total volumes stood at $388 million, up from $378 million a year ago and bifurcated between $199 million in debit transactions and the remainder in credit transactions.

Cross border volumes were up 13 percent.

Delving a bit into longer-term projections, Mastercard CFO Martina Hund-Mejean said that incentives would pressure revenue growth a bit, with the first half of 2017 seeing lower growth than in the second half. Nonetheless, management hewed to three-year guidance that is looking for revenue growth in the low-double-digit percentage range and some relief from operating expenses that should bring EPS growth to the mid-teens rate.

Card-related data showed that total cards were up 6 percent year over year, with 9 percent growth in Mastercards in the field, to nearly 1.7 billion in the latest tally. Switched transactions, formerly known as processed transactions — defined as the transactions cleared, authorized or settled by the company — came in at 15.2 billion, up from 17 percent last year.

Also on the conference call conducted with analysts following the results, CEO and President Ajay Banga said that the VocaLink merger process is on track and the closing should happen in the spring of this year. He also called out the steadiness of the U.S. economy, marked as it is by low unemployment and relatively strong consumer spending. Other areas remain points of concern, said the executive, such as China, marked as it is by slowing growth.

As for the digital side of the business, said Banga, the initiatives here amount to “a marathon, not a sprint,” where MasterPass has seen increasing user adoption and acceptance from merchants has also been on the rise, culminating in 50 million accounts at year end, with a merchant tally of 340,000. New markets entered (with five additional) have brought the current count to nearly three dozen.