PURCHASE, N.Y.--(BUSINESS WIRE)--Mastercard Incorporated (NYSE:MA) today announced financial results for the third quarter of 2016. The company reported net income of $1.2 billion, an increase of 21% versus the year-ago period, or 15% excluding a special item related to the termination of the U.S. employee pension plan taken in last year’s third quarter. Earnings per diluted share were $1.08, up 26%, or 19% excluding the special item. There was no currency impact on the reported growth rates for the third quarter, except where noted below.
Net revenue for the third quarter of 2016 was $2.9 billion, a 14% increase versus the same period in 2015. Net revenue growth was driven by the impact of the following:
- An increase in processed transactions of 18%, to 14.5 billion;
- An increase in cross-border volumes of 12%; and
- An 11% increase in gross dollar volume, on a local currency basis and adjusting for the impact of recent EU regulatory changes, to $1.2 trillion.
These factors were partially offset by an increase in rebates and incentives, primarily due to increased volumes and new and renewed agreements.
As a result of the June 2016 implementation of new EU regulations, the company no longer charges fees on domestic EEA co-badged volume and thus excludes that volume from its metrics. The impact on net revenue is de minimis (see page 11 for explanation of adjusted growth rates).
Worldwide purchase volume during the quarter was up 9% on a local currency basis, adjusting for the impact of recent EU regulatory changes, versus the third quarter of 2015, to $882 billion. As of September 30, 2016, the company’s customers had issued 2.3 billion Mastercard and Maestro-branded cards.
“Our business continues to perform well, and we are pleased with our strong growth in revenue and earnings per share this quarter,” said Ajay Banga, Mastercard president and CEO. “We are executing on our strategy, deepening issuer relationships and delivering our customers and partners digital-first solutions. As a result, consumers benefit from seamless and secure purchase experiences everywhere and every way they shop.”
Total operating expenses increased 4%, or 5% on a currency-neutral basis, to $1.2 billion during the third quarter of 2016 compared to the same period in 2015. Excluding the special item taken in the year-ago period, total operating expenses increased 12%. The increase was primarily due to continued investments in strategic initiatives, foreign exchange activity and higher data processing expenses.
Operating income for the third quarter of 2016 increased 22% versus the year-ago period. Compared to the third quarter of 2015 and excluding that quarter’s special item, operating income for the third quarter of 2016 increased 15%. The company delivered an operating margin of 58.0%.
Mastercard reported other expense of $37 million in the third quarter of 2016, versus $17 million in the third quarter of 2015. The increase was mainly due to an impairment charge taken on an investment.
Mastercard’s effective tax rate was 27.5% in the third quarter of 2016, versus a rate of 27.7% in the comparable period in 2015, or 28.2% excluding last year’s special item. The decrease was primarily due to the recognition of discrete tax benefits during the quarter, partially offset by a lower repatriation benefit.
During the third quarter of 2016, Mastercard repurchased approximately 6 million shares of Class A common stock at a cost of $591 million. Quarter-to-date through October 25, the company repurchased an additional 2.6 million shares at a cost of $263 million, which leaves $1.8 billion remaining under the current repurchase program authorization.
Year-to-Date 2016 Results
For the nine months ended September 30, 2016, Mastercard reported net income of $3.1 billion, an increase of 7%, or 9% on a currency-neutral basis, and earnings per diluted share of $2.83, up 11%, or 12% on a currency-neutral basis, versus the year-ago period. Excluding special items taken in the second quarters of both 2015 and 2016 related to separate U.K. merchant litigations, as well as the third quarter 2015 special item related to the U.S. pension plan termination, net income was $3.2 billion, up 6%, or 8% on a currency-neutral basis. Earnings per diluted share were $2.90, up 10%, or 12% on a currency-neutral basis, compared to the same period in 2015.
Net revenue for the nine months ended September 30, 2016 was $8.0 billion, an increase of 12%, or 14% on a currency-neutral basis, versus the same period in 2015. Processed transactions growth of 15%, cross-border volume growth of 12% and gross dollar volume growth of 12%, on a local currency basis and adjusting for the impact of recent EU regulatory changes, contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives.
Total operating expenses were $3.6 billion, an increase of 14%, or 16% on a currency-neutral basis, for the nine months ended September 30, 2016, compared to the same period in 2015. Excluding special items, total operating expenses were $3.5 billion, an increase of 16%, or 17% on a currency-neutral basis, compared to the same period in 2015. The increase was primarily due to continued investments to support strategic initiatives in digital, services, data analytics and geographic expansion, as well as higher legal costs. Also, the impact from foreign exchange activity and balance sheet remeasurement had a negative impact of approximately 4 percentage points on operating expense growth, compared to the same period in 2015.
Operating income for the nine months ended September 30, 2016 was $4.4 billion, an increase of 11%, or 13% on a currency-neutral basis, versus the same period in 2015. Excluding special items, operating income was $4.5 billion, an increase of 10%, or 11% on a currency-neutral basis, compared to the same period in 2015. The company delivered an operating margin of 54.8%, or 56.2% excluding this year’s special item.
Mastercard’s effective tax rate was 27.9% for nine months ended September 30, 2016, versus a rate of 25.8% in the comparable period in 2015, or 26.0% excluding special items. The increase was primarily due to the recognition of larger discrete benefits in 2015 and lower repatriation benefits in 2016, partially offset by a more favorable geographic mix of taxable earnings in 2016.
Third-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its third-quarter financial results.
The dial-in information for this call is 877-201-0168 (within the U.S.) and 647-788-4901 (outside the U.S.), and the passcode is 89677548. A replay of the call will be available for 30 days and can be accessed by dialing 855-859-2056 (within the U.S.) and 404-537-3406 (outside the U.S.), and using passcode 89677548.
This call can also be accessed through the Investor Relations section of the company’s website at www.mastercard.com/investor. Presentation slides used on this call are also available on the website.
Non-GAAP Financial Information
The company has presented certain financial data that are considered non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying tables.
The presentation of growth rates on a currency-neutral basis represent a non-GAAP measure and are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts in our operating results.
About Mastercard Incorporated
Mastercard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard products and solutions make everyday commerce activities - such as shopping, traveling, running a business and managing finances - easier, more secure and more efficient for everyone. Follow us on Twitter @MastercardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.
Forward-Looking Statements
This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this press release, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Mastercard’s future prospects, developments and business strategies. We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made. Except for the company’s ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
- payments system-related legal and regulatory challenges (including interchange fees, surcharging and the extension of current regulatory activity to additional jurisdictions or products);
- the impact of preferential or protective government actions;
- regulation to which we are subject based on our participation in the payments industry;
- regulation of privacy, data protection and security;
- the impact of competition in the global payments industry (including disintermediation and pricing pressure);
- the challenges relating to rapid technological developments and changes;
- the impact of information security failures, breaches or service disruptions on our business;
- issues related to our relationships with our customers (including loss of substantial business from significant customers, competitor relationships with our customers and banking industry consolidation);
- the impact of our relationships with stakeholders, including issuers and acquirers, merchants and governments;
- exposure to loss or illiquidity due to settlement guarantees and other significant third-party obligations;
- the impact of global economic and political events and conditions, including global financial market activity, declines in cross-border activity; negative trends in consumer spending and the effect of adverse currency fluctuation;
- reputational impact, including impact related to brand perception, account data breaches and fraudulent activity;
- issues related to acquisition integration, strategic investments and entry into new businesses; and
- potential or incurred liability and limitations on business resulting from litigation.
For additional information on these and other factors that could cause Mastercard’s actual results to differ materially from expected results, please see the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K for the year ended December 31, 2015 and any subsequent reports on Forms 10-Q and 8-K.
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MASTERCARD INCORPORATED |
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CONSOLIDATED STATEMENT OF OPERATIONS |
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(UNAUDITED) |
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||||||
| Net Revenue | $ | 2,880 | $ | 2,530 | $ | 8,020 | $ | 7,150 | ||||||||||||
| Operating Expenses | ||||||||||||||||||||
| General and administrative | 933 | 883 | 2,731 | 2,343 | ||||||||||||||||
| Advertising and marketing | 184 | 184 | 503 | 502 | ||||||||||||||||
| Depreciation and amortization | 93 | 94 | 281 | 273 | ||||||||||||||||
| Provision for litigation settlements | — | — | 107 | 61 | ||||||||||||||||
| Total operating expenses | 1,210 | 1,161 | 3,622 | 3,179 | ||||||||||||||||
| Operating income | 1,670 | 1,369 | 4,398 | 3,971 | ||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Investment income | 12 | 5 | 32 | 20 | ||||||||||||||||
| Interest expense | (23 | ) | (15 | ) | (65 | ) | (49 | ) | ||||||||||||
| Other income (expense), net | (26 | ) | (7 | ) | (30 | ) | (9 | ) | ||||||||||||
| Total other income (expense) | (37 | ) | (17 | ) | (63 | ) | (38 | ) | ||||||||||||
| Income before income taxes | 1,633 | 1,352 | 4,335 | 3,933 | ||||||||||||||||
| Income tax expense | 449 | 375 | 1,209 | 1,015 | ||||||||||||||||
| Net Income | $ | 1,184 | $ | 977 | $ | 3,126 | $ | 2,918 | ||||||||||||
| Basic Earnings per Share | $ | 1.08 | $ | 0.86 | $ | 2.84 | $ | 2.57 | ||||||||||||
| Basic Weighted-Average Shares Outstanding | 1,096 | 1,130 | 1,101 | 1,136 | ||||||||||||||||
| Diluted Earnings per Share | $ | 1.08 | $ | 0.86 | $ | 2.83 | $ | 2.56 | ||||||||||||
| Diluted Weighted-Average Shares Outstanding | 1,099 | 1,133 | 1,104 | 1,139 | ||||||||||||||||
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MASTERCARD INCORPORATED |
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CONSOLIDATED BALANCE SHEET |
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(UNAUDITED) |
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| September 30, 2016 | December 31, 2015 | |||||||||
| (in millions, except per share data) | ||||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 5,205 | $ | 5,747 | ||||||
| Restricted cash for litigation settlement | 543 | 541 | ||||||||
| Investments | 1,774 | 991 | ||||||||
| Accounts receivable | 1,298 | 1,079 | ||||||||
| Settlement due from customers | 1,137 | 1,068 | ||||||||
| Restricted security deposits held for customers | 997 | 895 | ||||||||
| Prepaid expenses and other current assets | 822 | 663 | ||||||||
| Total Current Assets | 11,776 | 10,984 | ||||||||
| Property, plant and equipment, net of accumulated depreciation of $585 and $491, respectively | 698 | 675 | ||||||||
| Deferred income taxes | 327 | 317 | ||||||||
| Goodwill | 1,814 | 1,891 | ||||||||
| Other intangible assets, net of accumulated amortization of $952 and $816, respectively | 747 | 803 | ||||||||
| Other assets | 1,961 | 1,580 | ||||||||
| Total Assets | $ | 17,323 | $ | 16,250 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Accounts payable | $ | 437 | $ | 472 | ||||||
| Settlement due to customers | 1,052 | 866 | ||||||||
| Restricted security deposits held for customers | 997 | 895 | ||||||||
| Accrued litigation | 716 | 709 | ||||||||
| Accrued expenses | 3,214 | 2,763 | ||||||||
| Other current liabilities | 705 | 564 | ||||||||
| Total Current Liabilities | 7,121 | 6,269 | ||||||||
| Long-term debt | 3,326 | 3,268 | ||||||||
| Deferred income taxes | 82 | 79 | ||||||||
| Other liabilities | 545 | 572 | ||||||||
| Total Liabilities | 11,074 | 10,188 | ||||||||
| Commitments and Contingencies | ||||||||||
| Stockholders’ Equity | ||||||||||
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Class A common stock, $0.0001 par value; authorized 3,000 shares,
1,373 and 1,370 shares issued and |
— | — | ||||||||
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Class B common stock, $0.0001 par value; authorized 1,200 shares,
20 and 21 issued and outstanding, |
— | — | ||||||||
| Additional paid-in-capital | 4,135 | 4,004 | ||||||||
| Class A treasury stock, at cost, 301 and 275 shares, respectively | (15,921 | ) | (13,522 | ) | ||||||
| Retained earnings | 18,722 | 16,222 | ||||||||
| Accumulated other comprehensive income (loss) | (717 | ) | (676 | ) | ||||||
| Total Stockholders’ Equity | 6,219 | 6,028 | ||||||||
| Non-controlling interests | 30 | 34 | ||||||||
| Total Equity | 6,249 | 6,062 | ||||||||
| Total Liabilities and Equity | $ | 17,323 | $ | 16,250 | ||||||
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MASTERCARD INCORPORATED |
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CONSOLIDATED STATEMENT OF CASH FLOWS |
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(UNAUDITED) |
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| Nine Months Ended September 30, | ||||||||||
| 2016 | 2015 | |||||||||
| (in millions) | ||||||||||
| Operating Activities | ||||||||||
| Net income | $ | 3,126 | $ | 2,918 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Amortization of customer and merchant incentives | 629 | 560 | ||||||||
| Depreciation and amortization | 281 | 273 | ||||||||
| Share-based payments | 15 | 1 | ||||||||
| Deferred income taxes | (1 | ) | 18 | |||||||
| Other | (24 | ) | 33 | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (190 | ) | (27 | ) | ||||||
| Income taxes receivable | 4 | (83 | ) | |||||||
| Settlement due from customers | (53 | ) | 78 | |||||||
| Prepaid expenses | (818 | ) | (704 | ) | ||||||
| Accrued litigation and legal settlements | 12 | (60 | ) | |||||||
| Accounts payable | (33 | ) | (31 | ) | ||||||
| Settlement due to customers | 171 | (192 | ) | |||||||
| Accrued expenses | 247 | 1 | ||||||||
| Net change in other assets and liabilities | 126 | 219 | ||||||||
| Net cash provided by operating activities | 3,492 | 3,004 | ||||||||
| Investing Activities | ||||||||||
| Purchases of investment securities available-for-sale | (751 | ) | (862 | ) | ||||||
| Purchases of investments held-to-maturity | (729 | ) | (868 | ) | ||||||
| Proceeds from sales of investment securities available-for-sale | 164 | 666 | ||||||||
| Proceeds from maturities of investment securities available-for-sale | 247 | 476 | ||||||||
| Proceeds from maturities of investments held-to-maturity | 240 | 576 | ||||||||
| Acquisition of businesses, net of cash acquired | — | (584 | ) | |||||||
| Purchases of property, plant and equipment | (156 | ) | (125 | ) | ||||||
| Capitalized software | (124 | ) | (124 | ) | ||||||
| Increase in restricted cash for litigation settlement | (2 | ) | (1 | ) | ||||||
| Other investing activities | (14 | ) | (7 | ) | ||||||
| Net cash used in investing activities | (1,125 | ) | (853 | ) | ||||||
| Financing Activities | ||||||||||
| Purchases of treasury stock | (2,410 | ) | (2,725 | ) | ||||||
| Dividends paid | (630 | ) | (548 | ) | ||||||
| Tax benefit for share-based payments | 44 | 40 | ||||||||
| Cash proceeds from exercise of stock options | 31 | 25 | ||||||||
| Other financing activities | (3 | ) | (8 | ) | ||||||
| Net cash used in financing activities | (2,968 | ) | (3,216 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 59 | (195 | ) | |||||||
| Net decrease in cash and cash equivalents | (542 | ) | (1,260 | ) | ||||||
| Cash and cash equivalents - beginning of period | 5,747 | 5,137 | ||||||||
| Cash and cash equivalents - end of period | $ | 5,205 | $ | 3,877 | ||||||
| Non-Cash Investing and Financing Activities | ||||||||||
| Fair value of assets acquired, net of cash acquired | $ | — | $ | 625 | ||||||
| Fair value of liabilities assumed related to acquisitions | $ | — | $ | 41 | ||||||
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MASTERCARD INCORPORATED OPERATING PERFORMANCE |
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| For the 3 Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
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GDV |
Growth |
Growth |
Purchase |
Growth |
Purchase |
Cash |
Growth |
Cash |
Accounts |
Cards |
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All Mastercard Credit, Charge and Debit Programs |
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| APMEA | $ | 381 | 8.8 | % | 10.0 | % | $ | 256 | 8.3 | % | 3,763 | $ | 125 | 13.7 | % | 1,298 | 565 | 601 | ||||||||||||||||||||||||||||
| Canada | 36 | 9.8 | % | 9.4 | % | 34 | 10.1 | % | 528 | 2 | -1.4 | % | 6 | 43 | 50 | |||||||||||||||||||||||||||||||
| Europe | 338 | 1.7 | % | 5.4 | % | 214 | -2.4 | % | 4,880 | 124 | 22.1 | % | 920 | 420 | 434 | |||||||||||||||||||||||||||||||
| Latin America | 83 | 7.5 | % | 14.3 | % | 51 | 15.5 | % | 1,652 | 32 | 12.5 | % | 252 | 148 | 166 | |||||||||||||||||||||||||||||||
| Worldwide less United States | 838 | 5.7 | % | 8.5 | % | 555 | 4.6 | % | 10,822 | 283 | 17.0 | % | 2,475 | 1,177 | 1,251 | |||||||||||||||||||||||||||||||
| United States | 383 | 4.8 | % | 4.8 | % | 327 | 4.8 | % | 6,058 | 57 | 4.7 | % | 351 | 344 | 380 | |||||||||||||||||||||||||||||||
| Worldwide | 1,221 | 5.4 | % | 7.3 | % | 882 | 4.7 | % | 16,880 | 339 | 14.7 | % | 2,827 | 1,521 | 1,631 | |||||||||||||||||||||||||||||||
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Mastercard Credit and Charge Programs |
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| Worldwide less United States | 465 | 4.1 | % | 6.4 | % | 426 | 7.0 | % | 6,438 | 39 | 0.8 | % | 188 | 527 | 582 | |||||||||||||||||||||||||||||||
| United States | 182 | 3.9 | % | 3.9 | % | 174 | 3.8 | % | 2,019 | 8 | 7.0 | % | 10 | 164 | 196 | |||||||||||||||||||||||||||||||
| Worldwide | 648 | 4.0 | % | 5.7 | % | 600 | 6.0 | % | 8,457 | 47 | 1.8 | % | 198 | 691 | 778 | |||||||||||||||||||||||||||||||
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Mastercard Debit Programs |
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| Worldwide less United States | 373 | 7.8 | % | 11.1 | % | 129 | -2.5 | % | 4,384 | 243 | 20.0 | % | 2,287 | 650 | 668 | |||||||||||||||||||||||||||||||
| United States | 201 | 5.6 | % | 5.6 | % | 152 | 5.9 | % | 4,039 | 49 | 4.4 | % | 342 | 180 | 184 | |||||||||||||||||||||||||||||||
| Worldwide | 573 | 7.0 | % | 9.1 | % | 281 | 1.9 | % | 8,423 | 292 | 17.1 | % | 2,629 | 830 | 852 | |||||||||||||||||||||||||||||||
| For the 9 Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
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GDV |
Growth |
Growth |
Purchase |
Growth |
Purchase |
Cash |
Growth |
Cash |
Accounts |
Cards |
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All Mastercard Credit, Charge and Debit Programs |
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| APMEA | $ | 1,102 | 7.6 | % | 11.9 | % | $ | 736 | 10.3 | % | 10,594 | $ | 366 | 15.3 | % | 3,765 | 565 | 601 | ||||||||||||||||||||||||||||
| Canada | 102 | 4.8 | % | 9.7 | % | 96 | 10.1 | % | 1,484 | 5 | 2.7 | % | 17 | 43 | 50 | |||||||||||||||||||||||||||||||
| Europe | 1,005 | 7.2 | % | 11.9 | % | 665 | 6.6 | % | 14,895 | 340 | 24.1 | % | 2,600 | 420 | 434 | |||||||||||||||||||||||||||||||
| Latin America | 235 | -0.9 | % | 14.6 | % | 140 | 15.3 | % | 4,699 | 95 | 13.7 | % | 739 | 148 | 166 | |||||||||||||||||||||||||||||||
| Worldwide less United States | 2,444 | 6.4 | % | 12.1 | % | 1,638 | 9.1 | % | 31,672 | 806 | 18.5 | % | 7,121 | 1,177 | 1,251 | |||||||||||||||||||||||||||||||
| United States | 1,147 | 7.3 | % | 7.3 | % | 978 | 7.6 | % | 18,002 | 169 | 5.5 | % | 1,040 | 344 | 380 | |||||||||||||||||||||||||||||||
| Worldwide | 3,591 | 6.7 | % | 10.5 | % | 2,616 | 8.6 | % | 49,674 | 975 | 16.1 | % | 8,161 | 1,521 | 1,631 | |||||||||||||||||||||||||||||||
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Mastercard Credit and Charge Programs |
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| Worldwide less United States | 1,345 | 2.4 | % | 7.6 | % | 1,231 | 8.2 | % | 18,432 | 114 | 1.7 | % | 554 | 527 | 582 | |||||||||||||||||||||||||||||||
| United States | 536 | 7.3 | % | 7.3 | % | 513 | 7.1 | % | 5,879 | 23 | 10.0 | % | 28 | 164 | 196 | |||||||||||||||||||||||||||||||
| Worldwide | 1,881 | 3.7 | % | 7.5 | % | 1,744 | 7.9 | % | 24,311 | 137 | 3.0 | % | 582 | 691 | 778 | |||||||||||||||||||||||||||||||
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Mastercard Debit Programs |
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| Worldwide less United States | 1,099 | 11.8 | % | 18.0 | % | 407 | 12.0 | % | 13,240 | 692 | 21.9 | % | 6,567 | 650 | 668 | |||||||||||||||||||||||||||||||
| United States | 611 | 7.4 | % | 7.4 | % | 465 | 8.2 | % | 12,124 | 146 | 4.8 | % | 1,013 | 180 | 184 | |||||||||||||||||||||||||||||||
| Worldwide | 1,710 | 10.2 | % | 14.0 | % | 872 | 9.9 | % | 25,364 | 838 | 18.5 | % | 7,580 | 830 | 852 | |||||||||||||||||||||||||||||||
| For the 3 months ended September 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
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GDV |
Growth |
Growth |
Purchase |
Growth |
Purchase |
Cash |
Growth |
Cash |
Accounts |
Cards |
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All Mastercard Credit, Charge and Debit Programs |
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| APMEA | $ | 350 | 2.6 | % | 14.0 | % | $ | 237 | 14.5 | % | 3,125 | $ | 113 | 12.9 | % | 1,136 | 498 | 531 | ||||||||||||||||||||||||||||
| Canada | 33 | -2.1 | % | 17.8 | % | 31 | 19.2 | % | 468 | 2 | -2.5 | % | 6 | 40 | 46 | |||||||||||||||||||||||||||||||
| Europe | 332 | -5.9 | % | 16.9 | % | 228 | 14.8 | % | 4,637 | 104 | 21.9 | % | 791 | 379 | 397 | |||||||||||||||||||||||||||||||
| Latin America | 77 | -15.2 | % | 16.7 | % | 45 | 18.0 | % | 1,444 | 32 | 14.9 | % | 231 | 142 | 161 | |||||||||||||||||||||||||||||||
| Worldwide less United States | 793 | -3.2 | % | 15.6 | % | 541 | 15.2 | % | 9,674 | 252 | 16.6 | % | 2,163 | 1,059 | 1,135 | |||||||||||||||||||||||||||||||
| United States | 366 | 7.8 | % | 7.8 | % | 312 | 7.9 | % | 5,673 | 54 | 6.9 | % | 340 | 330 | 363 | |||||||||||||||||||||||||||||||
| Worldwide | 1,159 | — | % | 13.0 | % | 853 | 12.4 | % | 15,347 | 306 | 14.8 | % | 2,503 | 1,389 | 1,498 | |||||||||||||||||||||||||||||||
|
Mastercard Credit and Charge Programs |
||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide less United States | 447 | -6.0 | % | 10.7 | % | 407 | 11.7 | % | 5,785 | 40 | 1.7 | % | 189 | 512 | 573 | |||||||||||||||||||||||||||||||
| United States | 176 | 8.7 | % | 8.7 | % | 168 | 8.2 | % | 1,909 | 8 | 22.3 | % | 9 | 156 | 186 | |||||||||||||||||||||||||||||||
| Worldwide | 623 | -2.2 | % | 10.2 | % | 575 | 10.7 | % | 7,694 | 48 | 4.5 | % | 198 | 668 | 760 | |||||||||||||||||||||||||||||||
|
Mastercard Debit Programs |
||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide less United States | 346 | 0.6 | % | 22.7 | % | 134 | 27.3 | % | 3,889 | 212 | 19.9 | % | 1,974 | 547 | 561 | |||||||||||||||||||||||||||||||
| United States | 190 | 6.9 | % | 6.9 | % | 144 | 7.6 | % | 3,764 | 47 | 4.7 | % | 331 | 174 | 177 | |||||||||||||||||||||||||||||||
| Worldwide | 536 | 2.8 | % | 16.6 | % | 278 | 16.3 | % | 7,653 | 258 | 16.9 | % | 2,305 | 721 | 738 | |||||||||||||||||||||||||||||||
| For the 9 Months ended September 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
|
GDV |
Growth |
Growth |
Purchase |
Growth |
Purchase |
Cash |
Growth |
Cash |
Accounts |
Cards |
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|
All Mastercard Credit, Charge and Debit Programs |
||||||||||||||||||||||||||||||||||||||||||||||
| APMEA | $ | 1,024 | 6.2 | % | 14.8 | % | $ | 689 | 15.1 | % | 8,714 | $ | 335 | 14.0 | % | 3,234 | 498 | 531 | ||||||||||||||||||||||||||||
| Canada | 97 | 1.2 | % | 16.8 | % | 92 | 18.6 | % | 1,314 | 5 | -6.9 | % | 17 | 40 | 46 | |||||||||||||||||||||||||||||||
| Europe | 938 | -7.1 | % | 16.2 | % | 648 | 14.4 | % | 12,967 | 289 | 20.6 | % | 2,219 | 379 | 397 | |||||||||||||||||||||||||||||||
| Latin America | 237 | -9.3 | % | 15.6 | % | 140 | 18.5 | % | 4,169 | 97 | 11.8 | % | 668 | 142 | 161 | |||||||||||||||||||||||||||||||
| Worldwide less United States | 2,296 | -1.5 | % | 15.5 | % | 1,569 | 15.3 | % | 27,164 | 727 | 16.0 | % | 6,138 | 1,059 | 1,135 | |||||||||||||||||||||||||||||||
| United States | 1,069 | 7.2 | % | 7.2 | % | 909 | 7.4 | % | 16,371 | 160 | 6.1 | % | 1,009 | 330 | 363 | |||||||||||||||||||||||||||||||
| Worldwide | 3,365 | 1.1 | % | 12.7 | % | 2,478 | 12.2 | % | 43,535 | 887 | 14.1 | % | 7,147 | 1,389 | 1,498 | |||||||||||||||||||||||||||||||
|
Mastercard Credit and Charge Programs |
||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide less United States | 1,314 | -3.6 | % | 11.0 | % | 1,195 | 12.2 | % | 16,491 | 119 | -0.1 | % | 557 | 512 | 573 | |||||||||||||||||||||||||||||||
| United States | 500 | 6.9 | % | 6.9 | % | 479 | 6.9 | % | 5,353 | 21 | 8.0 | % | 25 | 156 | 186 | |||||||||||||||||||||||||||||||
| Worldwide | 1,814 | -0.9 | % | 9.8 | % | 1,673 | 10.7 | % | 21,844 | 140 | 1.1 | % | 582 | 668 | 760 | |||||||||||||||||||||||||||||||
|
Mastercard Debit Programs |
||||||||||||||||||||||||||||||||||||||||||||||
| Worldwide less United States | 982 | 1.6 | % | 22.2 | % | 374 | 26.3 | % | 10,672 | 608 | 19.8 | % | 5,581 | 547 | 561 | |||||||||||||||||||||||||||||||
| United States | 569 | 7.3 | % | 7.3 | % | 430 | 7.9 | % | 11,018 | 139 | 5.8 | % | 985 | 174 | 177 | |||||||||||||||||||||||||||||||
| Worldwide | 1,551 | 3.6 | % | 16.3 | % | 804 | 15.7 | % | 21,691 | 747 | 16.9 | % | 6,565 | 721 | 738 | |||||||||||||||||||||||||||||||
| APMEA = Asia Pacific / Middle East / Africa |
| Note that the figures in the preceding tables may not sum due to rounding; growth represents change from the comparable year-ago period |
Footnote
The tables set forth the 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 cards. Growth rates over prior periods are provided for volume-based data.
Debit transactions on Maestro® and Cirrus®-branded cards and transactions involving brands other than Mastercard are not included in the preceding tables.
For purposes of the table: 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.
Performance information for prior periods can be found in the “Investor Relations” section of the Mastercard website at www.mastercard.com/investor.
|
Non-GAAP Reconciliations |
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|
($ in millions, except per share data) |
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| Three Months Ended September 30, | Percent Increase/(Decrease) | ||||||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||||||
| Actual | Actual |
Special |
Non- |
Actual |
Special |
Non- |
|||||||||||||||||||||||
| Total operating expenses | $ | 1,210 | $ | 1,161 | $ | (79 | ) | $ | 1,082 | 4% | (8)% | 12% | |||||||||||||||||
| Operating income | $ | 1,670 | $ | 1,369 | $ | 79 | $ | 1,448 | 22% | 7% | 15% | ||||||||||||||||||
| Operating Margin | 58.0 | % | 54.1 | % | 57.2 | % | |||||||||||||||||||||||
| Income tax expense | $ | 449 | $ | 375 | $ | 29 | $ | 404 | 20% | 9% | 11% | ||||||||||||||||||
| Effective Tax Rate | 27.5 | % | 27.7 | % | 28.2 | % | |||||||||||||||||||||||
| Net Income | $ | 1,184 | $ | 977 | $ | 50 | $ | 1,027 | 21% | 6% | 15% | ||||||||||||||||||
| Diluted Earnings per Share | $ | 1.08 | $ | 0.86 | $ | 0.04 | $ | 0.91 | 26% | 7% | 19% | ||||||||||||||||||
| Nine Months Ended September 30, | Percent Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||
| Actual |
Special |
Non- |
Actual |
Special |
Non- |
Actual |
Special |
Non- |
|||||||||||||||||||||||||||||||
| Total operating expenses | $ | 3,622 | $ | (107 | ) | $ | 3,515 | $ | 3,179 | $ | (140 | ) | $ | 3,039 | 14% | (2)% | 16% | ||||||||||||||||||||||
| Operating income | $ | 4,398 | $ | 107 | $ | 4,505 | $ | 3,971 | $ | 140 | $ | 4,111 | 11% | 1% | 10% | ||||||||||||||||||||||||
| Operating Margin | 54.8 | % | 56.2 | % | 55.5 | % | 57.5 | % | |||||||||||||||||||||||||||||||
| Income tax expense | $ | 1,209 | $ | 29 | $ | 1,238 | $ | 1,015 | $ | 45 | $ | 1,060 | 19% | 2% | 17% | ||||||||||||||||||||||||
| Effective Tax Rate | 27.9 | % | 27.9 | % | 25.8 | % | 26.0 | % | |||||||||||||||||||||||||||||||
| Net income | $ | 3,126 | $ | 78 | $ | 3,204 | $ | 2,918 | $ | 95 | $ | 3,013 | 7% | 1% | 6% | ||||||||||||||||||||||||
| Diluted Earnings per Share | $ | 2.83 | $ | 0.07 | $ | 2.90 | $ | 2.56 | $ | 0.08 | $ | 2.64 | 11% | 1% | 10% | ||||||||||||||||||||||||
| Note: Figures may not sum due to rounding | ||
|
1 |
Represents effect of excluding the Special Item relating to the termination of the U.S. employee pension plan (Q2 2015: $79 million pre-tax, $50 million after-tax, $0.04 per diluted share) |
|
|
2 |
Represents effect of excluding the Special Items relating to the U.K. merchant litigation provisions (Q2 2016: $107 million pre-tax, $78 million after-tax, $0.07 per diluted share; Q2 2015: $61 million pre-tax, $44 million after-tax, $0.04 per diluted share) | |
|
Article 8 Impacts on Europe and Worldwide GDV and Purchase Volume Growth Rates |
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| Growth (Local Currency) | ||||||||||||||||||||||||||||||
| 2015Q1 | 2015Q2 | 2015Q3 | 2015Q4 | 2016Q1 | 2016Q2 | 2016Q3 | 3QYTD15 | FY15 | 3QYTD16 | |||||||||||||||||||||
| GDV | ||||||||||||||||||||||||||||||
| Europe as reported | 15% | 16% | 17% | 15% | 18% | 14% | 5% | 16% | 16% | 12% | ||||||||||||||||||||
| Europe adjusted for Article 8 | 19% | 19% | 19% | 17% | 19% | 19% | 18% | 19% | 19% | 19% | ||||||||||||||||||||
| Worldwide as reported | 12% | 13% | 13% | 12% | 13% | 11% | 7% | 13% | 13% | 11% | ||||||||||||||||||||
| Worldwide adjusted for Article 8 | 13% | 13% | 13% | 13% | 13% | 13% | 11% | 13% | 13% | 12% | ||||||||||||||||||||
| Purchase Volume | ||||||||||||||||||||||||||||||
| Europe as reported | 13% | 15% | 15% | 13% | 14% | 9% | (2)% | 14% | 14% | 7% | ||||||||||||||||||||
| Europe adjusted for Article 8 | 18% | 19% | 18% | 16% | 16% | 15% | 16% | 18% | 18% | 16% | ||||||||||||||||||||
| Worldwide as reported | 12% | 12% | 12% | 12% | 12% | 9% | 5% | 12% | 12% | 9% | ||||||||||||||||||||
| Worldwide adjusted for Article 8 | 13% | 13% | 13% | 12% | 12% | 11% | 9% | 13% | 13% | 11% | ||||||||||||||||||||
|
|
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|
Note: |
| Article 8 of the EU Interchange Fee Regulation related to card payments, that became effective June 9, 2016, states that a network can no longer charge fees on domestic EEA payment transactions that do not use its payment brand. Prior to that, Mastercard collected a de minimis assessment fee in a few countries, particularly France, on transactions with Mastercard co-badged cards if the brands of domestic networks (as opposed to Mastercard) were used. As a result, the non-Mastercard co-badged volume is no longer being included. |
| To aid in understanding the underlying trends in the business, the table above reflects adjusted 2015 and YTD 2016 growth rates for the impact of Article 8, by eliminating the related co-badged volumes in prior periods. |
