Mastercard Revenue Rises But Tax Law Dents Earnings -- Update

02/01/18 11:31 AM EST
By AnnaMaria Andriotis and Cara Lombardo 

Mastercard Inc. beat revenue expectations in its latest quarter due to strong cardholder spending, but its profit took a hit as it implemented U.S. tax law changes.

Mastercard's fourth-quarter revenue rose 20% from the year before to $3.31 billion, more than the $3.26 billion analysts polled by Thomson Reuters expected.

Mastercard's profit dropped to $227 million, or 21 cents a share, from $933 million, or 86 cents a share, the year before. But excluding one-time items including the impact of the new U.S. tax law, it earned $1.14 a share, up from 86 cents a share the year before. Analysts expected adjusted earnings of $1.12 a share.

Mastercard shares rose 2.3% in morning trading. Shares in Mastercard are up more than 60% over the past year as consumer card-based spending in the U.S. and abroad continues to rise. Shares in rival Visa Inc. are up by more than 50%.

Earlier Thursday, Mastercard announced it landed Cabela's lucrative credit-card business following the sale of the sporting-goods company to Bass Pro.

The Purchase, N.Y.-based, company continues to benefit from strengthening economies in many markets, including in the U.S. Gross dollar volume of card transactions processed on its network world-wide totaled $1.42 trillion in the fourth quarter, up 13% from a year prior. In the U.S., that volume was up 9% year over year. The company had about 2.43 billion cards globally at year-end.

The company also got a boost from an increase in cardholder travel, specifically more cardholders using cards outside of the country they are issued in. "Cross-border" volume fees associated with those transactions and fees for Mastercard's networks in foreign markets both increased 17% from a year ago.

Mastercard's CEO Ajay Banga said on the earnings call that the company views tax reform as a positive development for the U.S., especially in the near term, because businesses will have a greater ability to invest and many consumers will have more disposable income. The company said Thursday it is increasing its employer match to 10% for defined-contribution retirement plans, a move designed to help most of its employees, including those in the U.S.

Separately, it said it will invest more money into efforts directed at workforce training and financial inclusion for consumers.

The company said it expects estimated growth for net revenue to be in the high end of the low-double digits in 2018, and operating expenses, excluding special items and a contribution to a nonprofit entity, to be in the mid-single digits.

The company's fourth-quarter operating expenses increased 28%, mainly due to costs related to its acquisition of U.K. payments-technology company VocaLink and investments in strategic initiatives.

One area of concern for the company is Venezuela. Chief Financial Officer Martina Hund-Mejean said on the earnings call that Mastercard has decided to exclude operations in Venezuela from its consolidated financial statements moving forward due to economic and political conditions that continue to deteriorate there.

Write to AnnaMaria Andriotis at and Cara Lombardo at


(END) Dow Jones Newswires

February 01, 2018 11:31 ET (16:31 GMT)

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