Please ensure Javascript is enabled for purposes of website accessibility

Mastercard Beats on Earnings and Revenue in First Quarter

By Bram Berkowitz – Apr 30, 2020 at 11:46AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company saw a drop in profits of 9% and expenses grow by 7%.

Profits at Mastercard (MA -1.18%) dropped 9% on an annual basis in the first quarter, beating analysts' expectations.

The payment processing company reported net income of $1.7 billion in the first quarter, or diluted earnings per share (EPS) of $1.68. Total revenue reached $4 billion, up 3% year over year, which also beat expectations.

Mastercard

Image Source: Getty

Despite supplying credit and debit cards to many financial institutions, Mastercard operates differently from a credit card company.

The company does not make money by issuing cards or extending credit, but rather by assessing fees based on the gross dollar volume of clients that use Mastercard products; by taking fees on transaction switching; and from other payment-related products and services.

Mastercard CEO Ajay Banga said in a statement, "We have built a set of diversified services capabilities to meet our partners' needs in this changing world. Although there will be twists in the road, we have seen early signs of spending levels stabilizing and are confident that we will emerge from this even stronger."

The company made gains in several of its key revenue areas, such as an 8% increase in gross dollar volume, a 13% increase in switched transactions and a 26% increase in other revenues, which consist of data analytics and consulting fees, cyber and intelligence fees, and loyalty and reward card solution fees, among other sources.

The gains were offset, however, by a 1% decrease in cross-border volume and a 24% increase in rebates and incentives for customers that hit certain volume targets.

Total operating expenses at the company also climbed 7% year over year, as a result of acquisitions and investment into strategic initiatives.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Mastercard Incorporated Stock Quote
Mastercard Incorporated
MA
$286.77 (-1.18%) $-3.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.