Mastercard Inc. (MA) said Thursday its profit for the fourth quarter increased by 23% over last year, as worldwide purchase volume improved reflecting a secular shift from cash to electronic payments.
Quarterly earnings, however, fell short of the analysts' expectations. Following the news, Mastercard lost more than 9% in intraday trading on the New York Stock Exchange.
Net income attributable to MasterCard was $294.00 million or $2.24 per share for the fourth quarter, up from $239.44 million or $1.83 per share in the prior year quarter.
Excluding items, non-GAAP net income would have been $243 million or $1.85 per share in the fourth quarter 2008.
On average, 31 analysts polled by Thomson Reuters expected the company to report earnings of $2.46 per share for the fourth quarter. Analysts' estimates typically exclude special items.
The Purchase, New York-based company's net revenue increased 6% to $1.3 billion from $1.2 billion in the same quarter last year. Currency fluctuations contributed 3.8 percentage points of the revenue growth, due to the movement of the euro and the Brazilian real relative to the U.S. dollar. Twenty-five analysts had a consensus revenue estimate of $1.30 billion for the fourth quarter.
MasterCard's gross dollar volume, on a local currency basis, improved 5.3% to $674 billion for the fourth quarter. On a local currency basis, worldwide purchase volume rose 5.7% to $510 billion during the quarter.
The number of transactions processed grew 6.7% to 5.9 billion during the quarter.
As of December 31, 2009, the company's customers had issued 966 million MasterCard cards, a decline of 1.3% over the cards issued at December 31, 2008.
Total operating expenses increased 9.8% to $830 million from $762 million in the prior year quarter. Currency fluctuations contributed 3.2 percentage points of the increase in expenses.
MasterCard's effective tax rate decreased to 35.8% in the fourth quarter from 46.1% in the year-ago quarter, due to a more favorable mix of earnings, a lower state tax rate and a lower provision for tax reserves in the fourth quarter of 2009.
For the full year 2009, MasterCard reported net income of $1.5 billion or $11.16 per share, compared to a loss of $254 million or $1.94 per share in the previous year.
Excluding items, non-GAAP net income was $1.5 billion or $11.19 per share, compared to $1.2 billion or $9.41 per share in the prior year.
Annual net revenue increased 2.1% to $5.1 billion from $5.0 billion in the year-ago. On a constant currency basis, net revenue increased by 3.9%.
Analysts expected the company to report earnings of $11.45 per share on revenue of $5.10 billion for the year.
Visa Inc. (V), the world's biggest payments network, reported that its profit for the first quarter increased 33% over last year, as consumers increasingly tend to digital currency. The company also benefited from the expansion of its payments network and processing capabilities, which in turn reflected on its transaction growth.
American Express Co. (AXP), which was granted a bank-holding status in November last year, reported that its fourth quarter profit more than doubled from last year, helped by the strong performance in the U.S. Card Services division and a sharp decline in loan loss provisions.
Mastercard is currently trading at $225.02, down $22.56 or 9.11% on a volume of 7.05 million shares. The stock has been moving in a range of $139.00 - $269.88 for the past 52 weeks, with an average daily volume of about 1.45 million shares for the past three months.
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