Mastercard Reports Record Q1 Profits, Shares Rise

Mastercard Inc MA announced Wednesday its financial results for the first quarter of 2018.

What Happened

The company reported a record first-quarter adjusted net income of $1.6 billion, or $1.50 per adjusted diluted share, beating the consensus of $1.25 per share. Revenue of $3.6 billion was also better than expected and represents an increase of 31 percent from Q1 2017.

Currency effects, new revenue recognition rules, and acquisitions had some impact on higher revenue. On a currency neutral basis, revenue was 27 percent higher than the same period last year, while the new rules and acquisition contributed to the growth with 4 percent and 2.5 percent, respectively.

Why It's Important

"We're off to a very strong start to the year, with record revenue and earnings this quarter, as we continue to execute against our strategy", Ajay Banga, Mastercard president and CEO, said in a press release.

Mastercard posted 14 percent increase in gross dollar volume and 15 percent increase in purchases. Cross-border volumes increased 21 percent on a local currency basis. The biggest weakness in the report was an increase in operating expenses of 43 percent.

What's Next

Mastercard used $1.4 billion to repurchase its shares and it paid $263 million in dividends. Additional $608 million were used in Q2, which leaves $3.3 billion remaining under current repurchase program authorizations.

Mastercard's stock traded around $187.40 Wednesday afternoon, up 3.9 percent on the day.

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