Higher Consumer Spending Helps Mastercard Beat Expected Q3 Earnings

An increase in the U.S. consumer spending has helped payment system companies such as Visa and PayPal Holdings to benefit in the third quarter just as Mastercard Inc. which reported better than expected earnings.

$1.78 per share was the reported adjusted earnings for the three months ending in September, Mastercard said which was more than the consensus forecast of $1.68 and noting an increase of 33 per cent compared to the same period a year ago.

The company said that there was an increase of 15 per cent in group sales on an adjusted basis at $3.9 billion even as there was an increase of 13 per cent in gross dollar volumes and a 15 per cent increase in purchase volumes in the third quarter compared to the same period a year ago.

“We had another very strong quarter, delivering solid top- and bottom-line growth ,” said CEO AjayBanga, Mastercard. “Our business wins and new partnerships, strengthened by our differentiated services offerings, are helping drive our global momentum. We are continuing to invest for the long term with a focus on secure and convenient solutions that will help us grow our core business and address new payment flows.”

As of the end of September, 2.5 billion Mastercard and Maestro-branded cards were issued by its customers after having adjusted for the impact of deconsolidation in its Venezuela business.

Commerce Department data showed that there was a 0.4 per cent increase in the U.S. consumer spending in September which is the seventh consecutive month of expansion. The growth in August was revised at 0.5 per cent even as the rate of unemployment touched the lowest level since 1969 while a 2.96% increase was seen in wages in the same period.

With operating revenue increase of 12 per cent at $5.43 billion, Wall Street expectations were beaten last week by Visa beat for its fiscal fourth quarter with a third quarter bottom line of $2.85 billion.

Impressive third quarter results were also posted for the third quarter earlier in the month by PayPal with its active customer base crossing the 250 million mark and with continued better than expected growth in its Venmo platform.

PayPal also beat third quarter earnings expectation of 54 cents a share with its non-GAAP earnings rising by some 26 per cent compared to the same period last year at 58 cents a share. The firm also reported a 13 per cent increase in at $3.68 billion. There was also a rise of 24 per cent in the total payment volumes compared to the same period a year ago to hit just above $143 billion even as the group added 9.1 million new customers which took its base of active customers to 254 million.

(Adapted from TheStreet.com)

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Categories: Economy & Finance, Strategy, Sustainability, Uncategorized

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