MasterCard Beats on Pricing & Costs

MasterCard Incorporated (MA - Analyst Report) reported third quarter 2009 net income applicable to common shareholders (excluding special items) of $456.0 million or $3.48 per share, compared to $322.0 million or $2.46 per share in the prior-year quarter. Results were substantially ahead of the Zacks Consensus Estimate of $2.93.

Better pricing, an increased number of processed transactions, lower operating expenses as a result of continuous cost-cutting initiatives and a lower tax rate contributed to the upside.

GAAP net income during the quarter was $452.0 million or $3.45 per share, compared to a net loss of $194.0 million or $1.48 per share in the prior-year quarter. GAAP results included $6.2 million in pre-tax litigation settlement charges during the quarter.

Total revenue increased 2.0% year-over-year (3.9% on a constant currency basis) to $1.4 billion, primarily due to better pricing and a 7.6% growth in the number of processed transactions which offset lower international volumes. Gross dollar volumes were relatively flat at $633 billion during the quarter, while cross border volumes were lower compared to the year-ago levels.

Total operating expenses decreased 57.3% year-over-year to $690.8 million. The decline was primarily attributable to decreased advertising and marketing expenses from reduced investments and continued cost containment initiatives and a decrease in general and administrative expenses resulting from lower professional fees and travel expenses.

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