Mastercard declines as revenue misses analysts' estimates

[NEW YORK] Mastercard Inc, the second-largest payments network, fell in early trading after fourth-quarter revenue missed analysts' estimates.

Revenue increased 9.5 per cent to US$2.76 billion from a year earlier, the Purchase, New York-based company said Tuesday in a statement, trailing the US$2.79 billion estimate of analysts surveyed by Bloomberg. Operating expenses declined 1.2 per cent to US$1.4 billion.

Mastercard has said revenue growth may be crimped as it spends more on rebates and incentives and signs deals with retailers. Consumers now demand better rewards and merchants continue to seek improved terms, forcing card networks and banks to sweeten offers on fees and rewards.

"Our continued investments in digital, safety and security, data analytics, loyalty and processing position us well for future growth in our core business and new payment flows," chief executive officer Ajay Banga said in the statement.

Mastercard shares slid 2.8 per cent to US$106.20 at 8.12am in New York. The stock had climbed 5.9 per cent this year through Monday, outpacing the five per cent advance of the 67-company S&P 500 Information Technology Index Net Income Net income rose 4.8 per cent to US$933 million, or 86 US cents a share, from US$890 million, or 79 US cents, a year earlier, the company said in the statement. That beat the 85-cent average estimate of 30 analysts surveyed by Bloomberg. Adjusted net income, which excludes a charge related to merchant litigation in the UK, was US$940 million, the company said.

Purchase volume, a measure of customer spending, rose 3.8 per cent to US$898 billion, based on local currency, while declining 2.6 per cent in Europe, the company said. Rebates and incentives increased, fueled by the jump in spending and new and renewed agreements with banks that issue the company's cards, according to the statement.

Mastercard said it expects revenue growth this year in the "low double digits," according to a presentation on its website. The company also expects operating expenses to climb in the "high single digit" range.

American Express Co, the biggest US credit-card issuer by purchases, said Jan 19 that fourth-quarter profit dropped 8.2 per cent to US$825 million as the company spent a record amount on marketing and other incentives. Visa Inc, the world's largest payments network, is scheduled to report fiscal first-quarter earnings on Thursday.

BLOOMBERG