By Yifang (Evonne) Liu
MasterCard Inc., a New York- based global payments company, beat Wall Street’s estimate by a penny, but revenue growth slowed compared to the first three quarters of 2016, and the stock dropped 2.8 percent.
For the fourth quarter ended Dec. 31, MasterCard reported a net income of $933 million, or 86 cents per diluted share, up from $890 million, or 79 cents, a year ago.
“Overall, the quarter was generally in-line,” wrote Sanjay Sakhrani, analyst at Keefe, Bruyette &Woods in a research note. “MA reported EPS of $0.86, which compared to our and consensus estimate of $0.85. Upside relative to our estimates was driven by lower rebates and incentives and lower total operating expenses, partially offset by lower gross revenues, and higher other expenses.”
Revenue rose 9 percent to $ 2.8 billion from $2.5 billion. It was the only quarter of 2016 in which revenue didn’t increase by double digits.
MasterCard is expanding beyond traditional payment to digital payment platform, the Masterpass.
“Last year, Masterpass became the first digital payment service to work across all devices and channels, which helped drive acceptance and enabled consumers to shop online, in-store, or in－app using a bank-branded offering from the issuer of their choice,” said Ajay Banga, CEO of MasterCard Inc. in the conference call.
Looking at the potential impacts on corporate taxes, the regulatory environment, and infrastructure investment of the Republican administration, the company believes these changes could be a net positive for the company over the next four to five years.
“I do believe like everybody else that in the corporate world, there are a lot of us have built our business on the freer flow of cross-border trade, data and people,” Banga said. “If that were to change over time, that would be a problem, but I don’t believe that that’s what the administration wants to do. They want to grow the economy.”
For the full year 2016, MasterCard reported net income of $4.1 billion, an increase of 7 percent from $3.8 billion a year earlier.
“Though alternative payment methods and international competition may result in some share loss over time, the global electronic payment pie should expand fast enough to ensure healthy revenue growth for years to come,” wrote Jim Sinegal, an analyst at Morningstar Inc.
MasterCard competitor Visa Inc. reports results on Thursday.