Chillin' out till it needs to be funded
Though the earnings growth may be unseemingly low at 20%, Mastercard’s growth to $2 Tln in purchase volume on Credit Cards in 2011 and $1.1 Tln on Debit cards is a strong testament to the strength of the plastic currencies. Credit and Debit card purchase volumes were even stevens in the fourth Quarter within the US at $143 bln and $139 bln while iWorldwide excl US Credit Cards purchases grew to $405 bln and Debit Cards to a $176 bln.
While the growth of Debit cards in value of transactions is double that of credit plastic int he US it still outgrows Credit cards in the rest of the world. In volume, the 9.35 bln transactions on card ( 4 bln in the US) compare with 5.58 bln on debit cards (1.6 bln in the US)
With 1.8 bln Master card and Maestro issues active currently, the company enjoys a Operating margin of 51.9% for 2011 with expenses at $3.2 bln and Full year revenues at $6.7 bln. The operating margin was a healthy 44% in the fourth quarter and an EPS for the Full year of $18.6 means the card issuer’s US listed stock could repeat ts 2011 performance in the Top 3 in returns for the year despite an effective tax rate of above 32%. The long term margins are likely to stay above 50%
The company is promoting the new Paypass touchless swipes in new global markets and the proprietary IPS systems with Keybank among others to build on its advantages. the company has provided $770 mln for settlements with merchants in the ongoing legal dispute.
The company guides a 50% operating margin with 12-14% revenue growth for the next two years
Deals are also near finalisation with major US banks with new non exclusivity criteria. For its mobile payment app it is running pilots in Australia ( Qkr) and Latin America ( Audio on the conference was interrupted)
The company reported earnings of $1.8 bln after tax on $6.7 bln in revenues, very few passing this watermark of profitability at this size as also Facebook in all probability!