Mastercard’s Strong Results Beat Earnings and Revenue Estimates

Mastercard (MA) released its earnings report this morning. The company reported earnings per share or EPS of $1.50 in 1Q18, which beat expectations from Wall Street analysts by $0.26. According to the company’s management, continued deployments are being made toward digital solutions as well as security to boost growth prospects.

Mastercard’s effective tax rate declined in 1Q18 compared to 1Q17, mainly because of the Tax Cuts and Jobs Act. The company’s competitors (XLF) Visa (V), American Express (AXP), and Discover Financial Services (DFS) have posted EPS of $1.11, $1.86, and $1.82, respectively, for the quarter.

Mastercard posted revenues amounting to $3.58 billion in 1Q18, beating expectations by $330 million. The company’s 1Q18 revenues were positively affected as switched transactions rose 17% on a year-over-year basis. However, the company’s gross dollar volumes and cross-border volumes rose 14% and 21%, respectively, on a local currency basis, and they also favorably affected 1Q18 revenues.

Mastercard is expected to experience a boost in revenues, mainly because of increased adoption of digital capabilities. Moreover, the company’s business would be positively affected by improvements in the global economy and consumer spending. Mastercard saw a substantial rise of 43% in 1Q18 on a year-over-year basis in total operating expenses.