Mastercard Inc (NYSE:MA) stock fell over 0.3% in the after-hours session 29th April, 2021 (Source: Google finance) after the company delivered about 6% fall in first-quarter profit, mainly driven by a steep decline in cross-border spending on its cards because of a slump in international travel due to the COVID-19 pandemic.
The company posted the net income, excluding exceptional items, of $1.7 billion, from $1.8 billion, a year earlier. The company’s long-term debt was $13.22 billion, up 9.9% from the level as of Dec 31, 2020. The cash and cash equivalents of $7.25 billion has declined 28.4% from the level as of Dec 31, 2020. Gross dollar volume rose up 8% to $1.7 trillion while cross-border volumes plunged 17% on a local-currency basis. Switched transactions, which indicate the number of times a company’s products were used to facilitate transactions, were up 9% year over year. As of Mar 31, 2021, the company’s customers issued 2.8 billion Mastercard and Maestro-branded cards.
Meanwhile, over the past year, major card companies and payment processors have been affected by a near collapse in travel demand and spending on non-essentials during the COVID-19 pandemic. A rebound from last year’s pandemic-fueled recession has lifted consumer spending in parts of the world, but new cross-border curbs due to a resurgence in infections are weighing on credit-card issuers’ prospects.
MA in the first quarter of FY 21 has reported the adjusted earnings per share of $1.74, beating the analysts’ estimates for the adjusted earnings per share of $1.57, according to Refinitiv IBES data. The company had reported 4 percent decline in the adjusted revenue to $4.2 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue of $3.99 billion. The decline in revenue is driven by cross-border volumes and growth in rebates and incentives. Total adjusted operating expenses have increased 7% year over year to $2 billion due to a rise in general and administrative expenses. Other revenues rose 27% year over year, including a 3% increase on acquisitions. Remaining growth was driven, mainly by the company’s Cyber & Intelligence and Data & Services solutions. The company has posted the adjusted operating margin of 52.9%, which was down 180 basis points year over year.
Additionally, the company during the quarter, back 3.9 million shares at a cost of $1.4 billion and paid out $439 million as dividends. The company had generated cash from operating activities of $1.46 billion, down 21.3% year over year.