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Mastercard Posts Earnings Beat but Travel Downturn Hits Revenue

Mastercard posts better-than-expected third-quarter earnings as consumers continue to pivot to plastic, though a drop in travel due to the pandemic hits revenue.

Mastercard  (MA)  on Wednesday posted better-than-expected third-quarter earnings as consumers continued to pivot away from cash and toward plastic for both online and in-person transactions, though a drop in travel and leisure activity due to the pandemic led to lower transactions and revenue.

The Purchase, N.Y., company posted their-quarter adjusted income of $1.6 billion, or $1.60 a share, vs. $2.2 billion, or $2.15 a share, in the year-earlier quarter. The results were slightly better than the $1.65 a share consensus forecast in a survey by FactSet.

Revenue totaled $3.8 billion, down 14% from $14.5 billion a year earlier, though above FactSet estimates of $3.96 billion. Operating expenses dropped to $1.7 billion from $1.8 billion a year earlier, while operating margin narrowed to 54.9% from 59.4%.

“We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge,” CEO Ajay Banga said in a statement. “Meanwhile, we are winning new business in core payments and are making real progress with our digital solutions, differentiated service offerings and multi-rail capabilities.”

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Mastercard in June agreed to buy Finicity, a consumer-financial-data and verification-solutions company, for $825 million plus potentially an additional $160 million conditioned on the acquired company's performance.

As of Sept. 30, the company’s customers had issued 2.7 billion Mastercard and Maestro-branded cards.

During the third quarter, Mastercard said it repurchased approximately 6.5 million shares at a cost of $2.1 billion, and paid $402 million in dividends. Quarter-to-date through Oct. 23, the company repurchased roughly 1.1 million shares at a cost of $392 million, leaving $4.5 billion under the company's current repurchase program.

Shares of Mastercard were down 6.32% at $297.06 in trading on Wednesday. 

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