Mastercard Suspends Full-Year Earnings Forecast and Tightens Expense Controls

Mastercard suspended its full-year earnings forecast and tightened its controls on expenses, citing the uncertain environment arising from the coronavirus pandemic. For the first quarter, the company expects net-revenue growth in the low-single digits.
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Credit-card titan Mastercard  (MA) - Get Report said Tuesday that it’s suspending its full-year 2020 estimates for net-revenue and operating-expense growth, due to the uncertainty brought on by the coronavirus pandemic.

“The long-term fundamentals of our business remain strong,” the Purchase, N.Y., company said. 

“However, due to the speed with which the Covid-19 situation is developing and the unknown duration and severity of the event,” it decided on the suspension.

“We anticipate giving further updates on our first-quarter earnings call,” the company said.

On Feb. 24, the payments giant said that if the impact of the coronavirus is limited to the first quarter, “we expect that our 2020 annual net revenue growth rate would be at the low end of the low-teens range, on a currency-neutral basis, excluding acquisitions.”

But clearly the impact will last far beyond March 31.

On Tuesday, Mastercard updated its first-quarter forecasts. It expects net-revenue growth in the low-single digits. Currency movements will take away about 2 percentage points from that growth in the quarter, the company said. The dollar has soared during the past two weeks.

First-quarter operating expense should rise in the low-to-mid-single-digits, Mastercard said. 

“We are taking several actions to manage our expenses prudently, including evaluating our travel & entertainment, advertising and marketing and professional fees,” the statement said. “We expect operating-expense savings to ramp as we move forward.”

Many other companies have suspended earnings estimates, too.

At last check, Mastercard’s shares traded at $235.81, up 16%. That compares with a 7.2% gain for the S&P 500 index.