MasterCard Inc.’s (MA) first quarter operating earnings per share of $3.46 came in substantially ahead the Zacks Consensus Estimate of $3.14 and $2.80 in the year-ago quarter. Net income for the reported quarter was $455 million, up 24% from $367 million in the prior-year quarter.

Results for the reported quarter improved over the prior-year quarter due primarily to better pricing, an increased number of processed transactions and higher operating margin. However, higher operating expenses as a result of increased fixed costs were on the downside.

Total revenue increased 13.1% year-over-year to $1.3 billion, primarily due to 5% favorable pricing changes, 4.6% growth in the number of processed transactions to 5.4 billion and a 10.9% increase in cross-border volumes. GDV [gross dollar volume] increased 8.3% to $631 billion during the reported quarter. As of Mar 31, 2010, MasterCard issued 1.6 billion MasterCard and Maestro-branded cards.

Total operating expenses increased 2.2% year-over-year to $608 million. Currency fluctuation contributed 1.7 percentage points of the increase in expenses. The overall increase was primarily attributable to a 2.1% increase in general and administrative expenses and a 13.3% increase in depreciation and amortization expenses. The operating margin for the reported quarter came in at 53.5%, up from 48.6% in the year-ago quarter.

MasterCard’s effective tax rate for the reported quarter was 34.6%, up from 33.2% in the year-ago period. The increase was primarily attributable to an adjustment to the balance of deferred taxes that was recorded in the first quarter of 2009. This was partially offset by a favorable mix of earnings and a lower state tax rate.

As of Mar 31, 2010, net operating cash flow was $95 million, down from $416 million as of Mar 31, 2009. At the end of Mar 31, 2010, cash and equivalents totaled $2.12 billion; long-term debt totaled $21 million while total equity was recorded at $3.83 billion.

Dividend Update

On Feb 2, 2010, the board of MasterCard declared a quarterly cash dividend to holders of shares of its Class A common stock and Class B common stock. The cash dividend of 15 cents per share will be paid on May 10, 2010 to the holders of record in both categories as on Apr 9, 2010.
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