MasterCard revenue misses estimates hurt by rebates, stronger dollar

By Nikhil Subba

REUTERS - MasterCard Inc, the world's second-biggest payments processor, reported lower-than-expected quarterly revenue on Tuesday, reflecting an increase in rebates, incentives and a stronger U.S. dollar.

The company, which deals in 150 currencies, also warned that the strong dollar was likely to constrain revenue and earnings growth this year.

Purchase, New York-based MasterCard, whose shares were down 3.2 percent, reported revenue of $2.76 billion for the quarter ended Dec. 31 - a rise of 9.5 percent from a year earlier but short of the average analysts' estimate of $2.79 billion.

The strong dollar is expected to negatively impact revenue growth by about 2 percent and net earnings by about 3 percent in 2017, Chief Financial Officer Martina Hund-Mejean said.

The dollar, already near a 14-year high against the euro, is expected to appreciate further if the U.S. economy picks up speed and inflation rises under the Trump administration.

MasterCard's fourth-quarter net income rose 4.8 percent to $933 million, or 86 cents per share, from $890 million, or 79 cents per share, a year earlier.

On an adjusted basis, the company also earned 86 cents per share, beating the average analysts' estimate by a cent, according to Thomson Reuters I/B/E/S.

MasterCard reiterated its 2016-2018 guidance for low double-digit percentage revenue growth and EPS growth in the mid-teens.

Revenue growth in the first half of 2017 is likely to be lower than in the second half due to higher incentives, Hund-Mejean said on a call with analysts.

Full-year operating expenses are expected to increase by a high single-digit percentage on a currency-neutral basis.

MasterCard, which processes more than 65,000 transactions a minute, said gross dollar volumes rose 9 percent to $1.2 trillion in the quarter on a local currency basis.

The United States, the company's largest market, accounted for a little under a third of the total.

MasterCard, said cross-border volumes - the value of transactions made by card holders outside the home country of the card-issuer - increased 13 percent.

Up to Monday's close of $109.30, the company's shares had risen about 23 percent in the past 12 months.

Visa Inc, the world's biggest payments processor, will report quarterly results on Thursday.

(Reporting by Nikhil Subba in Bengaluru; Editing by Ted Kerr and Shounak Dasgupta)