Mastercard shares jump after results beat the Street

Key Points
  • Mastercard reports quarterly earnings and revenue that beat analysts' expectations.
  • Share prices rise after the company earnings report.
Ajay Banga, chief executive officer of MasterCard Inc.
Pau Barrena | Bloomberg | Getty Images

Mastercard on Tuesday reported quarterly earnings and revenue that beat analysts' expectations.

Here's how the company did compared with what Wall Street expected:

  • EPS: $1.34 vs. $1.23 expected by analysts surveyed by Thomson Reuters.
  • Revenue: $3.4 billion vs. $3.28 billion expected in the Thomson Reuters survey.

Share prices rose 1.8 percent in the premarket after the company reported earnings.

"We are executing well on our strategy and are pleased to deliver another quarter of record results," said Ajay Banga, Mastercard president and CEO. "As the world becomes more connected, we remain very focused on security. Our investments in technologies like biometrics, tokens, encryption and artificial intelligence are redefining the way both consumers and transactions are protected."

Mastercard's net income rose to $1.43 billion for the quarter, from $1.18 billion a year ago.

As of Sept. 30, the company's customers had issued 2.4 billion Mastercard and Maestro-branded cards.

Third-quarter gross dollar volume was up 10 percent and purchase volume was up 11 percent.

During the third quarter, Mastercard said, it also repurchased approximately 6.4 million shares at a cost of $838 million and returned $235 million to shareholders in dividends. The company now has $2 billion remaining under the current repurchase program authorizations.

Mastercard hoped to build off momentum from the first and second quarters, when the company posted strong numbers as a result of solid payment volume growth, a favorable foreign exchange environment and innovative additions to its card lineup.

Like rival Visa, Mastercard generates revenue by facilitating credit- and debit-card transactions, and both their revenue streams are closely linked to consumer spending power.

Consumer spending in the United States, which accounts for more than two-thirds of nationwide economic activity, has been on an upswing, supported by a tightening labor market.

Mastercard recently announced that customers won't need to sign receipts anymore when they make purchases with the credit card, as of April. Whether to sign or not will now be an optional decision for merchants in the U.S. and Canada.

Commenting on the potential in the payments space, No. 1-ranked payments analyst Lisa Ellis of Bernstein told CNBC's "Closing Bell" that "the reality is consumer payments, which is where Visa and Mastercard play, is extraordinarily efficient today."

Consumer payments "are the one spot where there's not a problem waiting to be fixed," she said earlier this month.