This summary is based on the first quarter fiscal 2007 earnings call conducted by MasterCard Inc. (MA: chart) on May 2, 2007.

Chief Financial Officer: Chris A. McWilton

Head of Investor Relations: Barbara Gasper

Key Investors Issues

- The earnings per share were $1.57 in the first quarter.
- Revenue of $915 million represents a growth of 23.9% over prior year.
- At the end of the quarter, the firm had $2.5 billion in cash, cash equivalents and available-for-sale securities.

First Quarter Fiscal 2007 Financial Highlights

For the quarter, the company reported net income of $215 million, or $1.57 per share, on a diluted basis, the highest quarterly net income ever recorded by the company.

The net revenue for the quarter was $915 million, a 23.9% increase over 2006.

Currency fluctuation of the euro relative to the US dollar contributed 2.5 percentage points of the revenue increase. Approximately 5 percentage points was attributable to a restructuring of pricing, primarily on cross border transactions implemented in April 2006. Currency fluctuation of the euro relative to the US dollar contributed approximately 1.9 percentage points of the increase in expenses for the quarter. The company experienced 9.6 percentage point improvement in operating margin for the quarter demonstrating leverage in its business model.

In the first quarter, the firm experienced continued growth in both gross dollar volume (GDV) and process transaction.

GDV grew 16.4% on a local currency basis and 19.1% on a US dollar converted basis to $509 billion. The purchase volume was up 18% on a local currency basis and cash volume was up 12.1% on a local currency basis.

While the United States remains the firm’s largest region in terms of both volume and revenue, regions outside of the US such as EMEA and Latin America continue to grow at faster rates demonstrating the global strength of the company’s business.

The GDV and cash volume in the Asia-Pacific region are lower than previously reported, as the firm decided to remove commercial funds transfers in China from these volumes. Commercial funds transfers are generally transactions that facilitate the exchange of funds between bank branches, but they do not involve traditional withdrawals or balance transfers. The management believes that this is a more accurate reflection of its cash volume in Asia-Pacific and correlates more directly to the revenues that it generates in that region. The firm has adjusted historical volumes in Asia Pacific enabling to perform year-over-year comparisons.

One of the metrics that the firm focuses on is revenue yield, where net revenue for $1000 of GDV.

This metric was 18 basis points in the quarter versus 17.3 basis points in the first quarter of last year. Calculation incorporates the adjustment in Asia-Pacific, driven by pricing changes and strong process transaction growth in the quarter. Process transactions are those processed across the network, increased 19.4% to $4.2 billion for the quarter.

The net assessment increased $18 million or 17.4% to $262 million.

Gross assessments increased $49 million or 11.9% over 2006, to increase GDV offset by the reclassification implemented in Europe during April 2006 to address SEPA requirements.

As a result of these changes, certain assessment fees totaling $31 million were reclassified to the currency conversion at cross-border component within operations fees. Net assessments, as a percentage of gross assessments, declined due to an increased incentive, primarily from new and renewed customer and merchant agreement.

The net operations fees increased $158 million or 31.9% to $653 million.

Gross operations fees increased $181 million or 33.3%. This growth was driven in part by two factors.
- Growth in profits transaction and gross dollar volume.
- An increase in currency conversion and cross-border revenues, driven by fee restructuring that took place in April 2006.