Stronger spending powers Mastercard profit, revenue beat; shares hit record high

Mastercard Inc on Tuesday beat quarterly profit and revenue estimates, as a strong U.S. job market, rising wages and surge in online shopping boosted transaction volumes, sending shares of the world’s second largest payments processor to an all-time high.

The company’s gross dollar volume - dollar value of total transactions processed - rose 5.4 percent in the first quarter, with growth across all geographies.

Around 24 billion transactions were processed, up 18 percent from a year-ago quarter. The gain was led by an 8.4 percent rise in the United States and a 29 percent jump in Europe.

Retail sales in the U.S. rose to their highest in 1-1/2 years in March, according to data published earlier this month, with almost all sectors including autos, electronics, appliances and food and beverage registering growth.

In the U.K. too, retail spending remained healthy, Mastercard said, despite the uncertainty surrounding Brexit. Consumers have been stockpiling goods to get ahead of any border delays due to separation of the country from the European Union.

The company’s stock rose as much as 4.1 percent to $257.4 in morning trade.

Total net revenue rose 8 percent to $3.9 billion, in the quarter ended March 31, beating the average analyst estimate of $3.86 billion (3 billion pounds).

Mastercard, like rival Visa, has been looking to digitisation to drive its business and diversify its customer base. The company recently partnered with Apple Inc and Goldman Sachs for the Apple card, which can be accessed digitally on an iPhone.

Mastercard earlier this year dropped its name from its logo to distance itself from the notion it was only focused on “cards”, and suggest it was making a big foray into digital payments.

A collaboration with Goldman Sachs on its online consumer business platform, Marcus, “to bring new products and services to market over time” could also be on the horizon for Mastercard, the company hinted in its post-earnings conference call.

Brokerage Jefferies said the company’s clean EPS and revenue beat, and partnership win with Apple were positives in the quarter.

Net income rose 26.7 percent to $1.9 billion in the quarter.

Adjusted earnings of $1.78 per share beat the average estimate of $1.66, according to IBES data Refinitiv.