On January 30, Mastercard reported a fourth-quarter profit that exceeded Wall Street estimates, driven by strong consumer spending during the holiday season amid a resilient economy. This led to a 3.8% increase in the company's shares on Thursday.
Consumer spending was supported by continued wage growth and discounts from retailers aiming to attract budget-conscious shoppers.
Affluent consumers benefited from the wealth effect, while the mass segment was supported by the labor market, noted Mastercard CEO Michael Miebach.
The company's cross-border volume, reflecting spending on cards outside their country of issue, surged by 20% in the quarter. CFO Sachin Mehra attributed this increase to accelerated travel spending and cryptocurrency purchases.
Analyst Andrew Schmidt from Citi mentioned, A step up in Q4 volumes was somewhat anticipated given robust holiday trends, but cross-border volume upside was a nice surprise.
Mastercard's diverse global exposure has provided stable volume growth compared to its peers, as per analysts.
In recent years, the company has expanded its value-added services, including fraud protection, to diversify its business model. Additionally, Mastercard acquired threat intelligence company Recorded Future in the fourth quarter.
Miebach highlighted the rise in fraud attempts due to increasing online commerce and the prevalence of AI.
Revenue from Mastercard's value-added services and solutions business grew by 17% in the quarter, while the gross dollar volume of all transactions processed on the platform rose by 12%.
On an adjusted basis, Mastercard's earnings per share were $3.82, surpassing the average analyst estimate of $3.69.
The company's net revenue increased by 16% to $7.49 billion.
Visa, the largest payments processor globally, is scheduled to report earnings later in the day.