Mastercard Inc. topped profit expectations on Tuesday while continuing to show strong growth in cross-border payments and new types of transactions that bypass the traditional card rails.
The card network earned an adjusted $1.89 a share on revenue of $4.1 billion, beating the FactSet consensus for $1.83 in earnings and matching expectations on revenue. Shares MA, -0.26% were off 0.4% in midday trading.
Chief Financial Officer Sachin Mehra told MarketWatch that the company is benefiting from “relatively strong consumer sentiment and spending,” with some moderations due to geopolitical issues and trade tensions. While the political challenges are weighing a bit on business confidence, he’s encouraged by more accommodative monetary policies in markets like Asia that could boost consumer confidence.
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Mastercard continued to see growth on key metrics, recording a 13% increase in gross-dollar volume, a 16% rise in cross-border volume, and a 18% bump in switched transactions. Increases were partially offset by rises in rebates and incentives, stemming from new and renewed agreements as well as higher volumes.
Sachin talked up some of the company’s recent partnerships, including a credit-card co-branding arrangement with Flipkart, India’s largest e-commerce player. He said the company is also making progress on business-to-business (B2B) initiatives, with its recent acquisition of Transfast helping drive “tremendous reach in order to move from Point A to Point B across borders.”
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The company sees massive opportunity in the B2B space, pegging the addressable market at $120 trillion. Early efforts to gain traction in B2B are often helping accelerate the shift to digital payments, since many B2B transactions don’t involve cards. Mastercard offers non-carded options in this area and Sachin said the company is continuing to win deals with its B2B products.
Barclays analyst Ramsey El-Assal praised Mastercard’s “solid fundamentals” while commenting that the lack of a positive stock reaction reflects “the stock’s recent run, as well as heightened expectations.” Mastercard’s stock has risen 49% so far this year, while the S&P 500 SPX, -0.26% has climbed 21%.
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