Mastercard Sees Profit Growth as Travel and Entertainment Spending Increases


Key Takeaways

  • Mastercard’s Q2 profit hit $2.7 billion, a 10% rise from last year, surpassing predictions.
  • Earnings per share reached $2.89, exceeding the estimated $2.82.
  • Mastercard’s shares surged about 16%, outperforming rivals like Visa and American Express.
  • Gross dollar volumes rose by 12%, cross-border spending surged by 24%.
  • Net revenue soared by 14% to $6.3 billion, indicating strong growth.

Mastercard reported a substantial increase in its Q2 earnings, exceeding expectations, as customers resumed spending on travel and entertainment despite fears of a recession and rising interest rates. The New York-based company made a profit of $2.7 billion in the three months up to June 30, reflecting a 10% increase from last year.

Earnings Beat Estimates

According to a Reuters report, the company’s profit of $2.89 per share surpassed the predicted $2.82 per share, according to data from Refinitiv IBES. Darrin Peller, an analyst from Wolfe Research, commented on the positive results, stating that Mastercard could compound well throughout 2023.

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Mastercard Outperforms Visa and American Express

The report noted that Mastercard shares have risen nearly 16% this year, surpassing competitors Visa and American Express. This comes as part of a lukewarm earnings season for card issuers, who have felt the pressure after being relatively stable compared to other industries in the previous year.

Increase in Gross Dollar Volumes and Cross-Border Volume

The report noted that the gross dollar volumes, representing the total value of all processed transactions, increased by 12% to $2.3 trillion compared to a year ago.

Cross-border volume, indicative of travel demand as it tracks spending on cards outside the country of issue, saw a significant 24% increase. Mastercard CEO Michael Miebach highlighted this increase, noting that cross-border travel volume had reached 154% of pre-pandemic levels.

Net Revenue Growth

Mastercard’s net revenue increased by 14% to $6.3 billion, indicating strong growth in the quarter.

What We Think

Mastercard’s exceptional Q2 performance, exceeding estimates across various metrics, underscores its resilience amid economic uncertainties.

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The significant increase in spending on travel and cross-border transactions highlights a promising recovery in consumer behavior. Outperforming competitors amid a lukewarm earnings season for the sector demonstrate Mastercard’s strong market position.

This robust performance signals a positive trajectory, potentially reflecting a broader economic rebound and consumer confidence in the market’s recovery.

Learn more in the entire Reuters report.


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