Mastercard signals resilient consumer spending as profit tops estimates

By Prakhar Srivastava and Manya Saini

(Reuters) -Mastercard eased concerns about a potential slowdown in consumer spending after beating Wall Street estimates for second-quarter results on Thursday, sending its shares up nearly 3%.

The report rounded off a largely upbeat earnings season from the biggest U.S. payments firms, but analysts have projected a sharper pullback in discretionary purchases due to sticky inflation, tariff uncertainty and geopolitical tensions.

"Consumer spending remains healthy, supported by low unemployment and wage growth that continues to outpace inflation," CEO Michael Miebach said on a post-earnings call with analysts.

"While macro uncertainty remains due to government actions and geopolitical tensions, overall, we remain positive about our growth outlook".

Gross dollar volume - the total value of transactions processed on Mastercard's platform - rose 9% in the second quarter.

Its adjusted profit of $4.15 per share beat estimates of $4.03, according to data compiled by LSEG.

Mastercard's net revenue jumped 17% on a reported basis to $8.1 billion, sailing past expectations of $7.97 billion.

TRAVEL BUMP

Cross-border volume, which tracks spending on cards outside their country of issue, jumped 15%, pointing to still strong consumer appetite for travel and leisure.

Fears that trade tensions between the U.S. and key allies like Canada and the European Union, along with geopolitical turmoil in the Middle East, would weigh on travel demand had clouded the outlook for payments firms.

"Mastercard benefits from strong discretionary demand given its credit skew and robust cross-border business," analysts at William Blair said.

"We reiterate our view that Mastercard is the most attractive legacy fintech in our universe. We see the company benefiting from ongoing global share gains," the brokerage added.

Analysts also note that the business models of Mastercard and rival Visa are resilient because they are closely tied to everyday consumer behavior.

Most transactions - whether for groceries, fuel or fewer discretionary items - still flow through the same cards and platforms, helping sustain volumes even as some shoppers pare back on non-essential spending.

(Reporting by Prakhar Srivastava and Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)

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