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July 29, 2021, 3:05 p.m. EDT

Mastercard tops earnings expectations as spending recovery continues

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By Emily Bary

Mastercard Inc. topped expectations with its second-quarter results Thursday amid a continued recovery in spending trends.

The company reported second-quarter net income of $2.1 billion, or $2.08 a share, up from $1.4 billion, or $1.41 a share, in the year-prior quarter. After adjustments, Mastercard /zigman2/quotes/207581792/composite MA +3.31% earned $1.95 a share, up from $1.36 a share a year earlier and ahead of the FactSet consensus, which called for $1.74 a share.

Mastercard’s revenue increased to $4.53 billion from $3.34 billion, while analysts were modeling $4.37 billion. The company pointed to a continued spending recovery both domestically and in the cross-border category.

“In terms of how people are spending, they are definitely getting out more as we’re seeing improvement in card-present spending, particularly in the travel, retail and restaurant categories, while e-commerce continues to be strong,” Chief Executive Michael Miebach said on Mastercard’s earnings call, speaking of in-person spending. He also pointed to “improvements in both domestic and cross-border travel with significant upside potential.”

Shares are up 1.6% in Thursday afternoon trading.

Gross dollar volume for Mastercard was up 33% in the second quarter, while switched transactions grew 41%. Cross-border volume rose 58%.

Chief Financial Officer Sachin Mehra told MarketWatch that spending is rallying in discretionary areas like lodging and clothing, which is also helping to drive a rebound in credit spending. Though affluent customers tend to have more discretionary income that can translate to credit spending, the resurgence in credit has been “broad based,” he continued.

U.S. debit spending volumes increased 23% in the quarter, while U.S. credit volumes were up 50%.

Geographically, Mastercard is upbeat about increased vaccination rates in Canada, which is “a positive sign” in terms of driving travel into the country, Mehra continued. The company is also seeing “good outbound travel” to Latin America and within Europe, but travel to the Asia-Pacific region is still limited, even as Mastercard sees improving domestic spending trends there.

Mastercard’s report comes after Visa Inc. /zigman2/quotes/203660239/composite V +2.58% posted its own results Tuesday afternoon , showing improvements in spending categories like travel and entertainment but more room for recovery in the cross-border category. Visa’s stock had dipped 1.6% in Wednesday’s session while Mastercard’s fell 1.8%.

Shares of Mastercard have tacked on 0.2% over the past three months as the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.75% has gained 5.0%.

$ 356.00
+11.42 +3.31%
Volume: 4.05M
Oct. 15, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$340.02 billion
Rev. per Employee
$ 230.99
+5.81 +2.58%
Volume: 6.36M
Oct. 15, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$478.92 billion
Rev. per Employee
+33.11 +0.75%
Volume: 2.05B
Oct. 15, 2021 4:46p

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