Mastercard is feeling optimistic about the year ahead as the card network comes off a strong quarter that beat Wall Street's consensus.
Mastercard tightened its full-year revenue guidance toward the top end of the guidance provided in Q1 on the assumption that consumer and business spending remains healthy, Mastercard Chief Financial Officer Sachin Mehra said during the company's second-quarter earnings call with analysts Thursday morning.
The company now expects revenue growth in the "low teens" range on a currency neutral basis, excluding acquisitions. For the third quarter, revenue growth is expected to be on the high end of "a low double digit" range," Mehra said.
"Consumer spending remains healthy. The macroeconomic environment has been supported with low unemployment rates and for the most part, wage growth continuing to outpace the rate of inflation," Mehra said. "That said, ongoing geopolitical and economic uncertainty remains, with global policy shifts ongoing."
Mehra also said that Mastercard is expecting to feel the effects of the
"Conversions have actually started. They're still ramping up, so it still takes some time before the conversions actually come into play," Mehra said. "We expect this year the net revenue impact to be minimal to our overall company's net revenues. The vast majority of the impact we expect to feel will be next year."
Revenue for the second quarter hit $8.1 billion, an increase of 10% year over year and ahead of analysts' $8 billion estimates, according to Capital IQ. Net income tallied $3.7 billion, in line with analysts' expectations and an increase of 14% from the same reporting period last year. Diluted earnings per share hit $4.07, just ahead of the $4.02 consensus estimate.
Revenue was buoyed by increases in Mastercard's payment network volume, which jumped 13% year over year, led by a 9% increase in gross dollar volume to $2.6 trillion, 15% growth in cross-border payment volume and a 10% increase in switched transactions.
Value-added service revenue increased 23% compared with the same prior-year period, largely due to security, digital and authentication products.
Operating expenses also increased, rising 15% year over year to $3.4 billion, mostly due to jumps in administrative expenses.
William Blair analysts Andrew Jeffrey and Cristopher Kennedy called the quarter "squeaky clean" and "the most attractive legacy fintech in our universe," according to their research note.
"Like Visa, we see Mastercard as well positioned to build on payment ecosystem leadership," the research note said. "It is our view that the company will continue taking global share and we see incremental cross-border payments opportunity driven by remittances, commercial cards and burgeoning B2B payments. Our expectation is that Mastercard will play a leading role in cross-border stablecoin commerce, and we see little threat to its consumer payments franchise."
Shares in Mastercard were trading at $575.11 as of 11:44 am in New York, up 2.8%, or $15.75, from market open.
Mastercard's strong showing comes two days after
