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By Arasu Kannagi Basil
(Reuters) - Mastercard reported a fourth-quarter profit that beat Wall Street estimates as a resilient economy encouraged consumers to ramp up spending during the holiday season, sending the payments processor's shares up 3.8% on Thursday.
Consumer spending continues to be underpinned by a solid labor market and continued wage growth, while retailers also offered discounts to attract budget-conscious shoppers during the holiday season.
"Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market," Mastercard CEO Michael Miebach said.
The company's cross-border volume, which tracks spending on cards outside of the country of their issue, jumped 20% in the quarter.
Chief Financial Officer Sachin Mehra said cross-border volume benefited from a pull forward of travel spend and cryptocurrency purchases.
"A step up in Q4 volumes was somewhat anticipated given robust holiday trends, but cross-border volume upside was a nice surprise," according to Citi analyst Andrew Schmidt.
Mastercard's more balanced global exposure compared with its peers has resulted in continued stability in volume growth, analysts have said.
The company in recent years has also bolstered its value-added services such as fraud protection to diversify its business model.
Mastercard finalized the $2.65 billion acquisition of threat intelligence company Recorded Future during the fourth quarter.
"Fraud attempts are increasing at high levels as commerce increasingly moves online and as AI becomes more prevalent," Miebach said.
Revenue from Mastercard's value-added services and solutions business increased 17% in the quarter.
Gross dollar volume, or the value of all transactions processed on the company's platform, rose 12%.
On an adjusted basis, Mastercard earned $3.82 per share, beating the average analyst estimate of $3.69, according to data compiled by LSEG.
The company's net revenue rose 16% to $7.49 billion.
Visa, the world's largest payments processor, will report earnings later in the day.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shounak Dasgupta)