Mastercard’s third-quarter earnings results demonstrated that consumers are still spending, and sentiment is healthy amid a resilient labor market and the Federal Reserve’s September cuts to interest rates.
CEO Michael Miebach said on a conference call with analysts: “On Halloween, well, there’s nothing spooky here.”
Revenue growth of 14%, to $7.4 billion, was boosted by healthy consumer spending, which also spurred cross-border volume growth of 17% year over year, he said.
“The macroeconomic environment remains supportive and continues to underpin the strength in consumer spending,” Miebach said during the call.
Commercial volumes gained 11% year over year in the quarter on a currency-neutral basis.
Supplemental materials from the company detailed that transactions were 11% higher, and the number of cards wielded by consumers was 6% higher, to 3.4 billion, globally.
Amid the continued shift to digital transactions, Mieback said during the call, “there’s still a long runway for the secular shift for person-to-merchant payments.”
The payment network’s acceptance footprint has effectively doubled over the past five years, and Tap on Phone is now live in over 110 markets. Since the beginning of the year, the number of Tap on Phone locations has almost doubled.
Chief Financial Officer Sachin Mehra said on the call that in the United States, payment volumes were up 7%, with credit gaining 6% and debit growing by 8%.
Card-present growth was aided by an increase in contactless payments, which now represent 70% of all in-person transactions, Mehra said.
Value-added services and solutions net revenue increased 19%, to $2.7 billion, tied to the scaling of Mastercard’s fraud and security products and identity and authentication solutions, management said on the call.
In the current quarter, transactions through the first few weeks of October remained “generally stable sequentially, both in the U.S. and across the globe as spending remained healthy,” Mehra said.
Revenue growth in the current quarter is expected to be at the low-teens percentage point rate.
Investors sent the shares slightly lower, by 1%, on a day when broader market indices fell.
During a question-and-answer session with analysts, management said the strength in consumer spending was reinforced by interest rate cuts from the Fed.
Elsewhere, Miebach said tokenization is now tied to “billions of transactions. The benefit of tokenization is pretty clear. It helps on the security side … as the data will be only available for one-time use. That drives adoption across the ecosystem.”
Asked on the conference call about China, Miebach said the company has been “live” in China since May, with a single-use card that can be used domestically and across borders.
“And we’re busy investing in acceptance across the country,” said Miebach, who added that “there’s interest from the Chinese government … to link their economy more closely to the global economy … They’re keen on building out acceptance so that people who travel into China can use cards as they would normally anywhere else in the world.”
Elsewhere on the call, management was asked about the Department of Justice’s antitrust lawsuit against Visa.
“Obviously, we all read the headlines,” Miebach said. “We saw that allegations have been made. Obviously, we can’t comment on that. Our view always has been we have to compete in a competitive market.”
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