Mastercard Sticks by Forecast Even as Spending Growth Cools

(Bloomberg) -- Mastercard Inc. is sticking by its outlook for 2019 even though spending growth on its cards slowed in the first quarter.

  • Adjusted net revenue this year will climb by a percentage in the “low teens” as expenses increase in the “high end of high single digits,” the company said Tuesday, reaffirming previous guidance.
  • Card spending climbed 12 percent through March to $1.48 trillion, just below the $1.49 trillion analysts in a Bloomberg survey were expecting and the slowest growth since the third quarter of 2017.

Key Insights

  • While Mastercard has been investing in its cross-border payments capabilities, the firm has warned that a stronger U.S. dollar as well as a drop-off in cryptocurrency purchases would cause overseas spending on its network to moderate. Those warnings finally came to fruition: Cross-border payments climbed just 13 percent in the quarter, the smallest increase in at least two years of data provided by the network.
  • Mastercard had to spend more to lure retailers and banks to use its products. The firm offered $1.74 billion in rebates and incentives, in line with the $1.73 billion average of analyst estimates compiled by Bloomberg.

Market Reaction

  • Mastercard shares climbed 3 percent to $254.46 at 9:36 a.m. in New York. The shares have gained 35 percent this year, compared with the 27 percent advance of the S&P 500 Information Technology Index.

Read More

  • “We’re off to a very good start this year with strong revenue and earnings growth,” Chief Executive Officer Ajay Banga said in a statement Tuesday announcing first-quarter results.
  • Read the full statement here.

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