Mastercard Tops Q2 Earnings Forecast Despite Pandemic-Trigger Consumer Spending Slump

Mastercard said an increase in contactless payments could help support current quarter transactions following a stronger-than-expected second quarter earnings report.

Mastercard Inc.  (MA) - Get Report posted better-than-expected fourth quarter earnings Thursday, but noted a sharp decline in transaction volumes as consumer spending collapsed during the peak of the coronavirus pandemic.

Mastercard said adjusted profits for the three months ending in June were pegged at $1.4 billion, or $1.36 per share, down 28% from the same period last year but firmly ahead of the Street consensus forecast of $1.16 per share. Group revenues, Mastercard said, fell 19% to $3.3 billion, just ahead of analysts' estimates of a $3.245 billion tally.

The group transactions fell 10% from last year on a gross dollar-volume basis, with purchase volumes down around 9%. Cross-border volumes fell 45%, Mastercard said, on a local currency basis. Litigation provisions were pegged at $22 million, Mastercard said, while operating expenses fell 5% to $1.628 billion. 

“Our platform uniquely positions us to support the shift to digital across consumer and business payments that has been accelerated by the COVID-19 pandemic, including an increase in consumers’ preference for contactless payments,” said CEO Ajay Banga. “Further, our broad range of market-leading services—from insights and analytics to cybersecurity tools—means we are able to support our partners’ evolving needs in a rapidly changing world. We continue to execute against our strategy and are excited to enhance and grow our open banking reach and capabilities, including through the planned acquisition of Finicity.”

Mastercard shares were marked 0.75% higher in early trading immediately following the earnings release to change hands at $311.60 each, a move that would nudge the stock's year-to-date gain to around 5%.