(Bloomberg) — Mastercard Inc. said spending on its cards soared in the first quarter as consumers clamored to get back on the road and take to the skies.
Even as the omicron variant roared in the early days of the year, overall spending on the company’s cards jumped 22% to $1.52 trillion, in line with the average of analyst estimates compiled by Bloomberg. Overseas spending climbed 53%.
“Cross-border travel reach 2019 levels as of March for the first time since the pandemic began,” Chief Executive Officer Michael Miebach said on a conference call with analysts. “We’re off to a strong start in 2022.”
Governments around the world have been lifting travel restrictions, prompting consumers to get back to flying and dining out, a boon for Mastercard and its rivals. Visa Inc. shares surged after the company said Tuesday that purchase volumes climbed 17% in its fiscal second quarter, which ended March 31.
Shares of Purchase, New York-based Mastercard climbed 3.7% to $374.86 at 11:54 a.m. in New York, pushing this year’s gain to 4.4%.
Mastercard said its decision to withdraw from Russia following President Vladimir Putin’s invasion of Ukraine crimped revenue in the first quarter by $30 million. The company also adjusted guidance for its full-year performance: It now expects net revenue to climb by a percentage in the “high end of mid-teens” range, compared with an earlier forecast of a percentage in the “high teens.” Expenses, meanwhile, are now likely to climb by a percentage in the “high single digits,” compared with a previous target of a percentage in the “low double digits.”
“War returned to Europe for the first time in decades,” Miebach said. “Here we are thinking that we’re going to get out of omicron, and then a few days later we have an invasion in Europe. So for our teams around the world it continues to be a never-ending marathon.”
Net revenue jumped 24% to $5.2 billion, topping the $4.92 billion average estimate, as fees from cross-border spending soared 50%. Net income for the quarter rose 44% to $2.6 billion, or $2.68 a share. Analysts were expecting profit of $2.17 a share.
Rising Expenses
Mastercard, which has been on an acquisition spree as it seeks to boost revenue from data and services, said expenses for the quarter climbed 13% to $2.2 billion. Earlier this month, the company completed its acquisition of the artificial-intelligence startup Dynamic Yield.
The company inked an expanded deal with Capital One Financial Corp. in the quarter, and Mastercard will now be the issuing network for a larger number of new originations across the lender’s consumer and small-business card products. For the first time in a decade, Mastercard said Wells Fargo & Co. will issue proprietary and co-brand consumer credit cards on its network, and it will also work with the payment giant to issue small-business cards.
“A lot of this is about cultivating the relationship and showing how you can bring them value with the rest of your assets, which goes well beyond the network,” Chief Financial Officer Sachin Mehra said in an interview. “We’re pleased to be able to earn their trust.”
(Updates with executives’ comments beginning in third paragraph.)
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