Card spending slows, hurting revenue growth amid inflation, says Mastercard

Mastercard Inc. dropped after warning revenue growth would slow even faster than expected this quarter, stoking fears that inflation has put a damper on consumer spending.
 

The payments giant said spending on its cards increased 11% to $1.73 trillion in the fourth quarter, missing the $1.77 trillion average of analyst estimates compiled by Bloomberg. The company also warned revenue for the first quarter would climb by a percentage in the “high end of high single digits,” while analysts in a Bloomberg survey were expecting revenue to increase 10%.

“While macroeconomic and geopolitical uncertainty persists, consumer spending has been remarkably resilient,” Chief Executive Officer Michael Miebach said in a statement announcing the results. “We are well prepared to adjust our investment profile quickly if needed.”

Mastercard shares slipped 1.1% to $378.35 at 9:47 a.m. in New York trading. The stock has climbed 9.8% in the past year, compared with a 12% decline for the S&P 500 Information Technology Index.

Net revenue for the fourth quarter jumped 12% to $5.82 billion, in line with the $5.8 billion average of analyst estimates compiled by Bloomberg. Expenses jumped 10% to $2.6 billion, which was also in line with what was expected.

In all, the company reported earnings of $2.53 billion for the final quarter of the year, or $2.62 a share. That compares with the $2.58 average of analyst estimates.

Mastercard and its rival Visa Inc. have so far said that inflation hasn’t weighed on consumers’ overall spending patterns. Instead, card customers have shifted their spending to lower-cost items or generic brands. And the two companies have said they continue to get a boost from spending on travel and dining with pandemic-related restrictions easing globally.

“As we look at the broader economy, we see the continued recovery of cross-border travel, with volumes up 59% versus a year ago and we’re encouraged by Asia opening up further,” Miebach said.

Net revenue for the year is likely to grow by a percentage in the “low teens,” Mastercard said in a presentation posted on its website. Operating expenses, meanwhile, are likely to fall by a percentage in the “mid single digits,” the company said. That’s in line with what analysts are expecting.