April 30 (Reuters) – Mastercard beat Wall Street estimates for first-quarter profit on Thursday, as resilient consumer spending supported sustained transaction volumes on its network.
Spending has largely held up despite concerns of economic uncertainty fueled by the Iran war and U.S. tariffs, even though consumer confidence has waned in a sluggish labor market.
A bulk of the spending is coming from wealthier households who continue to make discretionary purchases, while lower-income families pare back on non-essentials.
Experts are increasingly highlighting the bifurcation as the so-called “K-shaped” economy continues to underpin consumer trends, cushioning industries such as travel and entertainment.
Wall Street executives and experts have said while trends have largely remained stable for now, higher gasoline prices spurred by the war could start pulling spending away from other categories.
Mastercard reported a 7% jump in gross dollar volume – the value of all transactions processed on its platform. Net revenue climbed 16% to $8.4 billion in the quarter.
Peer American Express, whose customer base is typically seen as more affluent, topped first-quarter profit expectations last week. Visa beat quarterly estimates for profit as well, supported by resilient consumer spending.
Payment processors offer the earliest window into consumer spending health, given their big market share in facilitating transactions on their individual networks.
Earlier this month, most of the big U.S. lenders also reported an uptick in consumer loan balances, signaling sustained borrowing despite macroeconomic pressures that typically prompt caution.
Cross-border volume, a metric that tracks spending on cards outside the country they were issued in, climbed 13%, despite airspace closures over the Middle East disrupting major global flight corridors and prompting rerouting and thousands of cancellations.
Mastercard’s adjusted profit per share came in at $4.6, above the analysts’ average estimate of $4.4 per share, according to data compiled by LSEG.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Arun Koyyur)
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