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Earnings Results: Mastercard stock gains after earnings beat

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Mastercard Inc. posted surprise growth in revenue Thursday morning while topping earnings expectations, as government stimulus boosted spending and as domestic travel improved.

The company reported first-quarter net income of $1.8 billion, or $1.83 a share, up from $1.7 billion, or $1.68 a share, a year earlier. After adjusting for special items and the impact of equity investments, Mastercard
MA,
-1.52%

earned $1.74 a share, down from $1.83 a share but ahead of the $1.58 a share that analysts surveyed by FactSet had been projecting.

Mastercard’s net revenue for the quarter rose to $4.2 billion from $4.0 billion, while analysts were projecting $4.0 billion.

Shares are down 1.9% in Thursday morning trading.

The company reported an 8% increase in gross dollar volume (GDV), while cross-border volume fell 17% amid continued pressure on international travel. Switched transactions rose 9% in the quarter.

“We saw particular strength in debit, primarily driven by fiscal stimulus and share gains,” Chief Executive Michael Miebach said on Mastercard’s earnings call. “In terms of how people are spending, e-commerce continues to be strong and we’re seeing improvement in card-present spending.”

While travel has been sluggish, Miebach said that there has been “recent improvement” in domestic travel and that he expects domestic travel “to improve progressively throughout the year in countries with strong vaccination programs.”

“International travel should start to open on a select basis in the second half of the year between countries with strong vaccination programs and/or low case rates,” he continued.

Mastercard expects that if spending levels “continue on their current trajectory,” the company could see a growth rate in the “low- to mid-20s” during the second quarter, according to Chief Financial Officer Sachin Mehra on the earnings call.

Shares of Mastercard have gained 23% over the past three months as the S&P 500
SPX,
+0.41%

has risen 13%.

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