July 30 (Reuters) - Mastercard posted a second-quarter profit that surpassed Wall Street expectations on Thursday, boosted by robust transaction volumes driven by steady consumer spending.
Despite fears that geopolitical tensions and the resulting economic uncertainty would dent consumer appetite for spending, shoppers have shown resilience.
The stable consumer behavior is supported by a still-strong labor market and continued wage growth, while transaction values have risen due to elevated inflation, triggered by the U.S.-Iran war-led oil spikes.
High-income households are driving a bulk of the spending, as they continue to make discretionary purchases while lower-income families cut budgets.
Mastercard's gross dollar volume - the value of all transactions processed on its platform - jumped 8% in the second quarter to $2.9 trillion.
Its adjusted profit per share came in at $5.04, compared with analysts' average expectation of $4.77, according to data compiled by LSEG.
Net revenue climbed 14% to $9.3 billion, also topping estimates.
"Mastercard's 2Q results were solid and comfortably ahead of guidance and expectations," J.P. Morgan analyst Tien-tsin Huang said in a note.
Shares of the company were up 1% in early trading.
STRONG QUARTER FOR NETWORKS
Payment networks' results are looked at closely for signals on the health of the economy, given their role in facilitating a significant chunk of transactions on their networks.
Earlier this week, peer Visa topped profit expectations for the quarter, buoyed by strong volumes from the FIFA World Cup. American Express, whose customer base is widely seen as more affluent, also beat Wall Street profit estimates and raised its full-year revenue forecast.
Despite disruptions over the Middle East, the World Cup offered a short-term boost to travel demand, as higher-income customers continued to spend on travel and entertainment.
"Impacts from the instability in the Middle East moderated throughout the second quarter and were less severe than we anticipated," Mastercard's outgoing CFO Sachin Mehra said on the post-earnings call.
The company's cross-border volumes, a metric that tracks spending on cards outside the country they were issued in, climbed 12% in the second quarter.
Its revenue in the value-added services and solutions segment increased 20%.
Mastercard has leaned on the unit to drive stronger growth from services such as fraud detection and cybersecurity, alongside its data offerings that provide spending insights and merchant analytics.
The firm is reshuffling its organizational structure to sharpen focus on customer-related operations, while also reportedly exploring divestment opportunities.
Mastercard and Visa are also expanding their efforts in stablecoin-based payments, as increasing regulatory certainty helps bring digital payment technologies into the mainstream.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Shinjini Ganguli)
