Mastercard (MA) is casting an eye toward further strength in consumer spending in 2024 after robust activity aided the payments processor in outstripping expectations for its fourth-quarter financial results.
“We remain fairly positive about the growth outlook. Consumer spending continues to be supported by a strong labor market and wage growth,” Chief Financial Officer Sachin Mehra said on the company’s conference call Wednesday, according to a transcript from Capital IQ. “Our base case scenario for 2024 reflects healthy consumer spending and recent spending dynamics.”
The upbeat remarks about a critical factor for growth came after the company said “healthy consumer spending” was a driver for “strong” earnings and revenue growth last year. It also presented fourth-quarter adjusted earnings and revenue above the Street’s consensus estimates.
For 2024, the company forecast net revenue percentage growth at the high end of low double digits. Revenue rose 13% in 2023. Shares of Mastercard were up 1% during Wednesday trade and have risen 5.3% so far this year.
Mastercard’s consumer assessment comes as consumer confidence in January climbed to its highest in two years, the Conference Board said a day earlier. That’s as shoppers expect inflation to keep cooling from its peak, the board said All age groups registered gains, led by consumers 55 and over, and across every income level except households earning more than $125,000.
Low unemployment and rising wages remain key drivers of consumer spending, Chief Executive Michael Miebach said on the conference call. But the company also sees some macroeconomic risks, noting it’s monitoring credit availability and delinquency rates.
“While inflation continues to moderate, prices of many goods and services remain elevated,” he said. “We’re tracking the efforts of central banks who are actively managing interest rates to normalize inflation.” The Federal Reserve is widely expected by markets to start lowering interest rates this year, although it’s likely to keep the benchmark rate steady later Wednesday at a range of 5.25% to 5.5%.
“Geopolitical uncertainty remains a concern in several markets,” Miebach said. “On balance, we remain fairly positive about the growth outlook, but we are monitoring the environment closely, and we’ll manage the business accordingly.”
Mastercard on Wednesday said fourth-quarter adjusted earnings were $3.18 a share, up from $2.65 a year earlier. Analysts polled by Capital IQ were looking for $3.08. Net revenue rose to $6.55 billion from $5.82 billion a year earlier, ahead of the Street’s call of $6.48 billion.