Mastercard is positioning itself for 'agentic commerce' as the payment-technology world evolves
Mastercard is moving further beyond traditional card payments.
Consumer spending looks healthy, as evidenced by Mastercard's earnings that came in better than expected for the second quarter, on the heels of strong travel and holiday-related activity.
But Mastercard's $(MA)$ business is about more than just payment transactions. Mastercard's value-added services, which is a portfolio of additional business solutions, reported 20% year-over-year growth to $3.83 billion on Thursday, beating FactSet estimates of $3.75 billion.
In a note to clients, Bernstein's Harshita Rawat called the growth "genuinely encouraging." She noted "increasing demand for its offerings across cybersecurity, identity and fraud."
The company is also trying to set itself up for a future in which payments might look dramatically different than they do today. On Mastercard's earnings call Thursday, management emphasized a commitment to new technologies such as stablecoins and its Agent Pay initiative, which enables AI agents to make purchases on behalf of its users. Mastercard expanded its stablecoin relationships to crypto companies BitGo and Kraken in the quarter.
"Stablecoins are additive to our network," CEO Michael Miebach said on the earnings call. "It's another opportunity for us to enable choice in how our customers and cardholders engage in commerce."
He noted that for Mastercard's customer base, which consists of financial-services players, the company's open standard for stablecoins "provides direct participation, reduced dependency on third parties and the benefits of distributed economics."
Miebach further touted the potential of agentic commerce and Mastercard's place in the future of this trend.
"The card infrastructure and the card ecosystem and the Mastercard proposition within that is unique," Miebach said. He thinks Mastercard's capabilities will allow people to challenge purchases through "verifiable intent" if an AI agent essentially goes rogue.
As some investors question whether AI-fueled commerce will reduce the need for traditional payments companies, Miebach thinks Mastercard will play a key role. "Cards can prevail there," he said.
The stock rose 2.5% on Thursday after the company turned in net revenue growth of 12%. Mastercard's $9.3 billion revenue total exceeded the FactSet consensus estimate of $9.1 billion. Adjusted earnings per share similarly exceeded expectations, hitting $5.04 compared to estimates of $4.77.
Strong revenue performance was bolstered by growth on key payment metrics, showing resilient and steady consumer spending despite macroeconomic uncertainty.
Gross dollar volume, which is the total value of all processed transactions, increased 8% to $2.9 trillion - surpassing estimates of $2.77 trillion - while purchase volume essentially met expectations at $2.4 trillion, making for 10.3% growth on a year-over-year basis.
Cross-border volume grew 12%, the same increase reported by competitor Visa (V) in its recent June-quarter results. The growth reflects a seasonal boost from holiday spending and a muted impact from the conflict in the Middle East.
-Julian Torres