MasterCard Inc (MA.N), the world's second-largest payments network, reported higher-than-expected quarterly profit and revenue as people spent more using credit and debit cards, sending its shares up as much as 3 percent to a record high.
MasterCard and bigger rival Visa Inc (V.N) generate revenue by facilitating credit- and debit-card transactions and their fortunes are closely tied to the health of the economy and consumer spending.
U.S. economic data has been largely positive in the past few months - the labor market has shown signs of improvement, while average wages are also up.
Underpinned by a recovering global and U.S. economy, stocks of both MasterCard and Visa, which share a global duopoly, have surged about 19 percent in the past year.
But the companies are facing increasing competition from digital payment services as more people use smartphones to make payments, forcing them to ramp up their own e-wallet offerings.
MasterCard said on Tuesday it spent $170 million on advertising and marketing in the first quarter, up 26 percent, to support the rollout of Masterpass - its digital wallet service.
Advertising and marketing spending in the second quarter is also expected to increase by about $40 million from the year-ago period, Chief Financial Officer Martina Hund-Mejean said on a call with analysts.
She also said near-term revenue growth would be affected by a rise in incentives in new and renewed agreements.
MasterCard's net income rose 12.7 percent to $1.08 billion in the first quarter ended March 31. On an adjusted basis, the company earned $1.01 per share, beating the average analyst estimate of 95 cents, according to Thomson Reuters I/B/E/S.
Total revenue rose 11.8 percent to $2.73 billion, beating the average estimate of $2.65 billion. (mstr.cd/2qthx67)
MasterCard, which processes more than 65,000 transactions a minute, said adjusted gross dollar volumes rose 8 percent to $1.18 trillion in the quarter on a local currency basis.
Cross-border volumes - the value of transactions made by card holders abroad - increased 13 percent on a local currency basis.
Total costs rose to $1.23 billion from $1.09 billion a year earlier as advertising and marketing spend increased.
The company reiterated its 2016-2018 guidance of revenue growth in low double-digits and full-year 2017 operating expenses to grow in the high single-digit range.
MasterCard's shares were up 2.3 percent at $119.10 in morning trading.
(Reporting by Nikhil Subba in Bengaluru; Editing by Sai Sachin Ravikumar and Saumyadeb Chakrabarty)