PayPal: Inside The Q4 and Full Year 2018 Earnings Call

PayPal discussed in its earnings report the huge user growth and opportunities they continue to see with the Venmo platform.

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Venmo is clearly a growth business for PayPal and as more merchants are able to accept payments through Venmo, it will become more than just a P2P money transfer service.

eBay also played a large role in the earnings call, but mostly on the “negative” side. PayPal is clearly no longer banking on eBay for significant revenues down the road and is concentrating on other market segments to make up for the eventual loss of those revenues.

Here are some Quotes from the earnings call that should be of interest to sellers.

For the complete Q4 and Full Year 2018 Earnings Report, please see: PayPal Releases Q4 and Full Year 2018 Earnings Report

Dan Schulman

The following quotes are from Dan Schulman – President and Chief Executive Officer

Revenues

“In 2018, we delivered $15.45 billion in revenue, up 18% on a spot basis and FX-neutral basis or 21% normalizing for the sale of our U.S. consumer credit receivables. That represents our highest annual spot revenue growth rate since separation.”

“In the fourth quarter, we generated $4.23 billion of revenue growing 14% or 21% normalized. This is the first time in our history that we surpassed $4 billion of revenue in a single quarter.”

eBay

Revenues in 2018 associated with eBay grew 4%, while merchant services grew 22% more than five times that of eBay.

“In the quarter, eBay had zero growth in its volume and it exit 2018 representing just 10% of our overall TPV down 300 basis points year-over-year.”

“…we saw this on their conference call as well. Clearly, Marketplaces is slowing down for them. …we saw zero growth in TPV on that. And if you look at what they announced on their call for intermediated payments, it’s well less than 1% of the GMV that we see presented to us.”

Users

“We added 39 million net new actives for the year. Another all time record for us. We now have 267 million active accounts on our platform with approximately 246 million consumers shopping at more than 21 million merchants. We are targeting more than 300 million active accounts on our platform by the end of 2019.”

Mobile

“Mobile continues to drive our growth was $67 billion of mobile TPV in Q4 alone representing 41% of our total TPV. One Touch with its market leading checkout conversion rates continues to grow with over 123 million consumers and 11 million merchants opted in.”

Venmo

“This quarter we drove $19 billion in payment volume through Venmo an increase of 80% year-over-year. For the full year Venmo’s volume increased 79% with $62 billion in payment volume process.”

“For the last two consecutive quarters, Venmo’s TPV surpassed the volume of TPV we process from eBay. Pay with Venmo continues to attract new partners including Shopify, who BigCommerce and Jay-Z’s Tidal music service.”

Bill Ready

The following quotes are from Bill Ready – Executive Vice President, Chief Operating Officer

Growth

“It was clear that PayPal is becoming the payment platform of choice for marketplaces and multi-seller e-commerce platforms. Our top 20 partners and marketplaces, total payment volume excluding eBay grew by over 40% in 2018, reaching nearly $85 billion. This segment of our business is now much larger and faster growing than our legacy eBay marketplace business.”

“we’re announcing today that we have entered into a strategic partnership with Paymentus, an electronic billing service company that provides e-bill presentment, management and payment capabilities to large scale merchants in the U.S., Canada and Mexico.”

READ MORE: PayPal and Paymentus Enter Strategic Partnership

eBay

“Because volume was going to be leaving eBay. It’s leaving now in a much more straight line, unfortunately, because they’re not having the growth that I’m sure they hope to drive as well in Marketplace.”

“…eBay is going to be a much smaller part of our business than even any of us initially thought when we were talking about this originally.”

John Rainey

The following quotes are from John Rainey – Chief Financial Officer and Executive Vice President, Global Customer Operations

eBay

“Revenue from our eBay marketplaces was lower than expected in the quarter.”

“For the first time in two years, revenue declined versus the prior year’s quarter. This decline was unrelated to the transition to manage payments, which had no material impact on our results.”

What are your thoughts on the comments by PayPal executives in their earnings call? Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.

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