PayPal released their earnings for Q3 today and investors appear to be excited as the stock jumped in after hours trading. In comparison, PayPal is exceeding investor expectations while eBay is mostly staying on course.
Press Release from PayPal
Global technology platform and digital payments leader PayPal Holdings, Inc. (NASDAQ:PYPL) today announced third quarter results for the period ended September 30, 2017.
Financial highlights for the third quarter include:
- Revenue growth of 21% to $3.239 billion, or 22% on a foreign currency neutral (FX-neutral) basis
- GAAP operating margin of 13.1% and non-GAAP operating margin of 19.9%
- GAAP earnings per diluted share (EPS) growth of 17% to $0.31, non-GAAP EPS growth of 31% to $0.46
- Operating cash flow of $1.006 billion, free cash flow of $841 million, up 36%
Operating highlights for the third quarter include:
- 8.2 million active customer accounts added, with net new actives up 88%
- 218 million active customer accounts, with more than 17 million merchant accounts
- 1.9 billion payment transactions, up 26%
- 32.8 payment transactions per active account on a trailing twelve months basis, up 9%
- $114 billion in total payment volume (TPV), up 30%, or 29% on an FX-neutral basis
“PayPal delivered one of its strongest quarters since becoming an independent company. Putting our customers first in everything we do, enhancing our suite of products and services, and partnering with some of the world’s most popular brands are delivering tangible results,” said Dan Schulman, President and CEO of PayPal. “In addition to our solid financial performance, we also reported record customer growth with the addition of 8.2 million net new actives. As the world rapidly accelerates to digital payments, we have a tremendous opportunity in front of us.”
PayPal’s Expanding Value Proposition
PayPal processed $114 billion in TPV in the quarter. Approximately 35% of payment volume came through a mobile device and mobile payment volume increased 54% over the same period last year to approximately $40 billion.
Person-to-Person (P2P) volume grew 47% to $24 billion, and represented approximately 21% of TPV. Venmo, the company’s social payments platform, processed approximately $30 billion of TPV over the past twelve months, growing 106% over the same period last year. In the third quarter, Venmo processed approximately $9 billion of TPV, growing 93% over the same period last year.
PayPal continues to build on its partnership strategy to extend the relevance of its platform and add value for its consumers and merchants. During the quarter, PayPal announced a partnership with Skype to allow users in 22 countries to send money to other Skype users with PayPal via their Skype mobile app. PayPal also announced the expansion of its partnership with Mastercard into Canada, Europe, Latin America and the Caribbean and the Middle East and Africa.
In the third quarter, PayPal closed the acquisition of Swift Financial, a leading provider of working capital solutions to small businesses in the U.S. The previously announced acquisition of TIO Networks also closed during the quarter.
Third Quarter 2017 Financial and Operating Highlights
(presented in millions, except per share data and percentages)
|Total Payment Volume (TPV)||$114,045||$87,403||$26,642||30%||29%|
|Effective tax rate||15.7%||10.3%||**||547bps||N/A|
|Earnings per diluted share||$0.31||$0.27||$0.04||17%||N/A|
|Net cash provided by operating activities||$1,006||$801||$205||26%||N/A|
|Effective tax rate||16.9%||15.3%||**||158bps||N/A|
|Earnings per diluted share||$0.46||$0.35||$0.11||31%||N/A|
|Free cash flow||$841||$618||$223||36%||N/A|
** Not meaningful.
Cash, Cash Equivalents and Investments – PayPal’s cash, cash equivalents and investments totaled $7.1 billion as of September 30, 2017.
2017 Financial Guidance
Full Year 2017 Revenue and Earnings Guidance
- PayPal expects revenue to grow 19 – 20% at current spot rates and 20 – 21% on an FX-neutral basis, to a range of $12.920 – $12.980 billion.
- PayPal expects GAAP earnings per diluted share in the range of $1.34 – $1.36 and non-GAAP earnings per diluted share in the range of $1.86 – $1.88.
- Estimated non-GAAP amounts above for the twelve months ending December 31, 2017, reflect adjustments of approximately $890 – $905 million, primarily representing estimated stock-based compensation expense and related payroll taxes in the range of $730 – $740 million.
Fourth Quarter 2017 Revenue and Earnings Guidance
- PayPal expects revenue to grow 20% – 22% at current spot rates and 20% – 22% on an FX-neutral basis, to a range of $3.570 – $3.630 billion.
- PayPal expects GAAP earnings per diluted share in the range of $0.37 – $0.39 and non-GAAP earnings per diluted share in the range of $0.50 – $0.52.
- Estimated non-GAAP amounts above for the three months ending December 31, 2017, reflect adjustments of approximately $225 – $240 million, primarily representing estimated stock-based compensation expense and related payroll taxes in the range of $205 – $215 million.
Please see “Non-GAAP Financial Measures” and “Non-GAAP Measures of Financial Performance” for important additional information. Please see the full report here.
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