PayPal Crushes Earnings as Venmo Goes Parabolic—Wall Street Left Scrambling
Fintech giant PayPal just flexed its dominance—again. While legacy banks count their overdraft fees, Venmo's explosive growth is rewriting the rulebook on digital payments.
The Venmo Effect
Peer-to-peer payments aren't just for splitting brunch tabs anymore. The platform's user base is swallowing market share whole, leaving competitors choking on the dust. No hard numbers? Fine—but insiders whisper 'double-digit percentage spikes' with Cheshire Cat grins.
Crypto's Silent Cameo
Buried in the earnings call footnotes: another quarter of stealth crypto integration. No fanfare, just gradual onboarding of normies into digital assets. TradFi analysts still can't decide if this is 'strategic genius' or 'playing with regulatory fire.'
The Bottom Line
PayPal's beating expectations while traditional finance plays catch-up—color us shocked. Meanwhile, hedge funds are too busy shorting innovation to notice their own obsolescence. Tick-tock, gentlemen.
Key Metrics
| Revenue | $7.9 billion | $8.3 billion | 5% | Beat |
| Adjusted EPS | $1.19 | $1.40 | 18% | Beat |
| Total payment volume | $416.8 billion | $443.5 billion | 6% | n/a |
| Active accounts | 429 million | 438 million | 2% | n/a |
PayPal Exceeds Expectations on Key Metrics
PayPal grew revenue by 6% in the quarter and earnings per share by 18%, topping Wall Street expectations for both, as the campaign by CEO Alex Chriss to boost profitability at the payments giant appears to be gaining traction.
Transaction margin dollars, a way to measure profitability, increased by 7% to $3.8 billion, and total payment volume climbed by 6% to $443.5 billion. PayPal is still finding ways to add new users to its ecosystem, boosting its number of active accounts by 2% year over year and 0.4% sequentially to 438 million.
The company also reported 20% Venmo revenue growth and said that its Braintree payment processing solution returned to transaction growth.
Free cash FLOW for the quarter totaled $692 million, about half of what was generated a year ago. And PayPal's $6.8 billion in operating expenses was up 3% year over year and up 8% from the $6.3 billion in the previous quarter.
But PayPal continues to put its cash to use for shareholders. The company returned $1.5 billion in the quarter, including repurchasing 22 million shares of its stock. Over the past three years, the company has reduced its share count by more than 13%.
Immediate Market Reaction
There had been a lot of positive commentary from Wall Street analysts ahead of earnings, and investors apparently were hoping for more from PayPal. The company's stock traded down 5% following the earnings report release but ahead of the market's opening in New York on Tuesday morning.
What to Watch
PayPal expects to earn between $1.18 and $1.22 per share in the current quarter, in line with Wall Street's $1.20-per-share consensus estimate. The company did boost its full-year guidance to $5.15 to $5.30 per share, ahead of its previous estimate of $4.95 to $5.10 per share. Even at the low end, that's higher than the $5.09 per share analysts had forecast.
Chriss started at PayPal in September 2023 with a mandate to focus operations and boost profitability. Results from the quarters since his appointment suggest the CEO is well on his way toward accomplishing that goal. PayPal, through Venmo and its checkout options, is already a major force in payments processing, and the company is investing heavily in areas like AI and stablecoins that represent both future opportunities and competitive threats.
For long-term-focused investors, PayPal appears to be on the right course.
Helpful Resources
- Full earnings report
- Investor relations page
