![]() ![]() That said, most investors seem to be overlooking the company’s full-year guidance, which points towards a new record in profitability. It clearly implies notable sequential deceleration, a trend the market never likes to see. For the quarter, management expects revenues to grow by roughly 7.5% to 8.0% on a CC basis and by about 6.5% to 7.0% based on the current spot FX rates. If there was something that the market found distasteful, that would be the company’s guidance for Q2. Overall, it looks like this was an excellent quarter for PayPal, both operationally and financially. On an adjusted basis, which excludes stock-based compensation and other non-cash items, earnings-per-share grew by 33% to $1.17. Earnings per share (EPS) also grew by a significant 61% to $0.70. The combination of double-digit revenue growth against a much humbler mid-single-digit growth in operating expenses resulted in substantial operating income growth of 46.6% to $999 million. Hence, total operating expenses grew by just 4.7% to $6.04 billion. In fact, customer support, sales & market, technology & development, and general & administrative expenses all declined compared to the prior-year period. Still, the company was able to control most of its other operating expenses. When it comes to PayPal’s expenses, total volume-based expenses grew by 17%, while transaction margin dollars grew by 1%, resulting in total transaction expenses (which comprise just over half of PayPal’s operating expenses) growing by nearly 18% to $3.3 billion. This growth was primarily driven by higher interest income on customer store balances and strong consumer and merchant credit performance.Ĭonsequently, the company was able to post total revenue growth of 10.4% in CC to $7.04 billion, which was actually about 1.5 percentage points higher than management’s prior guidance that targeted ~9% CC growth. Specifically, Total Payment Volume (TPV) came in at $354.5 billion, rising by 10% year-over-year or by 12% on a constant-currency (CC) basis.Īdditionally, there was a noteworthy 39% increase in revenue from value-added services, totaling $676 million. While investors may have had a negative reaction to PayPal’s Q1 results, the company has positioned itself to achieve new levels of profitability this year.įor the quarter, Transaction revenues advanced 6% to $6.4 billion, driven primarily by higher processing volumes. Q1: Setting the Stage for Record FY2023 Profits The company generates strong free cash flow, keeps returning substantial amounts of cash to shareholders, and appears to be trading at a rather attractive valuation. That said, PayPal’s most recent results demonstrated that its core business model remains intact. Take Block ( NYSE:SQ), for instance, which despite growing its revenues by 26% in Q1, failed to achieve positive net income. The increasing competition and unstable trading landscape have led to less promising prospects for profitability. This is likely the result of investors treating PayPal similarly to most fintech companies, which have been underperforming in the current environment. More recently Thiel has drawn criticism for his political lobbying, which included a high-profile endorsement of Donald Trump.Shares of PayPal ( NASDAQ:PYPL) are currently trading at 6-year lows, with the market lacking confidence in the company’s medium-term outlook despite its rather robust results. Portnoy later joined Thiel at his hedge fund, Clarium Capital, and the big-data firm Palantir, founded after PayPal was acquired in 2002. He said he was hired in 1999 by Thiel, then the CEO of the startup Confinity, because they'd bonded over a list of books he'd read while traveling around Europe. He was a vice president of finance at PayPal for three years. Portnoy appeared on the podcast to discuss his memoir, "Silicon Valley Porn Star," which details his early career in Silicon Valley as well as his descent into and recovery from a porn addiction. And over time, gradually, the executives from the PayPal team who had no prior experience in the financial-services industry wound up ascending in the corporate culture and hierarchy, and I think possibly because they weren't weighed down by legacy ideas of how things should be done," he said. "PayPal merged with X.com, and X.com had a lot of former financial-industry people. Account icon An icon in the shape of a person's head and shoulders. ![]()
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