PayPal 2Q17 Earning Report

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Paypal
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2Q17 Earning Report

PayPal reported its 2Q earning on July 26 after hour. They reported a revenue of 3.14 billion, an increase of 18.5% year-over-year (YoY), net income from continuing operation of 411 million, an increase of 27.2% YoY, and a GAAP EPS of 0.34, an increase of 25.9% YoY. The company were able to add 6.5 million new customer accounts, which is an increase of 80% YoY. The total active account PayPal has is now up to 203 million. It is an increase of 11.7% over the last 12 months. Some other highlights from the earning and the conference calls are listed below:

  • Total payment volume (TPV) was reported at 106.4 billion, a 23% increase.
  • Mobile TPV was reported at 36 billion, increase of 50%. It’s more than a third of the overall TPV for the quarter.
  • Venmo TPV came in at 8 billion and represent about 7.5% of the total TPV for the quarter.
  • Announced the closing the acquisition of TIO Networks for 238 million, a kiosk banking vendor.
  • Extended partnership with Visa to offer PayPal debit card in Europe.
  • Partnership with Chinese search leader, Baidu Inc. and Samsung to include PayPal as a payment option in their digital payment system respectively.
  • Expanded partnership with Chase and Citibank allowing the banks customers to take advantage of the cards rewards points anywhere PayPal is accepted. Also partnered with Bank of America that will allow Bank of America customers to use PayPal as a payment option of in store purchases across MasterCard and Visa (also PYPL partners) across the U.S. This is similar to Chase and Citi, but Bank of America doesn’t have reward points.
  • The average percentage of revenue PayPal makes per transaction declined by 2.58%. Management said this is due to the popularity of Venmo, which have yet been monetized.
  • The company repurchased 89 million of its own shares during the quarter.

Rather than trying to compete with banks and other competitors, PayPal took the approach of working together with them. PayPal is now partnered with Google, Discover, Visa, MasterCard, Chase, Citibank, Bank of America, Wells Fargo, Samsung, Baidu, Facebook, and many more. They are able to grow their customer base through all these partnerships which makes it very hard for competitors to catch up. PayPal is still on track with their plan to monetize Venmo. Going forward, PayPal again raised its guidance for the year. They, now, expected the revenue to grow between 18% and 19% with the previous guidance expectation of 15% to 17%. They also expected the GAAP EPS to be between 1.32 and 1.36, previously at 1.28 to 1.33. For the third quarter, PayPal expects the revenue will rise to between 18% and 20%.

Please feel free to read my due diligence here and my update here.

 

Disclaimer: I have a position in PYPL. I see great growth potential with the company. They are able to achieve this without any revenue from Venmo. Once PayPal monetize Venmo, I expect it to be a big boost to the company. Please do your own research before making any decisions. Do not make decisions based solely on the information provided here.