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How Is PayPal Doing after Splitting from eBay?

It was a big day for PayPal on Wednesday (and presumably for Carl Icahn) when the payments firm announced its first quarterly earnings since splitting from eBay in July. Icahn was the investor who pushed for the breakup – but it’s unclear if he got everything he wanted in the third quarter results.

PayPal grew revenue 15% in Q3, or 19% on a foreign currency neutral basis, to $2.3 billion and reported net income of $377 million.

It boasted that it gained market share, expanded its customer base, deepened engagement with merchants and consumers and delivered on its financial commitments during the quarter.

PayPal also noted that it grew its customer base to 173 million active customers, and it processed 345 million mobile transactions, an increase of 38%.

But the news didn’t completely satisfy investors. The Wall Street Journal called its sales growth “lackluster,” saying it narrowly missed analyst expectations for revenue. Also concerning to analysts: “a key metric measuring the profitability of each transaction, known as take rate, declined.”

PayPal said it processed 1.22 billion payment transactions in the third quarter, which translates to 27 payment transactions per active customer account. This is an increase from 24 payment transactions per active customer account in the same period last year.

And it said $2.1 billion of volume was processed through the Venmo product, growing over 200%, making it one of the fastest growing apps in the world by dollar volume.

PayPal CEO Dan Schulman addressed users in a blog post, telling them PayPal had achieved strong results in the third quarter. He recited the stats and said, “Taken together, these numbers clearly demonstrate PayPal’s strength as a company and they underscore our leadership in online and mobile payments.”

He also highlighted several products and services, including One Touch and Paydiant. And referring to PayPal Working Capital, he said, “We passed the $1 billion mark for loans we’ve provided to more than 60,000 small and medium business owners in the US, UK and Australia.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.