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PayPal Grows Revenue 22 Percent in Q1, Volume up 27 Percent

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PayPal LogoPayPal said Wednesday its revenue grew 22% year-over-year in the first quarter of 2018 on a foreign-exchange (fx)-neutral basis, reaching $3.69 billion.

The payments firm indicated to Wall Street analysts it was doing fine nearly three years after splitting from its former parent company eBay, and in a slide titled “Adding merchants across the globe,” it included well known brands such as Ikea, Williams-Sonoma, and Pottery Barn.

Total Payment Volume (TPV) was up 27%, aided by mobile transactions: mobile TPV was up 52% in the quarter, representing 37% of TPV.

PayPal defines Total Payment Volume as the value of payments, net of payment reversals, successfully completed through PayPal’s Payments Platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.

Payment volume from cross border trade was up 30% to $27 billion, representing 21% of TPV, consistent with prior quarters.

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PayPal said its eBay Marketplaces volume grew 6% on an FX-neutral basis, and it highlighted the growth rate of its non-eBay Merchant Services business:

– “Merchant Services (non-eBay Marketplaces related) volume represented 87.3% of TPV in Q1-18.”

– “30% growth on Merchant Services volume on an FX-neutral basis driven primarily by core
PayPal and Braintree, growing 5x the rate of eBay marketplaces volume growth.”

Press release follows:

Global technology platform and digital payments leader PayPal Holdings, Inc. today announced first quarter results for the period ended March 31, 2018.

“After a strong 2017, we entered 2018 with continued momentum. Our partner relationships in the U.S. and across the globe continue to grow and flourish. As the digital economy gathers speed, we are excited to provide new and innovative capabilities to better serve our consumer and merchant customers,” said Dan Schulman, President and CEO of PayPal.

Financial highlights for first quarter 2018 include:
– Revenue growth of 24% to $3.69 billion, or 22% on a foreign currency-neutral (FX-neutral) basis

– GAAP operating margin of 14.5%, with non-GAAP operating margin of 22.5%

– GAAP EPS growth of 33% to $0.42, with non-GAAP EPS growth of 29% to $0.57

– Repurchased 23.6 million shares of common stock, returning $1.83 billion to stockholders

Operating highlights for first quarter 2018 include:

– 8.1 million active accounts added, with net new actives up 35%

– 2.2 billion payment transactions, up 25%

– $132 billion in total payment volume (TPV), up 32%, or 27% on an FX-neutral basis

– 34.7 payment transactions per active account on a trailing twelve months basis, up 8%

PayPal’s expanding value proposition
PayPal processed $132 billion in TPV in the first quarter, representing growth of 32%, or 27% on an FX-neutral basis. Merchant Services TPV grew 30% on an FX-neutral basis, and represented 87% of overall TPV for the quarter versus approximately 85% a year ago. eBay Marketplaces volume grew 6% on an FX-neutral basis.

Person-to-Person (P2P) volume grew 50% to nearly $30 billion, and represented approximately 23% of TPV in the first quarter. Venmo, the company’s social payments platform, processed more than $40 billion of TPV over the past twelve months. In the first quarter, Venmo processed more than $12 billion of TPV, growing 80% over the same period last year.

Driven by strong mobile engagement on our platform, PayPal processed approximately $49 billion in mobile payment volume in the first quarter, representing approximately 52% growth year over year. One Touch, PayPal’s innovative checkout experience, ended the first quarter with 92 million consumers opted in. At the end of the first quarter, 8.6 million merchants offered One Touch.

Cash, Cash Equivalents and Investments – PayPal’s cash, cash equivalents and investments totaled $7.8 billion as of March 31, 2018.

Short-Term Borrowings – PayPal’s notes payable totaled $3.0 billion as of March 31, 2018.

2018 Financial Guidance

Full year 2018 revenue and earnings guidance
– PayPal expects revenue to grow 16 – 18% at current spot rates and 15 – 16% on an FX-neutral basis, to a range of $15.20 – $15.40 billion. As previously disclosed, full year 2018 revenue guidance includes an expected impact related to the sale of U.S. consumer credit receivables to Synchrony Financial of ~3.5 percentage points for full year 2018, assuming the transaction closes on July 1, 2018.

– PayPal expects GAAP earnings per diluted share in the range of $1.73 – $1.76 and non-GAAP earnings per diluted share in the range of $2.31 – $2.34.

– Estimated non-GAAP amounts above for the twelve months ending December 31, 2018, reflect adjustments of approximately $1.00 – $1.04 billion, primarily representing estimated stock-based compensation expense and related payroll taxes in the range of $885 – $915 million.

Second quarter 2018 revenue and earnings guidance

– PayPal expects revenue to grow 21% – 22% at current spot rates and 19% – 20% on an FX-neutral basis, to a range of $3.78 – $3.83 billion.

– PayPal expects GAAP earnings per diluted share in the range of $0.41 – $0.43 and non-GAAP earnings per diluted share in the range of $0.54 – $0.56.

– Estimated non-GAAP amounts above for the three months ending June 30, 2018, reflect adjustments of approximately $245 – $260 million, primarily representing estimated stock-based compensation expense and related payroll taxes in the range of $225 – $235 million.

Please see “Non-GAAP Financial Measures” and “Non-GAAP Measures of Financial Performance” for important additional information.

Note: See full press release including tables in link below.

SOURCE: PayPal Press Release

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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.

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