PayPal posted fourth-quarter results Wednesday (Feb. 3) that showed continued tailwinds under the rise of digital, and, specifically, contactless payments. Total payments volume stood at $277 billion across 4.4 billion transactions. Dollar volume was up 39 percent year over year, the transaction count grew by 27 percent.
The company said that at the end of the quarter, it had 377 million active accounts. Net new active account growth in the quarter was 16 million, up 72 percent. Payment transactions per active user was 40.9, up 1 percent on a trailing 12-month basis. Revenues were $6.12 billion, up 23 percent, slightly better than consensus, which had been at $6.1 billion. PayPal added 1.4 million new merchants in Q4 alone.
During the conference call with analysts, CEO Dan Schulman stated that the “digital-first world is no longer our future. It’s our current reality and it will forever change the way we interact across almost all elements of our lives.”
Looking ahead, the company expects to add another 50 million net new accounts this year, according to Schulman. Later in the call, in response to analyst questions, management noted particular, continued strength in the over-50 demographic.
With a bit of granular detail, the cross border trade share of total payments volume was 17 percent, steady with past periods, up 31 percent on an FX neutral basis. The fastest-growing categories for cross border transactions included fashion, cosmetics, gaming, auto parts and home goods. And in reference to omnichannel efforts, 10 million customers used PayPal in-store — with $20 billion of total payments volume coming from in-store transactions, across QR, Tap and Pay and cards.
Venmo processed approximately $47 billion in TPV, growing 60 percent, according to the latest results — and active accounts here were up 32 percent to 70 million.
“For the first time, later this month, our Venmo credit card will be available to 100 percent of our base,” Schulman said during the call.
Adoption of crypto is on an upswing as PayPal said that customers who purchase crypto have been logging into PayPal at a rate twice their login frequency prior to purchasing crypto. “We are excited to build upon this early success by allowing customers to use their crypto balance as a funding source,” said Schulman, when they shop at the company’s 20 million merchants.
Supplemental materials released by the company showed that eBay-related transactions (through managed payments) were 6 percent of total payments volume, where that percentage had 19 percent in the fourth quarter of 2015. Volume growth from PayPal’s top marketplaces and platforms grew six times faster than eBay marketplace volumes.
Buy Now, Pay Later
The company’s buy now, pay later offerings are attracting consumers: PayPal reported $750 million in total payments volume in the quarter, making it one of the fastest adopted products the company has launched. QR codes are also working. PayPal said approximately 600,000 merchants now accept PayPal and Venmo QR codes.
In response to questions about China and the acquisition of GoPay at the end of 2019, Schulman stated that there are “three goals over the next couple of years in China. So first obviously is to make sure we invest to have the right compliant infrastructure inside China. The second is to really leverage all of our cross border expertise. And that goes in two directions. First, we want to significantly increase the amount of cross border that Chinese merchants can get from the 350 million consumers we have outside of China … And we also want to work inside China to have Chinese consumers purchase from the 29 million merchants that we have outside of China.”
Third, he said, the company wants to work within the financial services ecosystem within China with companies such as Union Pay, with the banks and with platform companies.
PayPal expects revenue to grow roughly 26 percent on an FX neutral basis in the year ahead, said management.
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