PayPal Active User Base Grows 16 Pct, Hits 295M

PayPal reported third-quarter results Wednesday that showed continued growth in peer-to-peer (P2P) transactions and customer engagement — and the firm passed a monthly billion-transaction milestone.

In terms of headline numbers, the company’s adjusted earnings per share came in at 61 cents, topping the 52 cents expected by the Street.

Revenues were $4.4 billion, up 19 percent year on year compared to the $4.3 billion that had been expected by the Street.

The company said that Venmo’s processed volume was $27 billion, and that P2P volume stood at $51 billion, or 28 percent of the total tally.

CEO Dan Schulman said during the conference call with analysts that “for the first time ever we processed one billion transactions per month in the quarter.”

Net new active accounts were up by 9.8 million, and stood at 295 million active accounts at the end of the period, up 16 percent. There are 23 million merchants, Schulman said, on the platform.

The company said that it will see revenue growth of 15 percent through the end of the year and then growth will accelerate to 16 percent.

Venmo was up 64 percent year on year, said management. Schulman said Venmo could see as much $400 million in annualized revenue.

In reference to eBay, PayPal said that the eCommerce firm will represent 6 percent of volume upon the expiration of its partnership (eBay was 8 percent of volume in the quarter) in July 2020.

“We anticipate ending the year at approximately 304 million active accounts above our stated target of 300 million. Engagement continues to consistently increase, growing by 9 percent to almost 40 transactions per active account,” said Schulman, adding that “mobile is a major driver of our growth with One Touch at 172 million consumers and 13.8 million merchants.”

The CEO noted, too, that the firm became the first non-Chinese payments company to be granted a license in China. The initial focus of the 70 percent stake in GoPay is to provide cross-border payment solutions to merchants and consumers.  Noted Schulman during the Q and A: “China is the world’s largest e-commerce market … [with] 500 million online shoppers and they’re going to drive something like $2 trillion of online sales this year, which is more than 50 percent of global online retail.”

Chief Financial Officer John Rainey said that loan losses were five basis points as a percentage of TPV, up two basis points from last year. The company said that loans have the opportunity to grow across both merchants and the international consumer side of the businesses. The company said in its materials that total credit receivables stood at $3.5 billion.

He also said that Hyperwallet and Zettle contributed 1.9 percentage points to revenue growth.

Later, in response to analyst questions, Schulman said that customer engagement was up 9 percent year over year. He said, further, that in reference to Paymentus, the e-billing and payment solution “I think on the Paymentus side, we’ll have full stack integration live by the end of the year” and said that Paymentus has about 1,500 billers.

“Merchants understand the scale we have. They want to be a part of that. We do start to see right now the beginnings of our capabilities of selling as a platform provider and not just a product,” said Schulman.