PayPal met analyst expectations as it reported its Q4 2016 earnings yesterday (Jan 26) — while adding active uses and increasing payments volume.
The solid performance caps off a particularly active year for PayPal — its first full 365 day term as a fully independent entity. In his remarks to investors after the release, CEO Dan Schulman referred to the year as “transformative” – a nod to the spike in payment volume, customer adds and new partnership agreements with the likes of Visa, Mastercard, Citi and FIS.
“This is just the beginning, our conversations with almost all leading financial service players are warm and welcoming,” noted Schulman.
And PayPal, it seems, is all for being warm and welcoming right back — as Q1 2017 more or less kicked off with PayPal and Discover reaching a rewards deal.
By The Numbers
PayPal reported adjusted net income of $512 million, or 42 cents per share during Q4 2016, vs asjusted net profit of $443 million, or 36 cents a share, in the same period last year. That result was directly in line with analyst estimates of 42 cents.
Net revenue clocked in at $2.98 billion, up 17 percent from sales of $2.56 billion in the fourth quarter of 2015. Again, that was more or less what analysts had expected across the board. PayPal processed $99 billion in payments, a 22 percent pick-up from the same period last year.
“The scale and reach of our platform clearly separates PayPal as one of the world’s leading FinTech companies. In 2016, we processed 6 billion payments, an increase of 24 percent. This represented a total payment volume of $354 billion flowing through the PayPal platform.”
Active user accounts clocked in at 197 million, up from 192 million during Q3; for a net add of 5 million.
As for Q1 2017, PayPal is projecting net revenue to grow anywhere from 14 percent to 16 percent and fall between $2.9 billion to $2.95 billion. The company also projected adjusted earnings per share to land between 40 cents to 42 cents. Once again, all of those predictions were in line with analyst estimates.
Also Of Interest
Mobile was a particular focus of PayPal’s post-earnings remarks to investors — particularly its growing importance. According to Shulman, over half of PayPal’s active account base has transacted on the platform via mobile within the last year.
“Holiday shoppers increasingly bought gifts online and with their mobile devices through convenient omnichannel shopping experiences. For PayPal, this helps drive a 25 percent increase in payment volume, resulting in $99.3 billion of payment volume in the quarter.”
OneTouch also got a shout out — as of the end of 2016, the service is offered through 5 million merchants to more than 40 million consumers.
Venmo also had strong performances to report to round out the year. The P2P payments service facilitated $5.6 billion in payments, up 126 percent from Q4 2016. PayPal also noted that Venmo passed the $2 billion mark in monthly payment volume for the first time in December of last year.
PayPal did not break out the financial performance of Braintree, its mobile payment processing unit — though it did note that it has 428 million cards on file.
Meeting analyst expectations, however, did not seem to be quite enough to thrill investors. Following the earnings announcement, PayPal’s stock was down more than 2 percent in after-hours trading from Thursday’s closing share price of $41.50.
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