Earnings

Digital Gains (Payments) Ground, Across Verticals

Digital Gains (Payments) Ground Across Verticals

Companies across far-flung verticals reported earnings this past week – disparate enough so that one might not see the connections between, say, quick service restaurants, payment network giants and others.

But look a little closer, and an earnings roundup (such as this one!) reveals a bit of commonality.

Digital payments – the kind that render transactions into ones and zeros, send them across space and sometimes across borders – are growing, markedly so, in some cases, across channels and use cases and, of course, mobile devices.

And beyond the commonalities, each firm had a story of its own to tell.

PayPal

Consider PayPal, where a bright spot amid lowered guidance came as Venmo volume was up 70 percent as measured in the second quarter. CEO Dan Schulman stated that Mobile TPV was up 37 percent year on year to 73 billion in the quarter.

But beyond that, growth is slowing, and investors were spooked, as Schulman said revenue growth would be in the range of 14 percent to 15 percent for the year. The guidance implies that at the top end, sales would be $17.8 billion, where the Street had estimated $17.9 billion. Management had said that product integration delays, including those in Latin America, with MercadoLibre, would be pushed out – and that the revenues would indeed come, as a “when, not if” scenario.

Visa

Beyond PayPal, Visa noted that tap-to-pay transactions – the contactless kind – are now at 50 percent of face-to-face transactions made outside the United States, up from less than 30 percent two years ago. Here in the States, said CEO Al Kelly on the conference call, Visa-branded contactless cards should triple to 300 million from an expected tally of as much as 100 million by the end of this year.

Visa, for its part, said in its fiscal third-quarter report that total transactions were up double digits, while processed transactions were up 12 percent to 35.4 billion. In terms of cards, 3 percent growth was in the, well, cards, as the tally stood at 3.3 billion worldwide.

Kelly said the overall strategy is one where the company, especially through cross-border operations as acquired through Earthport, mean the company is striving to become a “network of networks.”

Chipotle

On Wednesday (July 24), Chipotle Mexican Grill said the chain’s digital sales grew 99.1 percent and accounted for 18.2 percent of sales in the second quarter. In the first quarter of this year, digital sales were 15.7 percent of transactions. The company said delivery is a driver of digital growth.

Facebook

Payments within the social media realm also got some illumination. Facebook, of course, has been in the spotlight for its Libra project. CEO Mark Zuckerberg dedicated a portion of his call to investors talking up Facebook’s ongoing expansion into the world of payments and commerce, particularly in the form of Instagram Shopping, the Facebook Marketplace and the Libra cryptocurrency project.

“When I look at the kinds of private interactions we can make easier, payments may be the most important for the long term,” Zuckerberg said on the call. “In the future, we’ll enable people to use the same payments account to send money to friends and businesses on WhatsApp, shop on Instagram or make transactions on Facebook. Being able to send money as easily as you can send a photo will open up new opportunities for businesses.”

Drilling down into the numbers, social media certainly brings in the dollars, especially for advertising. The company reported revenue was up 28 percent to $16.9 billion – leagues better than the $13.2 billion reported at this time in 2018. Of that $16.9 billion, as reported by the company, $16.6 billion was derived from ad revenue, which, according to COO Sheryl Sandberg, was up 28 percent. North America and Asia-Pacific led in ad growth with 30 percent increases.

Amazon

The eCommerce giant’s fiscal fourth-quarter revenue was up 20 percent to $63.4 billion, and yet the shift to one-day Prime shipping has been weighing on results, as earnings of $5.22 missed the Street at $5.57. The company spent more than the $800 million it had forecast spending on the shift to one-day shipping. Worldwide shipping costs were up 36 percent year on year.

Equifax

The data breach that hit 143 million people and the ensuing $700 million fine have dominated the credit reporting firm’s headlines, but Equifax reported that its second-quarter 2019 operating revenue hit $880 million, up slightly from the approximately $877 million reported for the same period last year.

Revenue for the company’s U.S. Information Services (USIS) business increased 2 percent to $332.7 million, the company said.

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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