Post Earnings Coverage as PayPal’s Quarterly Revenue Surged 19%; Announced $5 Billion Buyback Program

Upcoming AWS Coverage on Western Union Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 1, 2017 / Active Wall St. announces its post-earnings coverage on PayPal Holdings, Inc. (NASDAQ: PYPL). The Company released its first quarter fiscal 2017 results on April 26, 2017. The Payments processing pioneer outperformed top- and bottom-line expectations and also increased its revenue and earnings forecasts. Register with us now for your free membership at:

http://www.activewallst.com/register/

One of PayPal Holdings’ competitors within the Credit Services space, The Western Union Co. (NYSE: WU), announced on April 10, 2017, that Hikmet Ersek, President and CEO, and Raj Agrawal, Executive Vice President and CFO, will host a webcast and conference call to discuss Q1 2017 results on May 02, 2017 at 4:30 p.m. ET. A press release highlighting the financial results will be issued at approximately 4:00 p.m. ET the same day. AWS will be initiating a research report on Western Union in the coming days.

Today, AWS is promoting its earnings coverage on PYPL; touching on WU. Get our free coverage by signing up to

http://www.activewallst.com/register/

Earnings Reviewed

For the three months ended March 31, 2017, PayPal’s revenue rose 17% to $2.98 billion, or 19% on a foreign currency neutral (FX-neutral) basis. The revenue growth was driven by a 16% increase in transaction revenue and a 23% increase in revenue from other value-added services. The Company’s revenue numbers topped analysts’ consensus of $2.94 billion.

For Q1 2017, PayPal’s GAAP operating margin down 150 basis points to 14.5%, while non-GAAP operating margin expanded 50 basis points to 21.6%, the Company’s best operating margin performance since its separation from eBay. PayPal’s non-GAAP operating income grew 20% y-o-y to $643 million for the reported quarter.

PayPal’s reported Q1 2017 net income of $384 million, or $0.32 per share, compared to net income of $365 million, or $0.30 per share. After adjustments for stock-based compensation and other factors, PayPal reported adjusted earnings of $0.44 per share, surpassing Wall Street’s expectations of $0.41 per share.

Operating Results

In Q1 2017, PayPal’s total payment volume was $99 billion, up 25% on a currency-neutral basis, including US payment volume growth of 27% and international volume growth of 23%. The Company’s merchant services volume grew 30% on a currency-neutral basis to $84 billion. Merchant services represented approximately 85% of PayPal’s total volume in the reported quarter. The Company noted that volume associated with eBay represented approximately 15% of the total volume compared to 16% in the prior quarter and 18% in Q1 2016.

During Q1 2017, PayPal added 6 million net new active accounts, ending the quarter with 203 million active accounts, representing growth of 11% compared to Q1 2016. The number of payment transactions per active account increased 12% y-o-y. PayPal stated that solid growth of customer engagement in active accounts resulted in a 23% increase on a y-o-y basis in payment transactions to 1.7 billion.

For Q1 2017, PayPal’s total take rate was 3%, and transaction take rate was 2.62%. Both of these metrics were flat sequentially and down approximately 14 basis points from a year ago. The Company’s volume-based expenses increased 28% on a y-o-y basis. PayPal’s transaction expense was $987 million, up 31% on a y-o-y basis, primarily driven by increased funding costs across the core PayPal platform as well as business mix from strong growth in Braintree.

For Q1 2017, PayPal’s transaction loss was $171 million, or 5.7% of revenue, representing 40 basis points of leverage. In the reported quarter, loan losses for both the consumer and merchant credit products were $129 million, or 4.3% of revenue. The net charge-off rate was 6.9% in Q1 2017. PayPal ended the reported quarter with an aggregate gross receivables balance, including both principal and interest, of $5.7 billion in its consumer and merchant loan portfolios and a total reserve of $360 million.

Balance Sheet and Cash Flow

As of March 31, 2017, PayPal had cash, cash equivalents, and short-term investments of $6.4 billion. The Company generated $751 million of operating cash flow in the quarter. Capital expenditures were $148 million, or 5% of revenue, resulting in $603 million of free cash flow in the reported quarter, representing $0.20 of free cash flow for every $1 of revenue.

In Q1 2017, PayPal returned $517 million to shareholders in the form of stock repurchases. In the earnings release, PayPal announced that its board of directors has authorized a new stock repurchase program, under which the company may repurchase up to $5 billion in outstanding common stock. This program will become effective after completion of the company’s January 2016 stock repurchase program. As of March 31, 2017, approximately $488 million remained available for stock repurchases under this prior authorization.

Outlook

For FY17, PayPal expects revenue to grow 15% – 17% at current spot rates and 17% – 19% on an FX-neutral basis, to a range of $12.52 billion – $12.72 billion compared to its earlier forecast of $12.45 billion – $12.65 billion. The Company is forecasting GAAP earnings per diluted share in the range of $1.28 – $1.33 compared to the previous guidance of $1.26-$1.31 and non-GAAP earnings per diluted share in the range of $1.74 – $1.79.

For Q2 2017, PayPal expects revenue to grow 15% – 17% at current spot rates and 17% – 19% on an FX-neutral basis, to a range of $3.050 billion – $3.100 billion. The Company is projecting GAAP earnings per diluted share in the range of $0.30 – $0.32 and non-GAAP earnings per diluted share in the range of $0.41 – $0.43.

Stock Performance

On Friday, April 28, 2017, the stock closed the trading session at $47.72, rising 1.21% from its previous closing price of $47.15. A total volume of 11.64 million shares have exchanged hands, which was higher than the 3-month average volume of 6.41 million shares. PayPal Holdings’ stock price advanced 10.36% in the last month, 18.50% in the past three months, and 12.73% in the previous six months. Furthermore, on a year to date basis, the stock gained 20.90%. Shares of the company have a PE ratio of 40.86 and have a market cap of $56.63 billion.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned

SOURCE: Active Wall Street

ReleaseID: 461403