Post Earnings Coverage as PayPal Tops Market Estimates as Revenue Soars 18.1% and TPV Jumps 25%

LONDON, UK / ACCESSWIRE / October 28, 2016 / Active Wall St. announces its post-earnings coverage on PayPal Holdings, Inc. (NASDAQ: PYPL). The company reported its financial results for the third quarter fiscal 2016 on October 20 2016. The company reported a better-than-expected 18.1% rise in revenue which came on the back of a surge in payment processing volumes and customer additions. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on PYPL. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=PYPL.

Earnings Reviewed

For the three months ended on September 30th, 2016, PayPal said it earned $323 million, or $0.27 per share, compared to $301 million, or $0.25 per share in the year-ago period. Adjusted for one-time items, the San Jose, California, company earned $425 million, or $0.35 per share. PayPal, spun off from e-commerce company eBay Inc. (NASDAQ: eBay) in July 2015, said revenue rose 18% to $2.67 billion from $2.26 billion a year ago. Analysts expected PayPal to report adjusted earnings of $0.35 per share on revenue of $2.65 billion.

Segment Results

During Q3 2016, PayPal processed 1.5 billion payment transactions, which translates to 30 payment transactions per active account on a trailing twelve months basis, a 13% increase from a year ago, slightly lower than the average estimate of 1.52 billion. During the quarter, PayPal announced major agreements with Visa and MasterCard. These deals allow PayPal customers to conduct transactions with those brands of cards fairly seamlessly through PayPal’s system. In addition, as an extension of previous agreements with Alibaba, PayPal launched the first stages of becoming a payment option on Alibaba’s global retail marketplace, AliExpress.

Gaining Market Share and Growing Mobile Payments

In Q3 2017, PayPal processed $87 billion in Total Payment Volume (TPV), representing growth of 25%, or 28% on an FX-neutral basis. Merchant Services TPV grew 32%, or 34% on an FX-neutral basis, and represented 84% of overall TPV for the quarter. PayPal processed nearly $26 billion in mobile payment volume, up 56%, representing 29% of TPV for the quarter. Payment volumes at Venmo, the company’s social payments platform, soared 131% to $4.9 billion of TPV. However, PayPal’s transaction margins, which have been steadily declining for the last five quarters, fell to 58.7% from 59.8% in Q2 2016.

PayPal saw its active customer accounts grow by 11%, ending the quarter with 192 million active customer accounts.

Operating Metrics

During Q3 2016, PayPal’s operating margin decreased to 13.0% compared to 14.6% for the same period last year. Non-GAAP operating margin decreased to 18.4% compared to non-GAAP operating margin of 19.9% for the same period last year.

Cash Matters

PayPal generated $801 million of operating cash flow and $618 million of free cash flow during the third quarter of 2016. PayPal’s cash, cash equivalents and investments totaled $6.4 billion at September 30, 2016.

Financial Guidance

For FY16, PayPal expects revenue in the range of $10.780 billion to $10.850 billion. PayPal is projecting GAAP earnings per diluted share in the range of $1.13 – $1.15 and non-GAAP earnings per diluted share in the range of $1.48 – $1.50. For Q4 2016, PayPal expects revenue to grow 14% – 17% at current spot rates and 16% – 19% on an FX-neutral basis, to a range of $2.920 billion to $2.990 billion. PayPal expects GAAP earnings per diluted share in the range of $0.30 – $0.32 and non-GAAP earnings per diluted share in the range of $0.40 – $0.42.

Stock Performance

On Thursday, the stock closed the trading session at $41.69, falling 1.51% from its previous closing price of $42.33. A total volume of 9.45 million shares have exchanged hands, which was higher than the 3-month average volume of 8.15 million shares. PayPal Holdings’ stock price advanced 1.76% in the last month, 11.95% in the past three months, and 6.41% in the previous six months. Furthermore, since the start of the year, shares of the company have gained 15.17%. Shares of the company have a PE ratio of 37.69. The stock currently has a market cap of $50.32 billion.

PayPal’s stock has now appreciated by 13.57% since it was spun off from eBay. It is now the larger of the two businesses with a market capitalization of over $50.32 billion compared to eBay’s $32.48 billion. Its stock price rise has also eclipsed that of eBay’s, rising by 10.84% since the spin-off.

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SOURCE: Active Wall Street

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