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1/ PayPal $PYPL reported its 2019 Q2 earnings results last night and is trading down about 4% today, so let's talk about it...
TL;DR: Another solid quarter, rev came in at $4.31B, +12% YOY, non-GAAP EPS $0.86, +47% YOY.
But those numbers come w/ some caveats...
(cont)
TL;DR: Another solid quarter, rev came in at $4.31B, +12% YOY, non-GAAP EPS $0.86, +47% YOY.
But those numbers come w/ some caveats...
(cont)
2/ Remember, it's still lapping the sale of the credit portfolio to Synchrony Financial $SYF last year, which negatively affected rev growth by 7% this quarter.
And EPS includes $0.14 benefit related to PayPal's strategic investments. (cont)
And EPS includes $0.14 benefit related to PayPal's strategic investments. (cont)
3/ The legacy eBay $EBAY business also continues to be a drag on overall growth rates, creating a drag on the faster growth rates PayPal is seeing in core platform, Venmo, and from new partnerships (cont) 
4/ Big news - and why it's trading down - is that it cut full-year rev guidance to $17.6B-$17.8B from its previous range of $17.85B-$18.10B. It did boost 2019 adjusted EPS outlook to $3.12-$3.17 from prior range of $2.94-$3.01. (cont)
5/ Total payment volume (TPV) rose to $172.4B, +24% YOY. TPV growth was driven by Venmo,
Braintree, acquisitions and person-to-person (P2P) volume.
Mobile payment volume grew to $73B, +37% YOY -- and now accounts for ~42% of TPV.
Venmo processed $24B TPV, +70% YOY
(cont)
Braintree, acquisitions and person-to-person (P2P) volume.
Mobile payment volume grew to $73B, +37% YOY -- and now accounts for ~42% of TPV.
Venmo processed $24B TPV, +70% YOY
(cont)
6/ Best part is that new users continue to rise along w/ user engagement -- a potent combo!
# of active accounts: 286M, +17% YOY; +41M accts last year.
Payment transactions: 2.97B, +28% YOY
Payment transactions per active account: 39.0, +9% YOY
Steady as she goes!
(cont)
# of active accounts: 286M, +17% YOY; +41M accts last year.
Payment transactions: 2.97B, +28% YOY
Payment transactions per active account: 39.0, +9% YOY
Steady as she goes!
(cont)
7/ Now includes 23M merchant accounts, adding ~1M merchants/ quarter. This is creating a network effect...
(cont)
(cont)
8/ On rev guidance cut, management said this was due to large scope of new partnerships w/ likes of Paymentus, Uber $UBER, and MercadoLibre $MELI and that integrations were taking longer than expected. Still, management emphasized this was matter of when, not if.
(cont)
(cont)
9/ Meanwhile, op margin starting to improve significantly. Adj op margin improved to 23.2%, +2 percentage points YOY. This led to $PYPL raising full-year EPS guidance. Particularly exciting? Decline of transaction losses due to better fraud detection and risk management. (cont)
10/ $PYPL conclusion: Rev slowdown seems short-term in nature, w/ several medium- to long-term catalysts ahead, including partnership integrations, eBay deal expiring, and lapping of credit portfolio sale. Margin expansion/increased profitability should also continue... (cont)
11/ I have ~7% position w/ no plans to trim or add. Remain long $PYPL. YMMV. JMHO.
For full conference call transcript see fool.com/earnings/call-…
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For full conference call transcript see fool.com/earnings/call-…
Finish.
