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PayPal (PYPL) Q2 2022 Earnings

Dan Shulman, president and chief executive officer of PayPal Holdings Inc., arrives for the morning session of the Allen & Co. media technology conference. in Sun Valley, Idaho, USA on Wednesday, July 10, 2019. The 36th annual event brings together many of America’s richest and most influential people in media, technology and sports.

Patrick T. Fallon | Bloomberg | Getty Images

Shares of PayPal rose 13% in extended trading on Tuesday after the financial services company posted stronger-than-expected second-quarter results. In its earnings filing, PayPal said it entered into a value creation information sharing agreement with Elliott Management.

“As one of PayPal’s largest investors with approximately $2 billion invested, Elliott strongly believes in the value of PayPal. PayPal has an unmatched and industry-leading number of payment companies and is positioned to win in the near and long term. “, Elliott partner chief Jesse Kohn was quoted as saying in PayPal’s earnings presentation. The news came a day after Elliott said it had become a lead investor in social network operator Pinterest.

Here’s how PayPal performed in the second quarter:

  • income: 93 cents per share adjusted, compared with 86 cents per share, as analysts expected, according to Refinitiv.
  • income: $6.81 billion, compared with $6.79 billion expected by analysts, according to Refinitiv.

Revenue rose 9% year-over-year, but the company reported a net loss of $341 million, compared with a profit of $1.18 billion in the year-ago quarter. PayPal had 429 million active accounts at the end of the quarter, up 6% year-over-year, but below the 432.8 million analysts surveyed by StreetAccount.

PayPal highlighted progress made in capital efficiency. It plans to cut $900 million in costs this year, and the annual benefit from the cuts and other changes should save at least $1.3 billion in 2023.

“We have a lot of executives. We can be more productive,” CEO Dan Shulman told analysts on a conference call.

PayPal has announced a new $15 billion share buyback program, four years after starting a $10 billion program.

The company is moving away from some areas, including stock trading, and will focus on in-store cards rather than QR codes exclusively, Shulman said. According to him, the company is studying the interaction between PayPal and the payment app Venmo.

And in conjunction with the agreement with Elliott Management, the company has a “commitment to work with Elliott Investment Management LP on a comprehensive evaluation of capital return alternatives.” In July, the Wall Street Journal reported that Elliott had taken a position at PayPal.

“Our discussions are focused on operational improvements, revenue-generating investments and capital allocation, and are consistent with our short-term and long-term goals and plans,” Shulman said.

PayPal said it is looking to replace Mark Britt, its chief product officer for the past two years. Britta will retire at the end of this year.

For the full year, PayPal said it expects adjusted earnings per share of $3.87 to $3.97, down from a range of $3.81 to $3.93 in April. Analysts polled by Refinitiv had expected $3.82 per share.

In the second quarter, driven largely by Venmo’s growth, PayPal added about 400,000 new active accounts, which the company calls NNAs. PayPal reported 2.4 million NNAs in the first quarter, for a total of about 2.8 million in the first half of 2022. But PayPal still intends to add 10 million NNAs for the full year.

“However, as with all of our forecasts, NNA growth may be affected by broader economic factors, given that channels that drive organic customer acquisition may be adversely affected by weaker consumer sentiment and lower demand for discretionary goods,” said Shulman.

Despite the after-hours shift, PayPal shares have fallen 52% this year.

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PayPal (PYPL) Q2 2022 Earnings

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