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PayPal Holdings, Inc. (PYPL - Free Report) reported non-GAAP earnings of $1.24 per share for fourth-quarter 2022, beating the Zacks Consensus Estimate by 3.3%. However, the figure improved 11.7% on a year-over-year basis.
Net revenues of $7.38 billion exhibited year-over-year growth of 9% on an FX-neutral basis and 7% on a reported basis. The figure lagged the Zacks Consensus Estimate of $7.4 billion.
Growing transactions and other value-added services’ revenues drove the top line year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
By Type: Transaction revenues amounted to $6.7 billion (91% of net revenues), up 5% from the year-ago quarter’s level. Other value-added services generated revenues of $681 million (accounting for 9% of net revenues), up 26% year over year.
By Geography: Revenues from the United States totaled $4.3 billion (58% of net revenues), up 10% on a year-over-year basis. International revenues were $3.1 billion (42% of net revenues), up 2% from the prior-year quarter’s level.
Key Metrics to Consider
PayPal witnessed year-over-year growth of 2% in total active accounts, with 2.9 million net new active accounts added in the reported quarter. The total number of active accounts was 435 million in the quarter under review.
The total number of payment transactions was 6.03 billion, up 13% on a year-over-year basis.
PYPL’s payment transactions per active account were 51.4 million, which improved 13% from the year-ago quarter’s level.
Total payment volume (TPV) amounted to $357.4 billion for the reported quarter, reflecting year-over-year growth of 5% on a spot rate basis and 9% on a currency-neutral basis.
Year-over-year growth in TPV was primarily driven by Venmo, which accounted for $62.5 billion of TPV, rising 3% on a year-over-year basis.
Operating Details
PayPal’s operating expenses were $6.14 billion in the fourth quarter, up 4.6% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 170 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 22.9%, expanding 115 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash equivalents and investments were $10.9 billion, up from $10.8 billion as of Sep 30, 2022.
PayPal had a long-term debt balance of $10.4 billion at the end of the fourth quarter compared with $10.2 billion at the end of the third quarter.
PYPL generated $1.6 billion cash from operations, down from $1.9 billion in the previous quarter.
Free cash flow was $1.4 billion in the reported quarter, down from $1.8 billion in the prior quarter.
PayPal returned $1 billion to its shareholders by repurchasing 12 million shares.
Guidance
For first-quarter 2023, PayPal projects year-over-year revenue growth of 7.5% on a spot rate basis and 9% on a currency-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $6.9 billion.
Non-GAAP earnings are expected to between $1.08 and $1.10 per share, suggesting a growth of 23-25% on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.03 per share.
PayPal now projects 2023 non-GAAP earnings at $4.87 per share, suggesting a growth of 18% from the year-ago quarter. The Zacks Consensus Estimate for the same is pegged at $4.77 per share.
Agilent Technologies is set to report its first-quarter fiscal 2023 results on Feb 28. The Zacks Consensus Estimate for Agilent’s earnings is pegged at $1.31 per share, suggesting an increase of 8.3% from the prior-year period’s reported figure. Agilent has gained 9% in the past year.
Arista Networks is scheduled to release its fourth-quarter 2022 results on Feb 13. The Zacks Consensus Estimate for ANET’s earnings is pegged at $1.21 per share, suggesting an increase of 47.6% from the prior-year quarter’s reported figure. ANET has gained 7.4% in the past year.
Endava is scheduled to release its second-quarter fiscal 2023 results on Feb 14. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 68 cents per share, suggesting an increase of 7.9% from the prior-year quarter’s reported figure. DAVA has lost 18.5% in the past year.
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PayPal (PYPL) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
PayPal Holdings, Inc. (PYPL - Free Report) reported non-GAAP earnings of $1.24 per share for fourth-quarter 2022, beating the Zacks Consensus Estimate by 3.3%. However, the figure improved 11.7% on a year-over-year basis.
Net revenues of $7.38 billion exhibited year-over-year growth of 9% on an FX-neutral basis and 7% on a reported basis. The figure lagged the Zacks Consensus Estimate of $7.4 billion.
Growing transactions and other value-added services’ revenues drove the top line year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
Top Line in Detail
By Type: Transaction revenues amounted to $6.7 billion (91% of net revenues), up 5% from the year-ago quarter’s level. Other value-added services generated revenues of $681 million (accounting for 9% of net revenues), up 26% year over year.
By Geography: Revenues from the United States totaled $4.3 billion (58% of net revenues), up 10% on a year-over-year basis. International revenues were $3.1 billion (42% of net revenues), up 2% from the prior-year quarter’s level.
Key Metrics to Consider
PayPal witnessed year-over-year growth of 2% in total active accounts, with 2.9 million net new active accounts added in the reported quarter. The total number of active accounts was 435 million in the quarter under review.
The total number of payment transactions was 6.03 billion, up 13% on a year-over-year basis.
PYPL’s payment transactions per active account were 51.4 million, which improved 13% from the year-ago quarter’s level.
Total payment volume (TPV) amounted to $357.4 billion for the reported quarter, reflecting year-over-year growth of 5% on a spot rate basis and 9% on a currency-neutral basis.
Year-over-year growth in TPV was primarily driven by Venmo, which accounted for $62.5 billion of TPV, rising 3% on a year-over-year basis.
Operating Details
PayPal’s operating expenses were $6.14 billion in the fourth quarter, up 4.6% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 170 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 22.9%, expanding 115 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash equivalents and investments were $10.9 billion, up from $10.8 billion as of Sep 30, 2022.
PayPal had a long-term debt balance of $10.4 billion at the end of the fourth quarter compared with $10.2 billion at the end of the third quarter.
PYPL generated $1.6 billion cash from operations, down from $1.9 billion in the previous quarter.
Free cash flow was $1.4 billion in the reported quarter, down from $1.8 billion in the prior quarter.
PayPal returned $1 billion to its shareholders by repurchasing 12 million shares.
Guidance
For first-quarter 2023, PayPal projects year-over-year revenue growth of 7.5% on a spot rate basis and 9% on a currency-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $6.9 billion.
Non-GAAP earnings are expected to between $1.08 and $1.10 per share, suggesting a growth of 23-25% on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.03 per share.
PayPal now projects 2023 non-GAAP earnings at $4.87 per share, suggesting a growth of 18% from the year-ago quarter. The Zacks Consensus Estimate for the same is pegged at $4.77 per share.
Zacks Rank and Stocks to Consider
Currently, PayPal carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Endava (DAVA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent Technologies is set to report its first-quarter fiscal 2023 results on Feb 28. The Zacks Consensus Estimate for Agilent’s earnings is pegged at $1.31 per share, suggesting an increase of 8.3% from the prior-year period’s reported figure. Agilent has gained 9% in the past year.
Arista Networks is scheduled to release its fourth-quarter 2022 results on Feb 13. The Zacks Consensus Estimate for ANET’s earnings is pegged at $1.21 per share, suggesting an increase of 47.6% from the prior-year quarter’s reported figure. ANET has gained 7.4% in the past year.
Endava is scheduled to release its second-quarter fiscal 2023 results on Feb 14. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 68 cents per share, suggesting an increase of 7.9% from the prior-year quarter’s reported figure. DAVA has lost 18.5% in the past year.