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PayPal (PYPL) Q2 Earnings Match Estimates, Revenues Up Y/Y
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PayPal Holdings, Inc. (PYPL - Free Report) reported non-GAAP earnings of $1.16 per share for second-quarter 2023, which came in line with the Zacks Consensus Estimate. The figure improved 24% on a year-over-year basis.
Net revenues of $7.29 billion exhibited year-over-year growth of 8% on an FX-neutral basis and 7% on a reported basis. The figure surpassed the Zacks Consensus Estimate of $7.26 billion.
Growing transaction and other value-added services’ revenues drove top-line growth year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
Top Line in Detail
By Type: Transaction revenues amounted to $6.6 billion (90% of net revenues), up 5% from the year-ago quarter’s level. Other value-added services generated revenues of $731 million (accounting for 10% of net revenues), up 37% year over year.
By Geography: Revenues from the United States totaled $4.21 billion (58% of net revenues), up 9% on a year-over-year basis. International revenues were $3.1 billion (42% of net revenues), up 5% from the prior-year quarter’s level.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal witnessed year-over-year growth of 0.5% in total active accounts, which came at 431 million in the quarter under review. The figure came below the Zacks Consensus Estimate of 435 million.
The total number of payment transactions was 6.07 billion, up 10% on a year-over-year basis. The figure lagged the consensus mark of 6.18 billion.
PYPL’s payment transactions per active account were 54.7 million, which improved 12% from the year-ago quarter’s level. The consensus mark for the same was 55 million.
Total payment volume (TPV) amounted to $376.54 billion for the reported quarter, reflecting year-over-year growth of 11% on a spot rate basis as well as on a currency-neutral basis. The reported figure topped the Zacks Consensus Estimate of $370.02 billion.
Operating Details
PayPal’s operating expenses were $6.15 billion in the second quarter, up 1.9% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 440 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 21.4%, expanding 230 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash equivalents and investments were $9.9 billion, down from $10.7 billion as of Mar 31, 2023.
PayPal had a long-term debt balance of $10.55 billion at the end of the second quarter compared with $10.48 billion at the end of the first quarter.
PYPL used $200 million of cash in operations during the reported quarter compared with $1.2 billion of cash it generated from operations in the previous quarter.
Free cash flow was $350 million in the reported quarter.
PayPal returned $1.5 billion to its shareholders by repurchasing 22 million shares.
Guidance
For third-quarter 2023, PayPal projects revenues at $7.4 billion, indicating year-over-year growth of 8% on a spot rate basis as well as on a currency-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $7.32 billion.
Non-GAAP earnings are expected to be $1.22-$1.24 per share, suggesting growth of 13-14% on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.21 per share.
For 2023, PayPal reiterated its guidance for non-GAAP earnings of $4.95, suggesting growth of 20% from the year-ago quarter. The Zacks Consensus Estimate for the same is pegged at $4.95 per share.
Zacks Rank and Stocks to Consider
Currently, PayPal carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2 (Buy).
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PayPal (PYPL) Q2 Earnings Match Estimates, Revenues Up Y/Y
PayPal Holdings, Inc. (PYPL - Free Report) reported non-GAAP earnings of $1.16 per share for second-quarter 2023, which came in line with the Zacks Consensus Estimate. The figure improved 24% on a year-over-year basis.
Net revenues of $7.29 billion exhibited year-over-year growth of 8% on an FX-neutral basis and 7% on a reported basis. The figure surpassed the Zacks Consensus Estimate of $7.26 billion.
Growing transaction and other value-added services’ revenues drove top-line growth year over year in the reported quarter. Also, accelerating U.S. and international revenues contributed well.
Top Line in Detail
By Type: Transaction revenues amounted to $6.6 billion (90% of net revenues), up 5% from the year-ago quarter’s level. Other value-added services generated revenues of $731 million (accounting for 10% of net revenues), up 37% year over year.
By Geography: Revenues from the United States totaled $4.21 billion (58% of net revenues), up 9% on a year-over-year basis. International revenues were $3.1 billion (42% of net revenues), up 5% from the prior-year quarter’s level.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
Key Metrics to Consider
PayPal witnessed year-over-year growth of 0.5% in total active accounts, which came at 431 million in the quarter under review. The figure came below the Zacks Consensus Estimate of 435 million.
The total number of payment transactions was 6.07 billion, up 10% on a year-over-year basis. The figure lagged the consensus mark of 6.18 billion.
PYPL’s payment transactions per active account were 54.7 million, which improved 12% from the year-ago quarter’s level. The consensus mark for the same was 55 million.
Total payment volume (TPV) amounted to $376.54 billion for the reported quarter, reflecting year-over-year growth of 11% on a spot rate basis as well as on a currency-neutral basis. The reported figure topped the Zacks Consensus Estimate of $370.02 billion.
Operating Details
PayPal’s operating expenses were $6.15 billion in the second quarter, up 1.9% from the prior-year quarter’s figure. As a percentage of net revenues, the figure contracted 440 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 21.4%, expanding 230 bps from the year-ago quarter’s level.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash equivalents and investments were $9.9 billion, down from $10.7 billion as of Mar 31, 2023.
PayPal had a long-term debt balance of $10.55 billion at the end of the second quarter compared with $10.48 billion at the end of the first quarter.
PYPL used $200 million of cash in operations during the reported quarter compared with $1.2 billion of cash it generated from operations in the previous quarter.
Free cash flow was $350 million in the reported quarter.
PayPal returned $1.5 billion to its shareholders by repurchasing 22 million shares.
Guidance
For third-quarter 2023, PayPal projects revenues at $7.4 billion, indicating year-over-year growth of 8% on a spot rate basis as well as on a currency-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $7.32 billion.
Non-GAAP earnings are expected to be $1.22-$1.24 per share, suggesting growth of 13-14% on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.21 per share.
For 2023, PayPal reiterated its guidance for non-GAAP earnings of $4.95, suggesting growth of 20% from the year-ago quarter. The Zacks Consensus Estimate for the same is pegged at $4.95 per share.
Zacks Rank and Stocks to Consider
Currently, PayPal carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Salesforce shares have gained 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
AvidXchange shares have increased 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.