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Continuing with its upbeat performance for the fourth straight quarter, PayPal Holdings, Inc. (PYPL - Free Report) , yesterday, reported impressive results for fourth-quarter 2017. Quarterly revenues and earnings both came in above the company’s expectations as well as surpassed the respective Zacks Consensus Estimate.
Despite this, shares of PayPal plunged drastically during late-hour trading yesterday as its former parent company — eBay Inc. (EBAY - Free Report) — has decided to rely less on the company for processing payments. The online marketplace company, during the fourth-quarter 2017 earnings conference call, announced that it has signed a Dutch payment company — Adyen — as its new primary payment processor.
It should be noted that eBay accounts for 13% of PayPal’s total payment volume (TPV), thereby contributing a major portion to its total revenues. Therefore, if this volume tanks by nearly 50% due to the recent development, it might consequently impact PayPal’s top and bottom lines massively in the near term.
The stock lost more than 11% of its value during yesterday’s after-hour trade. Notably, PayPal was one of the best performing stocks in 2017. The stock has appreciated 115.6%, significantly outperforming its industry’s gain of 33.2%, in a year’s time.
Let’s discuss quarterly results in detail.
Revenues
The company’s net revenues jumped 25.6% to $3.744 billion, on a year-over-year basis (up 26% on an Fx-neutral basis), beating the Zacks Consensus Estimate of $3.631 billion. The figure also came ahead of the company’s guided range of $3.57-$3.63 billion.
The results were driven by continued solid performance in global payments, especially mobile. PayPal added record 8.7 million customers in the fourth quarter, taking the total active customer accounts to 227 million.
During the quarter, the company entered into agreements with big companies like The Walt Disney Company (DIS - Free Report) , Dillard’s, Inc. (DDS - Free Report) and QVC Group. Moreover, it rolled out its domestic operations in India in the last quarter.
Also, the quarter witnessed PayPal’s accelerated push into mobile with One Touch and Venmo continuing to bolster its stake in mobile payments. Venmo users can now pay at more than 2 million PayPal merchants across the United States. One Touch is currently in use by more than 8 million merchants and 80 million consumers.
In the reported quarter, mobile made significant contribution to PayPal’s volume growth, processing $48 billion of transactions and accounting for approximately 37% of total payments made on its platform.
TPV was $131 billion, increasing 29% year over year on an Fx-neutral basis. The company processed 2.2 billion payment transactions, up 25% year over year. Over the trailing 12 months, payment transaction per active account was up 8% to 33.6.
Segment wise, Transaction revenues of $3.22 billion contributed 86% to total revenues and were up 23% on a year-over-year basis. Other value-added services revenues of $523 million contributed the rest and climbed 43% year over year.
Geographically, the United States contributed 55% to total revenues, up 30% on a year-over-year basis. International revenues contributed 45% to total revenues and were up 21% year over year on an Fx-neutral basis.
Margins and Net Income
Non-GAAP operating margin of 21.8% expanded 100 basis points (bps) year over year. Non-GAAP net income of $670 million was up 31% year over year.
Non-GAAP earnings per share came in at 55 cents, improving 30% from the year-ago quarter earnings of 42 cents. Quarterly earnings also came in above the company’s guidance range of 50-52 cents per share and surpassed the Zacks Consensus Estimate of 52 cents as well.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal ended the fourth quarter with cash and short-term investments balance of $5.695 billion compared with $4.92 billion recorded in the previous quarter. The company generated $2.531 billion in cash from continuing operations and spent $667 million on capex during full-year 2017.
The company has no long-term debt.
Outlook
The company initiated guidance for the first quarter and ful-year 2018.
For first-quarter 2018, PayPal expects revenues to be up nearly 20-21% on an Fx-neutral basis to $3.58-$3.63 billion ($3.605 billion). The mid-point of the range is better than the Zacks Consensus Estimate of $3.55 billion.
Non-GAAP earnings are estimated in the band of 52-54 cents per share. The Zacks Consensus Estimate of 54 cents is in line with the high-end of this range. GAAP earnings per share are expected in the range of 41-43 cents.
For 2018, the company expects revenues between $15 billion and $15.25 billion (mid-point $15.125 billion). This is lower than the Zacks Consensus Estimate of $15.17 billion at the mid-point.
Non-GAAP earnings are projected in the range of $1.86-$1.88 per share compared with the earlier expectation of $2.24-$2.30 per share (mid-point $2.27). At mid-point, this exceeds the Zacks Consensus Estimate of $2.26.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
PayPal (PYPL) Q4 Earnings Top, eBay's Switch Hurts Stock
Continuing with its upbeat performance for the fourth straight quarter, PayPal Holdings, Inc. (PYPL - Free Report) , yesterday, reported impressive results for fourth-quarter 2017. Quarterly revenues and earnings both came in above the company’s expectations as well as surpassed the respective Zacks Consensus Estimate.
Despite this, shares of PayPal plunged drastically during late-hour trading yesterday as its former parent company — eBay Inc. (EBAY - Free Report) — has decided to rely less on the company for processing payments. The online marketplace company, during the fourth-quarter 2017 earnings conference call, announced that it has signed a Dutch payment company — Adyen — as its new primary payment processor.
It should be noted that eBay accounts for 13% of PayPal’s total payment volume (TPV), thereby contributing a major portion to its total revenues. Therefore, if this volume tanks by nearly 50% due to the recent development, it might consequently impact PayPal’s top and bottom lines massively in the near term.
The stock lost more than 11% of its value during yesterday’s after-hour trade. Notably, PayPal was one of the best performing stocks in 2017. The stock has appreciated 115.6%, significantly outperforming its industry’s gain of 33.2%, in a year’s time.
Let’s discuss quarterly results in detail.
Revenues
The company’s net revenues jumped 25.6% to $3.744 billion, on a year-over-year basis (up 26% on an Fx-neutral basis), beating the Zacks Consensus Estimate of $3.631 billion. The figure also came ahead of the company’s guided range of $3.57-$3.63 billion.
The results were driven by continued solid performance in global payments, especially mobile. PayPal added record 8.7 million customers in the fourth quarter, taking the total active customer accounts to 227 million.
During the quarter, the company entered into agreements with big companies like The Walt Disney Company (DIS - Free Report) , Dillard’s, Inc. (DDS - Free Report) and QVC Group. Moreover, it rolled out its domestic operations in India in the last quarter.
Also, the quarter witnessed PayPal’s accelerated push into mobile with One Touch and Venmo continuing to bolster its stake in mobile payments. Venmo users can now pay at more than 2 million PayPal merchants across the United States. One Touch is currently in use by more than 8 million merchants and 80 million consumers.
In the reported quarter, mobile made significant contribution to PayPal’s volume growth, processing $48 billion of transactions and accounting for approximately 37% of total payments made on its platform.
TPV was $131 billion, increasing 29% year over year on an Fx-neutral basis. The company processed 2.2 billion payment transactions, up 25% year over year. Over the trailing 12 months, payment transaction per active account was up 8% to 33.6.
Segment wise, Transaction revenues of $3.22 billion contributed 86% to total revenues and were up 23% on a year-over-year basis. Other value-added services revenues of $523 million contributed the rest and climbed 43% year over year.
Geographically, the United States contributed 55% to total revenues, up 30% on a year-over-year basis. International revenues contributed 45% to total revenues and were up 21% year over year on an Fx-neutral basis.
Margins and Net Income
Non-GAAP operating margin of 21.8% expanded 100 basis points (bps) year over year. Non-GAAP net income of $670 million was up 31% year over year.
Non-GAAP earnings per share came in at 55 cents, improving 30% from the year-ago quarter earnings of 42 cents. Quarterly earnings also came in above the company’s guidance range of 50-52 cents per share and surpassed the Zacks Consensus Estimate of 52 cents as well.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. Price, Consensus and EPS Surprise | PayPal Holdings, Inc. Quote
Balance Sheet and Cash Flow
PayPal ended the fourth quarter with cash and short-term investments balance of $5.695 billion compared with $4.92 billion recorded in the previous quarter. The company generated $2.531 billion in cash from continuing operations and spent $667 million on capex during full-year 2017.
The company has no long-term debt.
Outlook
The company initiated guidance for the first quarter and ful-year 2018.
For first-quarter 2018, PayPal expects revenues to be up nearly 20-21% on an Fx-neutral basis to $3.58-$3.63 billion ($3.605 billion). The mid-point of the range is better than the Zacks Consensus Estimate of $3.55 billion.
Non-GAAP earnings are estimated in the band of 52-54 cents per share. The Zacks Consensus Estimate of 54 cents is in line with the high-end of this range. GAAP earnings per share are expected in the range of 41-43 cents.
For 2018, the company expects revenues between $15 billion and $15.25 billion (mid-point $15.125 billion). This is lower than the Zacks Consensus Estimate of $15.17 billion at the mid-point.
Non-GAAP earnings are projected in the range of $1.86-$1.88 per share compared with the earlier expectation of $2.24-$2.30 per share (mid-point $2.27). At mid-point, this exceeds the Zacks Consensus Estimate of $2.26.
PayPal currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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