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Will PayPal (PYPL) Q3 Earnings Gain on Portfolio Strength?

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PayPal Holdings, Inc. (PYPL - Free Report) is slated to report third-quarter 2019 results on Oct 23.

Notably, the company’s robust services have enabled it to maintain a deep and trusted relationship with merchants and consumers. Moreover, its two-sided platform helps in developing direct financial relationship with both customers and merchants.

The Total Payment Volume (TPV) for the third quarter is anticipated to reflect the impact of all these factors. Notably, TPV is a key growth metric for PayPal’s top line.

TPV in the last reported quarter improved 24% and 26% year over year on spot rate and currency neutral basis, respectively, to $172.36 billion. This was driven by well-performing Venmo and growing momentum of core peer to peer, accounting for $24 billion and $46 billion of TPV, respectively.

The Zacks Consensus Estimate for TPV for the third quarter is pegged at $177.7 billion, suggesting growth of 24.3% on a year-over-year basis.

Click here to know how the company’s overall second-quarter performance is likely to be.

Portfolio Strength: Key Catalyst

PayPal’s persistent efforts toward strengthening its services portfolio are likely to have aided the company in gaining traction across customers in the third quarter.

The company’s third-quarter performance is likely to reflect the strength in product lines such as Venmo and One Touch.

The company’s third-quarter performance is also likely to have benefited from its growing monetization efforts. Further, new Bitmojis in Venmo app deliver personalized user experience. These are expected to have contributed to the Venmo’s TPV in the quarter under review.

Further, One Touch is gaining traction across merchants by aiding their sales growth in the competitive omni-channel retail environment. Moreover, its robust mobile checkout services are anticipated to reflect in PayPal’s mobile TPV in the third quarter.

Both Venmo and One Touch are expected to have contributed to growth in the company’s net new active accounts. Further, these two products are known for accelerating customer engagement on PayPal’s platform, which is likely to have bolstered total active accounts in the quarter under review.

Further, PayPal Commerce Platform, which offers an amalgamation of its technologies, tools, services and financing for businesses of all sizes, and back-end systems like compliance and account authentication, helps in enhancing end-to-end payment capabilities of merchants.
The service is anticipated to have aided the company in gaining traction across e-commerce companies, marketplaces and crowdfunding platforms.

Additionally, expanding international footprint of Xoom is likely to get reflected in the company’s third-quarter results.

Thereby, portfolio strength of PayPal is likely to reflect in PayPal’s third-quarter top line.

Zacks Rank & Stocks to Consider

Currently, PayPal carries a Zacks Rank #3 (Hold).

Some other better-ranked stocks in the broader technology sector are Alteryx, Inc. , Five9, Inc. (FIVN - Free Report) and 8x8, Inc. (EGHT - Free Report) . While Alteryx and Five9 sport a Zacks Rank #1 (Strong Buy), 8x8 carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alteryx, Five9 and 8x8 are set to release their earnings report on Oct 31, Nov 5 and Oct 6, respectively.

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