PayPal CEO: ‘I don’t think there is any going back’ from e-commerce after COVID-19

PayPal Holdings Inc shares were up 1.5% in after-hours trading Wednesday after the digital payments company showed strong growth across its business stemming from increased usage of digital payments during the COVID-19 crisis.

Read: PayPal tops earnings expectations as COVID-19 drives big e-commerce growth

“The world has moved to a digital-first economy and I don’t think there is any going back,” Chief Executive Dan Schulman said in an interview with MarketWatch prior to the company’s earnings call. He said that the COVID-19 crisis has meant a “tipping point” for digital payments that, over the past three to five months, drove an acceleration in e-commerce penetration that could have otherwise taken three to five years to accomplish.

Even as more stores began to reopen their physical locations toward the end of the second quarter, PayPal

saw its highest year-over-year growth in total payment volume, or the value of transactions processed on the platform, during the month of June, according to Schulman. He called the period “the strongest quarter in our history.”

Overall, PayPal generated $222 billion in payment volume during the quarter, up from $172 billion a year earlier and ahead of the $210 billion that analysts surveyed by FactSet had been predicting. The company’s Venmo service processed about $37 billion in volume, up 52% from a year before.

The company added 21.3 million net new active accounts during the quarter, with 1.7 million of those being merchant accounts. Schulman said that the merchant-account growth was three times what PayPal normally adds on a quarterly basis.

PayPal said that it had 60 million active Venmo accounts as of the second quarter, which the company defines as accounts that have made a transaction through the service over a 12-mnth span. “Venmo is experiencing some of its strongest growth ever,” Schulman said, with a 60% year-over-year increase in revenue growth during the first three weeks of July.

The company posted second-quarter net income of $1.53 billion, or $1.29 cents a share, up from $823 million, or 69 cents a share, in the year-prior quarter. PayPal’s adjusted earnings per share increased to $1.07 a share from 71 cents a year earlier, whereas analysts surveyed by FactSet were modeling 87 cents. That includes a 7-cent negative impact from credit-loss reserves.

Revenue for the quarter climbed to $5.26 billion from $4.31 billion. The FactSet consensus called for $4.99 billion.

Don’t miss: Visa tops earnings expectations, but travel category remains slow to snap back

Schulman said that PayPal is making progress with in-store payment adoption since announcing the availability of QR code technology for 28 markets back in May. The company announced in its release that it will be partnering with CVS Health Corp.

to roll out PayPal and Venmo QR codes at physical checkout points in 8,200 standalone stores by the end of the year. This is the first retail chain to partner with PayPal, according to the company’s release.

For the third quarter, PayPal expects 30% growth in total payment volume, 25% growth in revenue on a currency-neutral basis, and 25% growth in adjusted earnings per share.

The company also reinstated a 2020 forecast after pulling its prior one earlier in the year due to pandemic-related uncertainties. For the full year, the company expects high-20% growth in total payment volume, 22% growth in currency-neutral revenue and about 25% growth in adjusted EPS.

Shares of PayPal have rallied 49% over the past three months as the S&P 500

has gained 11%.

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