PayPal Q3 Earnings: Revenue Falls Short of Expectations, Strong Payment Volume Growth, CEO Sees 15%-20% Increase In BNPL

PayPal Holdings Inc PYPL reported fiscal third-quarter revenue growth of 6% year over year to $7.85 billion, marginally missing the analyst consensus of $7.88 billion. 

The company reported an adjusted EPS of $1.20, beating analyst consensus of $1.07. The stock dipped after the print.

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Total payment volumes increased 9% year-over-year to $422.6 billion in the quarter. Payment transactions were up 6% to $6.6 billion, and the payment transactions per active account increased 9% on a trailing 12-month basis to $61.40.

Total active accounts decreased by 0.9% to 432 million. On a sequential basis, active accounts increased by 0.6%, or 2.6 million.

The operating margin expanded 198 basis points to 17.7%, and the adjusted operating margin increased 194 bps to 18.8%.

Operating cash flow was $1.6 billion, and free cash flow was $1.4 billion. PayPal held $16.2 billion in cash and equivalents as of September 30, 2024, and had a debt of $12.40 billion on its balance sheet.

Outlook: PayPal expects fourth-quarter revenues to increase by a low-single-digit percentage compared to $8.03 billion in the prior year's period and the consensus of $7.81 billion.

It expects adjusted EPS to decrease by a low- to mid-single-digit percentage or reach $1.03-$1.07, compared to $1.14 for the previous year's period and the consensus of $1.10.

PayPal expects full-year 2024 adjusted EPS to increase by a high teens percentage or reach $3.92-$3.96 (prior low-mid-teens percentage) compared to $3.83 Y/Y. Current analyst estimates are calling for an EPS of $4.46 per share.

On the conference call, the CEO said he sees an increase of 15% to 20% in the Buy-Now-Pay-Later use. Based on the holiday quarter spending trends, the CFO says, "Consumer Feels Strong At This Point."

PayPal Holdings stock gained over 36% year-to-date.

Price Action: PYPL stock is down by 1.11% at $82.66 premarket at the last check on Tuesday.

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Photo courtesy of PayPal.