PayPal posts $1bn profit on higher payment volumes

The company’s revenue during the April-June period increased 7% on an annual basis to $7.3bn

PayPal headquarters in San Jose, California. Getty Images

PayPal swung to a profit of $1.03 billion in the second quarter compared to a loss of $341 million in the same period last year.

It was up nearly 30 per cent on a quarterly basis as the company earned a net profit of $795 million in the March quarter.

The California company’s revenue during the April-June period increased 7 per cent on an annual basis to $7.3 billion. Earnings for each share jumped to $0.92.

Analysts polled by Investing.com anticipated earnings a share of $1.15 on revenue of $7.27 billion.

The company's shares fell as much as 7.4 per cent in extended-hours trading. They closed more than 3 per cent down at $73.2 a share giving the company a market valuation of $81.67 billion.

Dan Schulman, president and chief executive of PayPal. Getty

“Our second quarter results show continued momentum,” said Dan Schulman, president and chief executive of PayPal.

"We have high confidence that our business is on the right path … and we are seeing clear signs that the investments we have made are paying off."

In February, PayPal announced that Mr Schulman will retire and leave the global payments company at the end of the year.

Under his leadership, the company’s market cap growth outpaced the S&P 500 with revenue increasing to $27.5 billion in 2022 from $9.2 billion in 2015.

PayPal’s operating income surged 48 per cent on a yearly basis to $1.1 billion in the last quarter.

The company’s total payment volumes processed during the three months jumped 11 per cent annually to more than $376.5 billion.

The company’s total payment transactions surged 10 per cent year on year to 6.1 billion during the last quarter.

Total active accounts stood at 431 million at the end of second quarter, compared to 429 million in the second quarter of last year.

But there was a slight decline compared to the March quarter when they reached 433 million.

PayPal said it expected its revenue to grow 8 cent to $7.4 billion and earnings a share to hover in the range of $0.85 to $0.87 in the third quarter of the 2023 financial year.

That compared with analysts’ estimates for revenue and earnings a share of $7.33 billion and $1.22, respectively.

“Our teams are energised … and … confident that we are well positioned to continue to grow our leadership in digital payments,” Mr Schulman said.

PayPal’s total cash, cash equivalents and investments totalled $14.4 billion, while its debt stood at $10.5 billion as of June 30.

In the last quarter, PayPal generated cash flow from operations of $200 million, and free cash flow of $400 million.

PayPal and private equity firm KKR have announced a multi-year relationship for European buy now, pay later receivables. Bloomberg

The company repurchased about 22 million shares of common stock, returning $1.5 billion to stockholders in the previous quarter, PayPal said in a statement.

In February, it announced that it will lay off 2,000 employees, about 7 per cent of its workforce, as the technology industry continues to cut back on a hiring surge that began after the onset of the Covid-19 pandemic.

In June, PayPal and private equity firm KKR announced a multi-year relationship for European "buy now, pay later" receivables.

Under the transaction, which is expected to close in the second half of this year, private credit funds and accounts managed by KKR will buy up to €40 billion ($43.8 billion) of current and future BNPL loans originating in the UK and other European countries.

PayPal expects nearly $1.8 billion of proceeds, the company said.