PayPal's annual second-quarter net profit fell nearly 23 per cent despite the company adding 11.4 million new active accounts and revenue for the period coming in lower than expected.
The California-based company’s net profit in the three months to June 30 slumped to $1.2 billion, about $346 million less than the same period a year earlier, it said.
Although revenue during the quarter increased 19 per cent on an annual basis to $6.24bn, it missed analyst expectations of $6.27bn.
The company's shares fell as much as 8 per cent in extended trading on Wednesday following the results which were weaker than analysts had expected.
“On the heels of a record year, we continued to drive strong results in the second quarter, reflecting some of the best performance in our history,” PayPal’s chief executive Dan Schulman said.
“Our platform now supports 403 million active accounts, with an annualised TPV [total payment volume] run rate of approximately $1.25 trillion … clearly PayPal has evolved into an essential service in the emerging digital economy,” added Mr Schulman.
In its guidance for the third quarter, PayPal said it expected its revenue to be in the range of $6.15bn to $6.25bn. It has raised its full-year sales forecast to $25.8bn from $25.5bn announced in February.
“We are reporting another strong quarter … indicative of the strength, diversification and breadth of our two-sided platform,” John Rainey, the company’s chief financial officer and executive vice president for global customer operations, said.
“PayPal sits at the intersection of transformative secular tailwinds and is uniquely positioned to address the massive opportunity in digital payments,” he added.
Payment volumes processed through the platform rose 36 per cent to $311bn in the second quarter period.
PayPal, which added 11.4 million new accounts in the April-June period, ended the quarter with 403 million active accounts — 9.9 million less than the total number of users added in the same period last year.
The company saw a huge surge in the number of new users and in payment volumes last year as more people shifted to online shopping and digital transactions during the Covid-19 pandemic.
Venmo, PayPal's app that allows customers in the US to send each other money, processed nearly $58bn in payments in the second quarter — up 58 per cent on an annual basis, the company said.
Last year, PayPal launched a service enabling users to buy, hold and sell cryptocurrency, allowing cryptocurrency to become a funding source for its more than 28 million merchants.
It also extended “buy, sell and hold cryptocurrency” experiences to Venmo users following a successful initial launch in April, the company said.
The company’s cash, cash equivalents and investments totalled $19.4bn at the end of the second quarter, while its debt amounted $8.9bn as of June 30.
It also repurchased nearly 765,000 shares of common stock, returning nearly $200m to stockholders.