PayPal earnings beat: 58 cents per share, vs 54 cents expected EPS

PayPal reported third-quarter earnings and revenue that topped Wall Street estimates on Thursday. Here’s how the company did compared with what Wall Street expected:

  • Earnings: 58 cents vs. 54 cents per share, forecast by Refinitiv.
  • Revenue: $3.68 billion vs. $3.66 billion, forecast by Refinitiv.

Shares of PayPal rose 2.2 percent in after-hours trading Thursday and were trading near $79.20. Revenue grew 14 percent in the third quarter to $3.68 billion, while earnings were up 26 percent.

The company raised its fourth-quarter earnings guidance to a range of between 65 and 67 cents, and increased quarterly revenue guidance, both in-line with analysts’ expectations, according to Refinitiv. PayPal also upped its full-year earnings guidance to a range of between $2.38 and $2.40 per share, above analysts’ consensus expectations of $2.34 per share.

In the previous quarter, PayPal reported earnings that beat Wall Street estimates, but its third-quarter revenue outlook fell short. It also raised full-year forecast in the second-quarter announcement and said that PayPal’s board had approved up to $10 billion in share buybacks.

In July, Third Point hedge fund manager Daniel Loeb revealed that his fund added a new position in PayPal during the second quarter. The firm predicted that the stock price will rise to $125 within 18 months, representing a roughly 40 percent upside to share prices at the time.

What to watch

Analysts will be looking for details on PayPal’s peer-to-peer payments app Venmo, which has struggled to prove itself as a money-maker for the payment company. Earlier this year, PayPal unveiled new “checkout-button” options for online retailers to make it earlier to display Venmo as a payment option on their sites and apps.

“While the monetization of Venmo remains a longer term strategy (material impact not expected until FY20), the inability to show progress on this initiative could hurt estimates and valuation multiples,” Mizuho Bank analyst Thomas McCrohan said in a note to clients ahead of PayPal earnings.

In September, PayPal CEO Dan Schulman outlined a plan to monetize the app, telling Yahoo Finance that Venmo merchants, not consumers, would be footing the bill.

Investors will also be looking for details on PayPal’s M&A strategy on the call. Earlier this year, the company announced a $2.2 billion deal to buy European payments start-up iZettle which prior to the announcement had been planning on going public on the Nasdaq in Stockholm. PayPal has also made deals to buy Hyperwallet, Jetlore and Simility this year.

Stifel analyst Scott Devitt expects investors to be focused on recently announced acquisitions and integration plans, the Venmo monetization roadmap, the company’s ongoing partnership efforts, progress in emerging geographies, including India and Brazil, and an update on the company’s product development efforts.

On Thursday, the company announced new features and an expansion of its existing partnership with American Express, which is also reporting earnings after the bell. American Express customers will now be able to send money via Venmo or PayPal directly from their Amex mobile app, pay credit card bills with existing Venmo balances, and use Amex Membership Rewards points for PayPal purchases.

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