PayPal beats Q4 earnings and revenue estimates, but shares drop
PayPal delivered better-than-expected fourth-quarter results on Tuesday, surpassing analysts’ earnings and revenue forecasts.
The company posted adjusted earnings per share of $1.19, beating the expected $1.12, and revenue of $8.37 billion, ahead of the anticipated $8.26 billion, News.Az reports, citing CNBC News.
Despite the strong performance, PayPal’s shares fell more than 6% in premarket trading.
For the first quarter, PayPal expects adjusted earnings per share of $1.15 to $1.17, which is higher than the average analyst estimate of $1.13. Earnings for the year will come in at $4.95 to $5.10 a share, topping the $4.90 average estimate, according to LSEG.
PayPal also announced a new $15 billion share buyback program, and expects to make around $6 billion in repurchases in 2025.
Revenue increased about 4% in the quarter from $8.03 billion a year ago.
Total payment volume, an indication of how digital payments are faring in the broader economy, was just short of estimates, coming in at $437.8 billion for the fourth quarter, versus the $438.2 billion analysts projected.
While PayPal’s take rate slipped to 1.91% from 1.96% a year earlier, transaction margin, which is how the company gauges the profitability of its core business, rose to 47% from 45.8%. In 2024, transaction margin dollars grew 7% to $14.7 billion, bolstered by Braintree, a service Meta uses for credit-card processing.
The company said it anticipates growth of 4% to 5% in transaction margin dollars in 2025 to $15.2 billion to $15.4 billion
PayPal’s stock is up 43% in the past year, as of Monday’s close. CEO Alex Chriss, who joined the company in September 2023, is trying to revive growth at PayPal, which had been been mired in a deep slump due to increased competition and a declining take rate, or the percentage of revenue PayPal keeps from each transaction.
Chriss has focused on prioritizing profitable growth and better monetizing key acquisitions like Braintree and payments app Venmo.
Venmo’s total payment volume rose 10% in the quarter from a year earlier. DoorDash, Starbucks and Ticketmaster are among businesses now accepting Venmo as one way that consumers can pay.
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