PayPal reports strong Q3 earnings, revenue slightly below expectations
PayPal announced better-than-expected third-quarter earnings on Tuesday, although its revenue fell slightly short of forecasts, leading to a decline in shares during premarket trading.
Revenue increased about 6% in the quarter from $7.42 billion in the same period a year ago, News.Az reports, citing CNBC.PayPal reported net income of $1.01 billion, or 99 cents per share, compared to $1.02 billion, or 93 cents per share, a year earlier.
It’s the first earnings report for CEO Alex Chriss since he reached his one-year mark on the job in September. The stock is up 36% this year and 42% since Chriss joined the payments company, which at the time was 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, which is used by Meta for credit card processing, and payments app Venmo.
Total payment volume, an indication of how digital payments are faring in the broader economy, rose 9% from a year earlier to $422.6 billion for the quarter ended Sept. 30, and came in just above the average analyst estimate of $422.5 billion, according to StreetAccount.
“PayPal delivered strong financial and operating results during a highly productive third quarter,” Chriss said in the earnings release.
The company’s operating margin came in at 18.8%, beating the StreetAccount estimate of 17.4%. PayPal reported total active accounts of 432 million, up 1% from a year earlier, and beating the average estimate of 430.5 million.
While PayPal’s take rate slipped to 1.86% from 1.91% a year earlier, transaction margin, which is how the company gauges the profitability of its core business, rose to 46.6% from 45.4%.
For the fourth quarter, PayPal is calling for “low single-digit growth.” Analysts were expecting growth of 5.4% to $8.46 billion. The investor deck says guidance reflects a “price-to-value strategy and prioritization of profitable growth.”
The company expects adjusted earnings per share of $1.07 to $1.11, versus the average analyst estimate of $1.10, according to LSEG.
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