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PayPal reports mixed bag of results for Q2; provides dismal revenue outlook

By Staff Correspondent |
Earnings Update by AlphaStreet

PayPal Holdings (NASDAQ: PYPL) surpassed Q2 earnings estimates, while its revenue fell short of the expectations. The digital payments platform reported adjusted EPS of $0.86 on revenue of $4.31 billion. Wall Street estimated the company to earn $0.74 per share on revenue of $4.33 billion. PayPal stock dropped about 6% in the extended trading hours as the company provided dismal revenue outlook for FY19.

PayPal (PYPL) Q2 2019 earnings surpass estimates, while revenue misses analysts; projections. PayPal stock drops 6% in extended trading hours

GAAP EPS of $0.69, increased 58% over the prior-year quarter. Net new active accounts of 9 million brought the total active accounts to 286 million accounts, up 17%. Payment transactions surged 28% to 3 billion and $172 billion in total payment volume was up 24%, or 26% on an FX-neutral basis.

For full-year 2019, PayPal expects revenue to grow 14-15% at current spot rates and 14-15% on an FX-neutral basis, to a range of $17.60-17.80 billion. This guidance includes an expected decline of approximately 3.5 percentage points for full year 2019 related to the sale of U.S. consumer credit receivables portfolio to Synchrony.

Full-year 2019 GAAP EPS is touted to be between $2.16 and $2.22 and non-GAAP EPS is seen in the range of $3.12 to $3.17. EPS guidance for full year 2019 includes $0.26 of unrealized gains from PayPal’s strategic investments recognized in the first and second quarters of 2019 and an approximate $0.03 of expected net unrealized gains related to PayPal’s strategic investment portfolio in Q3 2019.

For the third quarter of 2019, PayPal expects revenue to grow 18-19% both at current spot rates and FX-neutral basis, to a range of $4.33-4.38 billion. GAAP EPS is projected in the range of $0.32 to $0.35 and non-GAAP EPS is expected to be in the range of $0.69 to $0.71.

Also read: Positive momentum likely to continue in Twitter’s Q2 earnings

“PayPal delivered another solid quarter, and consequently we are raising EPS guidance for the year. Net new active accounts increased by a record 41 million over the last 12 months, and engagement per active account once again increased by 9% to 39 times a year,” said CEO Dan Schulman.

Payment gateway firm Visa (NYSE: V) reported its third quarter 2019 results yesterday. While the results surpassed estimates, Visa stock dropped as it cut down FY19 earnings outlook.

Shares of PayPal, which reached its all-time high ($121.48) last week, have surged 44% so far in this year and 32% in the past 12 months.

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