Earnings preview: PayPal to cash in on strong user base, volumes in Q2

PayPal Holdings (Nasdaq: PYPL) has stayed on a steady growth trajectory so far this year as the payment services platform continues to expand its customer base. The company is expected to report earnings of $0.74 per share when it publishes the second-quarter results Wednesday after the closing bell, which is higher by 28% from the same period of last year. Revenues are seen advancing 12% to $4.33 billion. The outlook is above the company’s own estimate.

The results will benefit from the growing contribution from mobile payment service Venmo, in the form of new partnerships and volume growth through user-base expansion. Another service that drives growth is One Touch, which is gaining traction among customers and merchants rapidly.

Earnings exceeded Wall Street’s forecast in each of the trailing four quarters, reflecting the rapid adoption of e-payment. It is estimated that the to-be-reported quarter benefitted particularly from strategic investments in fintech companies.

It is estimated that results for the to-be-reported quarter benefitted from strategic investments in fintech companies

The San Jose, California-based company reported a 37% jump in its first-quarter earnings to $0.78 per share, exceeding the forecast, as the user base expanded further and engagement increased across the platform. There was a 12% growth in revenues to $41.3 billion. Meanwhile, the top-line was negatively impacted by sale of the consumer receivables portfolio to Synchrony Financial.

The number of customer accounts moved up 15% annually to 277 million, thanks to PayPal’s strategic partnerships with some of the leading online platforms like Instagram and MercadoLibre.

Also see: PayPal Q1 2019 Earnings Conference Call Transcript

Of late, the management has been on an aggressive mission to expand its payment processing footprint through deals such as the acquisitions of digital payment processor Hyperwallet, financial technology company iZettle and prediction app Jetlore. Over the years, growth has also been driven by diversification into new geographical regions and product innovation.

PayPal shares hit a record high mid-July after making steady gains since the beginning of the year. In the past twelve months, the stock gained about 39%.

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