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PayPal reported its strongest quarterly performance ever in Q2 thanks to the accelerated shift to online and contactless payments during the coronavirus pandemic. PayPal beat Wall Street estimates on all key financial metrics. PYPL stock is 4%.
Shares of the American company operating a worldwide online payment system PayPal Holdings Inc (NASDAQ: PYPL) that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders. PayPal (PYPL) stock was up more than 3.84% in after-hours trading Wednesday after the digital payments company released its Q2 earnings and revenue report among the growing boom within online transactions.
PayPal posted net income in Q2 of $1.53 billion, or $1.29 cents a share, up from $823 million, or 69 cents a share, in the year-prior quarter. The company’s adjusted earnings per share increased to $1.07 a share from 71 cents a year earlier, whereas analysts gathered by FactSet estimated it will be 87 cents. That includes a 7-cent negative impact from credit-loss reserves.
Revenue for the quarter rose to $5.26 billion from $4.31 billion. The FactSet consensus expected $4.99 billion. PayPal’s total payment volume, or the value of transactions going through the PayPal platform, went up to $222 billion from $172 billion, while analysts estimated it will amount to $210 billion.
Growth of Payment Volume via PayPal in Q2
The company also saw about $37 billion in Venmo payment volume. Overall, PayPal added 21.3 million net new active accounts in the period. The company revealed that it had more than 60 million active Venmo accounts as of the second quarter, which the company defines as accounts that have completed a transaction within a 12-month span.
For the third quarter, the company stated it expects a 30% incline in total payment volume, a 25% jump in revenue on a currency-neutral basis, and a 25% growth in adjusted earnings per share.
Chief Executive Dan Schulman said:
“The world has moved to a digital-first economy and I don’t think there is any going back.”
He added that the COVID-19 crisis has meant a “tipping point” for digital payments that, over the past three to five months, drove an acceleration in e-commerce penetration that could have otherwise taken three to five years to accomplish.
The company also reinstated a 2020 forecast after pulling the prior one earlier in the year due to pandemic-related uncertainties.
Schulman also noted that PayPal is making progress with in-store payment adoption since the company announced the availability of QR code technology for 28 markets back in May. The company also announced in its release that it will be partnering with CVS Health Corp. to roll out PayPal and Venmo QR codes at physical checkout points in 8,200 standalone stores by the end of the year. This is the first retail chain to partner with PayPal, according to the company’s release.
For the full year, the company expects a high-20% rise in total payment volume, a 22% rise in currency-neutral revenue and about 25% hop in adjusted EPS. PayPal shares have gained 49% over the past three months as the S&P 500 SPX, +1.24% has risen 11%.
Coming to Cryptosphere with Paxos
Meanwhile, a few days ago, PayPal chose Paxos to handle the new service’s supply of digital assets. This seems to be a fantastic assignment for New York-based Paxos, which last week launched Paxos Crypto Brokerage and announced its first customer in Revolut US, the American division of the UK-based fintech firm that offers Bitcoin trading
The offering would make PayPal one of the most important mainstream firms to offer cryptocurrency purchases, joining fellow publicly-traded payments provider Square and unicorn stock brokerage Robinhood.
It is not clear exactly which cryptocurrencies PayPal intends to offer.