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The integration of cryptocurrency purchase options for Bitcoin (BTC), Ethereum (ETH), and other limited altcoins has proven to be the right move for PayPal as shown in its Q4 results.
American payment giant PayPal Holdings Inc (NASDAQ: PYPL) has released its Q4 2020 result in which it posted a better than expected growth. According to the earnings release, the company recorded a 72% increase year-on-year in the number of its new accounts which came in at 16 million for the quarter.
In addition, the firm recorded 40.9 transactions per active accounts with a total payment volume coming in at $277 billion. This figure represents a 39% on a spot basis growth with 36% on an FX-neutral basis, despite the approximately 50% decline in volumes from travel agents and event verticals, according to the firm.
PayPal increased its transaction revenue by 12% to $5.7B when compared with the figures reported in the third quarter. The stellar performance of the firm was inspired by two of its new products. These are cryptocurrency purchasing tools and a “buy now pay later” feature, both of which had exceeded the company’s expectations.
“The volume of crypto traded on our platform greatly exceeded our projections,” PayPal CEO Dan Schulman said on the company’s fourth-quarter earnings call. “We’re excited to build on this early success by allowing customers to use their crypto balance as a funding source. … We hope to launch our first international market in the next several months.”
The performance came at a price though, with PayPal spending 30% more on its tech products year-over-year. The firm pumped as much as $732 million to bolster its tech ecosystem.
The Q4 result news has translated to more investor accolades as PayPal shares closed up 1.12% to $251.90. The shares are also trading with renewed gains in the pre-market with a 5.09% gain.
PayPal (PYPL) Q4 Results, Confirmation of Profitable Crypto Integration
The integration of cryptocurrency purchase options for Bitcoin (BTC), Ethereum (ETH), and other limited altcoins has proven to be the right move for PayPal as shown in its Q4 results. PayPal noted thus that it has plans for direct crypto acquisitions but this will come as a multi-year strategy.
Based on the company’s profitability, Coindesk reported that PayPal’s Chief Financial Officer John Rainey acknowledged that the firm is in a good position to make these acquisitions.
“We are unique in the fintech ecosystem as we enjoy outsized growth rates and are profitable,” Rainey said. “That allows us the ability to have this asset where we can look at inorganic opportunities to complement what we’re doing.”
Schulman however noted that the company is building its platform into a ‘superapp’ that will serve more customers. “We’re building our digital wallet into a superapp that transcends across payments and financial services,” he said.
The institutional investors who took a position with Bitcoin toward the tail end of last year had good tales to tell. The UK based Ruffer Investment Management firm is one of such firms besides PayPal. The UK firm turned its Bitcoin investment into a $750 million profit in about 2 months, per a Coindesk report.