PayPal (PYPL) Q1 Earnings & Revenues Beat Estimates, Rise Y/Y

PayPal Holdings, Inc. PYPL reported non-GAAP earnings of $1.08 per share for first-quarter 2024, which improved 27% on a year-over-year basis.

Per the company’s old methodology, which excludes the impacts of stock-based compensation expenses and related employer payroll taxes, adjusted earnings were $1.40 per share, which surpassed the Zacks Consensus Estimate by 16.7%

Net revenues of $7.7 billion exhibited year-over-year growth of 10% on an FX-neutral basis and 9% on a reported basis. The figure surpassed the Zacks Consensus Estimate of $7.5 billion.

Growing transaction revenues drove year-over-year top-line growth in the reported quarter. Also, accelerating U.S. and international revenues contributed well.

PayPal has gained 10.6% year to date, outperforming the industry’s rally of 7.5%.

PayPal Holdings, Inc. Price, Consensus and EPS Surprise

 

PayPal Holdings, Inc. Price, Consensus and EPS Surprise

PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote

Top Line in Detail

By Type: Transaction revenues amounted to $7.03 billion (91% of net revenues), up 11% from the year-ago quarter. Other value-added services generated revenues of $665 million (accounting for 9% of net revenues), down 2% year over year.

By Geography: Revenues from the United States totaled $4.5 billion (58% of net revenues), up 8% on a year-over-year basis. International revenues were $3.2 billion (42% of net revenues), up 12% from the prior-year quarter.

Key Metrics to Consider

PayPal witnessed a year-over-year decline of 1% in total active accounts, which came in at 427 million in the quarter under review. The figure was in line with the Zacks Consensus Estimate.

The total number of payment transactions was 6.5 billion, up 11% on a year-over-year basis. The figure beat the consensus mark of 6.49 billion.

PYPL’s payment transactions per active account were 60 million, which improved 13% from the year-ago quarter.

Total payment volume amounted to $403.9 billion for the reported quarter, indicating year-over-year growth of 14% on a spot-rate basis, as well as on a currency-neutral basis. The reported figure topped the Zacks Consensus Estimate of $394.05 billion.

Operating Details

PayPal’s operating expenses were $6.53 billion in the first quarter, up 8.1% from the prior-year quarter. As a percentage of net revenues, the figure contracted 100 basis points (bps) on a year-over-year basis.

The non-GAAP operating margin was 15.2%, expanding 100 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2024, cash equivalents and investments were $14.3 billion, up from $14.1 billion as of Dec 31, 2023.

PayPal had a long-term debt balance of $9.68 billion as of Mar 31, 2024, compared with $9.67 billion as of Dec 31, 2023.

PYPL generated $1.9 billion in cash from operations in the reported quarter compared with $2.6 billion in the previous quarter. The free cash flow was $1.8 billion in the first quarter, down from $2.5 billion in the prior quarter.

The company returned $1.5 billion to its shareholders by repurchasing 25 million shares.

Guidance

For second-quarter 2024, PayPal expects revenues to grow 6.5% on a spot rate basis and 7% on a currency-neutral basis from the year-ago quarter. The Zacks Consensus Estimate for revenues is pegged at $7.82 billion.

Non-GAAP earnings per share are expected to rise in the low-double-digit percentage on a year-over-year basis. The Zacks Consensus Estimate for earnings is pegged at $1.19 per share.

For 2024, PayPal anticipates non-GAAP earnings per share to rise in the mid to high-single-digit percentage. The Zacks Consensus Estimate for the same is pegged at $5.11.

Zacks Rank & Stocks to Consider

Currently, PayPal carries a Zacks Rank #3 (Hold).

Some other top-ranked stocks in the broader technology sector are Arista Networks ANET, Badger Meter BMI and Dell Technologies DELL. Arista Networks and Badger Meter sport a Zacks Rank #1 (Strong Buy) at present, and Dell Technologies carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Arista Networks have gained 4.2% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.

Shares of Badger Meter have gained 17.5% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.

Shares of Dell Technologies have gained 52.3% in the year-to-date period. The long-term earnings growth rate for DELL is projected at 12%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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