PayPal Quarterly Update: Another Strong Quarter

Since there was brief interest on this board in PayPal, I thought I would share its quarterly results here. It just reported what I would call another strong quarter and is currently up about 5% in AH trading:

Online payments firm PayPal reported third quarter earnings on Thursday that matched analysts’ expectations for profit and revenue growth.

In its earning’s release, the company played up its emphasis on customer choice following a quarter in which it signed deals with Mastercard and Visa that allow its users to choose PayPal as an option when they pay for goods in stores with their smartphones.

“We are further expanding the ubiquity and value of the PayPal brand and moving deliberately towards achieving our vision of becoming an everyday, essential financial service for people around the world,” said CEO Dan Schulman in a press release.

Read the entire article at http://www.forbes.com/sites/ryanmac/2016/10/20/paypal-report…

Here’s a look at their updated revenues and earnings:


Revenues (millions)			Q1		Q2		Q3		Q4	
2014					1874		1983		1971		2193	
2015					2137		2297		2258		2556
2016					2544		2650		2667

EPS (non-GAAP)			        Q1		Q2		Q3		Q4
2014					0.27		0.28		0.24		0.28	
2015					0.29		0.32		0.31		0.36	
2016					0.37		0.36		0.35

2016 Q3 Earnings

Revenue Growth (billions)
2015 Q3 TTM Revenue = 8.885
2016 Q3 TTM Revenue = 10.417
YOY Revenue Growth = 17.2%, previous Q 16.4%

EPS Growth
2015 Q3 TTM EPS = 1.2
2016 Q3 TTM EPS = 1.44
YOY EPS Growth = 20%, previous Q 23.9%

P/E (Check Current Price) = 40.09/1.44 = 27.84

1YPEG = 27.84/20 = 1.39

PayPal Metrics

Here is a look at some of PayPal’s other important metrics growth:

of active accounts: 192 million, +11% YOY

Payment transactions: 1.512 billion, +24% YOY
Payment transactions per active account: 30.2, +13% YOY
Total Payment Volume: 87.403 billion, +25%
Transaction margin: 58.7%

And here’s a look at the historic growth of those numbers:


# of Active Accounts (millions) 		Q1		Q2		Q3		Q4
2014						148		152		157		162
2015						165		169		173		179
2016						184		188		192

Payment Transactions (millions)		        Q1		Q2		Q3		Q4
2014						918		930		972		1144
2015						1123		1161		1216		1428
2016						1414		1448		1512

Payment Transactions Per Active Account	        Q1		Q2		Q3		Q4
2014						23		23		24		24.5	
2015						25.2		26.1		26.9		27.5
2016						28.4		29.4		30.2

Total Payment Volume	(billions)		Q1		Q2		Q3		Q4
2014						53.676		56.736		58.184		66.039
2015						63.021		67.482		69.738		81.523
2016						81.056		86.208		87.403

Transaction Margin (percentage)		        Q1		Q2		Q3		Q4
2014						65.0		65.7		63.1		63.5	
2015						64.2		63.8		62.3		61.1
2016						60.4		59.8		58.7

Yes, their transaction margin was down another smidgen of a percent but this was expected. As long as they keep growing users, transactions, revenues, and earnings at double digit clips, I don’t see how anyone can complain too much. Seems like a good trade-off to me. I will be sure to look over the conference call this weekend and report back.

Matt
Long PYPL
MasterCard (MA), Nestle (NSRGY), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

24 Likes

Matt,

Thanks for all your write ups on companies during earnings season!

In my opinion they are some of the most concise and informative write ups I see, to give a great snapshot of the company’s current situation.

Appreciate your work!

Mike

10 Likes

Thanks Mike. That’s very kind of you to say.

Matt