PayPal Reports 2016 Q4 Earnings

At first glance, it looks like another solid quarter, with PayPal hitting the high side of its guidance. Full year guidance for 2017 looked fine, first quarter guidance did look a bit light, as this article mentions. However, I really don’t see anything that looks unexpected either way. Shares are trading down about 1.5% in AH trading.

Payments processor PayPal (PYPL) posted Q4 earnings and revenue after the close Thursday that met Wall Street expectations, but the midpoint of its Q1 guidance came in a bit light and shares fell late.

Analysts had expected the company to get a boost from a holiday shopping season that was robust for online sellers, though many brick-and-mortar retailers had troubles, but some Q4 metrics lagged Q3.

PayPal has yet to ink a partnership with e-tail king Amazon.com (AMZN), but last year it did so with credit card giants Visa (V) and MasterCard (MA). It also inked a mobile payments partnership with Facebook (FB) last year.

Read more at http://www.investors.com/news/technology/paypal-q4-earnings-…

Here’s a look at the numbers we’re following. I’ve added non-GAAP operating margin to the mix too, since last quarter.


Revenues (millions)			Q1		Q2		Q3		Q4	
2014					1874		1983		1971		2193	
2015					2137		2297		2258		2556
2016					2544		2650		2667		2981

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		0.42

2016 Q4 Earnings

Revenue Growth (billions)
2015 Q4 TTM Revenue = 9.248
2016 Q4 TTM Revenue = 10.842
YOY Revenue Growth = 17.2%, previous quarter 17.2%

EPS Growth (non-GAAP)
2015 Q4 TTM EPS = 1.28
2016 Q4 TTM EPS = 1.5
YOY EPS Growth =17.2%, previous quarter 20%

P/E (Check Current Price) = 41.50/1.5 = 27.7

1YPEG = 1.61

PayPal Metrics

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

of active accounts: 197 million, +10%

Payment transactions: 1.755 billion, +23%
Payment transactions per active account: 31.1, +13%
Total Payment Volume (TPV): 99.348 billion, +25% (FXN)
Transaction margin: 57.7%
Operating margin (non-GAAP): 21%

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		197

Payment Transactions (millions)		Q1		Q2		Q3		Q4
2014					918		930		972		1144
2015					1123		1161		1216		1428
2016					1414		1448		1512		1755

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		31.1

TPV (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		99.348

Transaction Margin (%)			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		57.7

Operating Margin (%)(non-GAAP)	        Q1		Q2		Q3		Q4
2014									18.4		20.4
2015					22.1		22.6		19.9		20.8
2016					21.1		19.9		18.4		21.1

If anything sticks out, its that operating margin was strong, though transaction margin did trickle down another percentage point. I will be interested to hear if that’s attributed to the MA and V deals on the conference call. Everything else looks like it grew by the same, steady amount except TPV, which really jumped high. Good to see!

I will listen to the conference call within the next day or two and report back with notes.

Matt
Long MA, 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

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I see little advantage to Amazon buyers using Pay Pal.
Amazon offers a credit card card giving points worth 5% off on Amazon purchases .

Which Amazon card? There is a store card and a rewards card. If you don’t mind would you tell me which you are using and why?

Mark

Mauser,

On a personal level I totally agree with you. But not everybody likes credit cards or even has credit cards. Others don’t have good enough credit to obtain a high rewards credit card. A deal between PayPal and Amazon makes sense for both companies because it gives both sets of customers more choices and options.

Matt
Long AMZN, 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

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