PayPal Reports 2019 Q2 Earnings

TL;DR: Another solid quarter, revenue came in at $4.31B, +12% YOY, non-GAAP EPS $0.86, +47% YOY. Remember, we’re still lapping the sale of the credit portfolio to Synchrony Financial last year, which negatively affected revenue growth by 7% this quarter.

The big news – and why shares were down about 4% in AH trading, is that the company cut full-year revenue guidance to $17.6B-$17.8B from its previous range of $17.85B-$18.10B. compares with consensus estimate of $17.98B. It did boost 2019 adjusted EPS outlook to $3.12-$3.17 from prior range of $2.94-$3.01. From the earnings release:

“PayPal delivered another solid quarter, and consequently we are raising EPS guidance for the year. Net new active accounts increased by a record 41 million over the last 12 months, and engagement per active account once again increased by 9% to 39 times a year. Venmo’s momentum continues, with 70% growth in total payment volume to $24 billion. Earlier this month, Xoom expanded to 32 new send markets throughout Europe,” said Dan Schulman, President and CEO of PayPal.

Read the entire release at https://investor.paypal-corp.com/news-releases/news-release-…

Let’s take a look at the numbers:


Revenues (millions)			Q1		Q2		Q3		Q4	
2014					1874		1983		1971		2193	
2015					2137		2297		2258		2556
2016					2544		2650		2667		2981
2017					2975		3136		3239		3744
2018					3685		3857		3683*		4226
2019					4128		4305

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
2017					0.44		0.46		0.46		0.55
2018					0.57		0.58		0.58		0.69
2019					0.78		0.86

*Sale of consumer debt to Synchrony Financial in July 2018

2019 Q2 Earnings (Current)

Revenue Growth (billions)
2018 Q2 TTM Revenue = 14.425
2019 Q2 TTM Revenue = 16.342
YOY TTM Revenue Growth = 13.3%, previous quarter 15.1%

EPS Growth (non-GAAP)
2018 Q2 TTM EPS = 2.16
2019 Q2 TTM EPS = 2.91
YOY TTM EPS Growth = 34.7%, previous quarter 28.9%

Non-GAAP P/E (Check Current Price) = 121.30/2.91 = 41.7, previously 40.8

Trailing 1YPEG = 41.7/34.7 = 1.2

PayPal Metrics

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

of active accounts: 286M, +17% YOY

Payment transactions: 2.97B, +28% YOY
Payment transactions per active account: 39.0, +9% YOY
Total Payment Volume (TPV): $172.4B, +24% YOY
Venmo processed $24B TPV, +70% YOY
P2P volume: $46B, +40% YOY, representing 27% of TPV
Mobile TPV: $73B, +37% YOY
Transaction margin: 54.8%
Operating margin (non-GAAP): 23.2%
Cash, cash equivalents, and investments: $10.7B
Short term borrowings: $2.5B
No share buybacks in Q2

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
2017					203		210		218		227
2018					237		244		254		267
2019					277		286

Payment Transactions (millions)	        Q1		Q2		Q3		Q4
2014					918		930		972		1144
2015					1123		1161		1216		1428
2016					1414		1448		1512		1755
2017					1771		1817		1941		2240
2018					2214		2327		2463		2867
2019					2838		2973

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
2017					31.7		32.3		32.8		33.6
2018					34.7		35.7		36.5		36.9
2019					37.9		39.0

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
2017					99.327		106.44		114.05		131.45
2018					132.36		139.40		143.00		163.65
2019					161.49		172.36

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
2017					56.7		56.3		54.8		65.1
2018					57.1		56.0		54.9		54.6
2019					54.2		54.8

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
2017					21.6		21.0		20.0		22.0
2018					22.5		21.3		21.0		22.0
2019					22.6 		23.2

I’ll be back w/more thoughts after I read through the conference call.

Matt
Long PYPL
Phoenix 1 Contributor
BlackLine (BL), MasterCard (MA), Ollie’s (OLLI), PayPal (PYPL), and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx

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