PayPal

Earnings up 28%. Revs up 23%. TPV up 29%.

https://investor.paypal-corp.com/releasedetail.cfm?ReleaseID…

Venmo growth up 78%, over $14Bn in payments this Q. P2P up 50%.

This company is a hidden hi-growth story, as legacy eBay Marketplaces is only growing at 6%.

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This company is a hidden hi-growth story, as legacy eBay Marketplaces is only growing at 6%.

We have similar styles, Najorf! Love this PayPal story.

Shares are down about 4% in AH trading but, at first glance, I don’t see anything to be concerned about. Looks like another good quarter. I’ve said this before, but PayPal is one of the most consistently good companies I follow. Via CNBC:

PayPal reported second-quarter earnings that topped Wall Street estimates on Wednesday, but its third-quarter revenue outlook fell short.

Here’s how the company did compared with what Wall Street expected:

Earnings per share: 58 cents vs. 57 cents, forecast by Thomson Reuters
Revenue: $3.86 billion vs. $3.81 billion, forecast by Thomson Reuters

That revenue figure represents 23 percent growth, from the $3.14 billion PayPal reported in the year-ago quarter. For the third quarter, PayPal’s profit forecast was in line with analyst expectations, but its revenue outlook missed. The company said it expects adjusted earnings per share between 53 cents and 55 cents on revenue between $3.62 billion and $3.67 billion. Analysts had projected third-quarter earnings of 54 cents a share on revenue of $3.71 billion, according to Thomson Reuters consensus estimates.

From https://www.cnbc.com/2018/07/25/paypal-earnings-q2-2018.html…

So, revenue and earnings beat estimates but guidance for next quarter fell $40M or so short of “estimates” – I don’t think we need to discuss how ridiculous that is. Either way, the stock had a nice run this quarter. Here’s 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

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

2018 Q2 Earnings (Current)

Revenue Growth (billions)
2017 Q2 TTM Revenue = 11.76
2018 Q2 TTM Revenue = 14.53
YOY Revenue Growth = 23.6%, previous quarter 22.45%

EPS Growth (non-GAAP)
2017 Q2 TTM EPS = 1.67
2018 Q2 TTM EPS = 2.16
YOY EPS Growth = 29.3%, previous quarter 29.9%

Non-GAAP P/E (Check Current Price) = 91.37/2.16 = 42.3

Trailing 1YPEG = 42.3/29.3 = 1.44

PayPal Metrics

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

of active accounts: 244M, +15% YOY

Payment transactions: 2.327B, +28% YOY
Payment transactions per active account: 35.7, +9% YOY
Total Payment Volume (TPV): $139.4B, +29% YOY
Mobile Payment Volume: $54B, +49% YOY
Transaction margin: 56.0%
Operating margin (non-GAAP): 21.3%
Venmo processed $14B TPV, +78% YOY
Cash and cash equivalents: $6.3B
Short term borrowings: $2.0B
Repurchased 6.1M shares, approx. $500M
Authorized new $10B buyback program, to go into effect when current buyback program ($2.7B remaining of $5B) finishes

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

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

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

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

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

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

Will be back in a day or two with notes from the conference call.

Matt
Long PYPL
MasterCard (MA), PayPal (PYPL), Skechers (SKX) and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx

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