PayPal lifts full-year forecast after bumper second quarter

PayPal reported a strong set of second-quarter results on Tuesday, surpassing analyst expectations, as it hiked its full-year earnings forecast.

The California-based payments giant achieved an 8% year-on-year revenue increase, reaching $7.89bn, slightly above the consensus estimate of $7.81bn.

Adjusted earnings per share (EPS) for the quarter came in at $1.19, significantly exceeding the analyst forecast of 98 cents.

Total payment volumes surged 11% year-on-year to $416.8bn, while payment transactions rose 8%, totaling $6.6bn, and payment transactions per active account grew 11% on a trailing 12-month basis.

However, the total number of active accounts saw a slight decline of 0.4% to 429 million, although there was a sequential increase of 0.4%, or 1.8 million accounts.

The company's operating margin expanded by 126 basis points to 16.8%, with the adjusted operating margin increasing by 231 basis points to 18.5%.

PayPal generated operating cash flow of $1.5bn and free cash flow of $1.4bn.

As of 30 June, the company held $18.3bn in cash and equivalents.

Looking ahead, PayPal projected mid-single-digit percentage revenue growth for the third quarter, up from $7.42bn in the same period last year.

The company also anticipated high single-digit percentage growth in adjusted earnings per share, compared to the previous year's 98 cents.

For the full 2024 financial year, PayPal expected adjusted earnings per share growth in the low-to-mid teens percentage range, up from the prior estimate of mid-to-high single digits, with current analyst estimates of $4.23 per share.

“PayPal delivered a strong second quarter and first half, and I’m confident we’re on the right track,” said president and chief executive officer Alex Chriss.

“We delivered our best transaction margin dollar growth since 2021, and we are making steady progress on our strategic transformation, while investing in innovation and operating more efficiently.

“Given the strength of our business, we are raising our 2024 guidance and increasing share repurchases. We are operating from a position of strength, delivering for our customers, and focusing on long-term profitable growth.”

At 0843 EDT (1343 BST), shares in PayPal Holdings were up 8.09% in premarket trading in New York, at $63.71.

They had closed up 1.12% on Monday, ahead of the earnings release, at $58.94.

Reporting by Josh White for Sharecast.com.