PayPal Holdings (PYPL) reported fourth-quarter earnings that fell short of expectations while total payment volume also came in below estimates. PayPal stock plunged as 2022 profit guidance was missed as well.
San Jose, Calif.-based PayPal reported earnings late Tuesday. PYPL stock toppled 15.5% to near 148.50 in extended trading on the stock market today.
PayPal earnings for the quarter ended Dec. 31 were $1.11 per share, up 4% from a year earlier. The e-commerce company said revenue rose 13% to $6.90 billion, including acquisitions.
PayPal’s operating agreement with eBay has ended and the online marketplace’s transition to its own payments platform is impacting transaction volumes.
EBay’s transition is expected to put $600 million of revenue pressure in the first half of this year, Chief Executive Officer Dan Schulman said on a conference call with analysts.
“In the second half of the year, I look forward to being able to stop adjusting for eBay, and letting the strength of our core results speak for themselves,” Schulman added.
In recent quarters, PayPal had said it believes it will notch 750 million active accounts on its platform by 2025. To achieve that goal, the company has been spending more on marketing campaigns to lure new customers to PayPal’s many offerings.
Financial Highlights
Analysts expected PayPal earnings of $1.12 a share on revenue of $6.90 billion. A year earlier, PayPal earned $1.08 a share on sales of $6.12 billion.
Total payment volume processed from merchant customers climbed 23% to $339.5 billion. Analysts had projected a total payment volume of $345.40 billion.
In addition, PayPal lowered its 2022 net revenue growth outlook to 16% at the midpoint of guidance vs. its 18% or better outlook issued in November, Jefferies analyst Trevor Williams said in a report to clients
The San Jose, California-based company added 9.8 million net new active accounts during the past quarter, including 3.2 million accounts from the acquisition of Paidy, the Japanese buy-now-pay-later firm it bought in September.
As a result, its total revenue rose 13 percent to $6.9 billion (roughly Rs. 51,730 crores) in the fourth quarter and it earned $1.11 (roughly Rs. 80) per share – with both numbers largely matching estimates.
PayPal added 9.8 million net new active accounts in the quarter, including 3.2 million from the acquisition of Paidy. That was down, however, from 13.3 million net new active accounts added in Q3.
PayPal forecast revenue to grow about 15% to 17% for the full year 2022, on a spot and foreign-currency-neutral basis. Analysts had expected year-over-year revenue growth for 2022 to be 17.9%.
Stock Movement
PayPal shares tumbled 17% to $145.96 at 6:26 p.m. in extended New York trading Tuesday following the announcement, after slipping as low as $144.51. They had advanced 2.2% to $175.80 in regular trading. The company’s German-listed shares were down 16.3% at 10:05 a.m. in Frankfurt on Wednesday.
