PayPal’s stock price fell by 3.5% during Monday’s after-hours trading after the company issued weak Q2 guidance, citing lower-than-expected adjusted earnings per share (EPS).
The payment technology company expects to post Q2 adjusted EPS of between $1.15 and $1.17, which is lower than the average analyst estimate of $1.17.
However, PayPal raised its full-year earnings guidance to reflect its stronger-than-expected Q1 earnings. The company’s cost-cutting actions helped boost Q1 adjusted EPS to $1.17, up from $0.88 in Q1 2022 and exceeding the consensus estimate of $1.10.
Acting CFO Gabrielle Rabinovitch attributed the Q1 results to the “diversification of PayPal’s platform and ongoing benefits from productivity initiatives.”
The Q1 revenue of $7.04B was higher than the consensus estimate of $6.99B, but lower than the $7.38B revenue in the prior quarter. Additionally, the Q1 total payment volume (TPV) of $354.5B slipped from $357.4B in Q4 2022 but grew from $323.0B in Q1 2022.
The total active accounts stood at 433M as of March 31, 2022, up from 429M in the same period last year but lower than 435M at Dec. 31, 2022.
Venmo processed $62.7B in TPV in the first quarter of the year, compared to $62.5B in Q4 2022. The Q1 total operating expenses of $6.04B declined from $6.14B in Q4 2022 but increased from $5.77B in Q1 2022.
Net cash provided by operating activities was $1.17B in Q1 2023, down from $1.59B in Q4 2022 and $1.22B in Q1 2022. Additionally, free cash flow declined from $1.43B in the prior quarter to $1.00B in Q1 2023, and from $1.03B in the year-ago period.
Despite the drop in PayPal’s stock price, the company’s full-year earnings guidance has been raised to ~$4.95 from its previous outlook of ~$4.87, beating the consensus estimate of $4.89.
PayPal’s Q1 results reflect the company’s growth in e-commerce and cost-cutting initiatives. The Q1 results were also boosted by Venmo’s performance, which processed a high volume of transactions. However, the company’s Q2 guidance has fallen short of analysts’ expectations.
PayPal has been expanding its payment processing capabilities and investing in new technologies to capture a larger share of the e-commerce market.
The company’s recent acquisition of Curv, a digital asset security infrastructure provider, is expected to enable PayPal to enter the cryptocurrency market and offer its customers new payment options.
Additionally, PayPal’s partnership with Google Cloud is expected to enable the company to offer more innovative payment solutions.
PayPal shares Q2 earnings report
PayPal is facing increasing competition in the payment technology space, with rivals such as Square, Stripe, and Adyen vying for market share.
However, PayPal’s strong brand recognition and extensive user base give it a significant advantage over its competitors. The company’s focus on innovation and strategic acquisitions is expected to help it maintain its market position.
PayPal’s Q1 results have been strong, with the company beating revenue and EPS estimates. However, the company’s Q2 guidance has been lower than analysts’ expectations, leading to a drop in the stock price. PayPal’s ongoing investments in new technologies and strategic acquisitions.
PayPal’s Q1 earnings beat the consensus estimate, which could have a positive impact on investor confidence in the company’s ability to perform well in the future.
Additionally, PayPal raised its full-year earnings guidance, reflecting its stronger-than-expected Q1 earnings, which could also be viewed positively by investors.
PayPal is a large payment technology company with a market capitalization of over $300 billion as of May 2023.
It is one of the most well-known and widely used online payment systems in the world, with operations in more than 200 countries and support for transactions in over 100 currencies.
PayPal’s customer base includes millions of individuals and businesses who use the platform to send and receive payments securely and easily across the globe. Its financials indicate that the company generated over $23 billion in revenue and $5 billion in net income in 2022.