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PayPal says 86% profit jump flags shift from cash payments in stores

PayPal added 21.3 million accounts during the quarter, up 137 percent from a year earlier.

July 30, 2020 / 09:20 AM IST
Representative image

Representative image

Payments processor PayPal Holdings Inc said on July 29 that a surge in e-commerce transactions and new accounts that drove quarterly profits 86 percent higher was continuing and would support additional investments in mobile-payment tools.

The news lifted the stock as much as 6% in after-hours trading. The stock, seen as an e-commerce investment play, was already up 44% since PayPal last reported results on May 6.

The company said it expected the trends to continue and that it now expected earnings per share for the full year to increase about 25% on 22% revenue growth.

Three months ago, the company had withdrawn full-year guidance because of uncertainty about the economic consequences of the coronavirus pandemic.

"We have more confidence in the elevated e-commerce trends we are seeing," Chief Financial Officer John Rainey told analysts.

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What in late April felt like a potentially short-lived surge of panic buying supported by government stimulus checks has become a "durable and profound behavioral shift," Rainey said.

The company processed $222 billion in payments over the period, up 30% from a year earlier, adjusted for foreign exchange. The rate of payment growth compares with a year-earlier increase of 26% that had slowed to 19% in the first quarter when the pandemic broke and retail spending collapsed broadly.

The company added 21.3 million accounts during the quarter, up 137% from a year earlier.

The company said it would invest $300 million more this year, mostly on its mobile phone app that displays QR codes so that people can go into stores and pay without touching anything.

Net income increased to $1.53 billion, or $1.29 per share, in the quarter ended June 30, from $823 million, or 69 cents per share, a year earlier.

Revenue increased 25% to $5.26 billion, topping the average analyst estimate of $5.0 billion.
Reuters
first published: Jul 30, 2020 09:07 am

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