PayPal (PYPL) Q3 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings PYPL reported third-quarter non-GAAP earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 6.56% and increased 20.4% year over year.
Net revenues of $7.42 billion exhibited year-over-year growth of 9% on a FX-neutral (FXN) basis and 8.4% on a spot basis. The figure surpassed the Zacks Consensus Estimate by 0.37%.
Total payment volume amounted to $387.701 billion, reflecting year-over-year growth of 15% on a spot basis and 13% on an FXN basis. The figure topped the Zacks Consensus Estimate by 1.53%.
Quarter Details
Growing transaction and other value-added services’ revenues drove top-line growth on a year-over-year basis in the reported quarter.
Transaction revenues were $6.654 billion (90% of net revenues), up 7% year over year. Other value-added services generated revenues of $764 million (10% of net revenues), up 25% year over year.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
U.S. net revenues accounted for 57% of total revenues. The top-line figure increased 7% year over year to $4.257 billion.
International revenues increased 10% on a spot basis and 11% on an FXN basis to $3.161 billion.
PayPal witnessed a year-over-year decline of 1% in total active accounts, which came in at 428 million in the quarter under review.
The total number of payment transactions was 6.275 billion, up 11% on a year-over-year basis. Payment transactions per active account on a trailing 12-month basis were 56.6 million, which improved 13% year over year.
The non-GAAP operating margin was 22.2%, contracting 18 bps year over year.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash equivalents and investments were $15.4 billion, up from $9.96 billion as of Jun 30, 2023.
PayPal had a long-term debt balance of $10.6 billion as of Sep 30, 2023 compared with $10.55 billion as of Jun 30, 2023.
PYPL generated $1.3 billion in cash from operations during the reported quarter. Free cash flow was $1.1 billion, much better than the $350 million reported in the previous quarter.
The company returned $1.4 billion to its shareholders by repurchasing 23 million shares.
Guidance
For fourth-quarter 2023, PayPal expects revenues to grow roughly between 6% and 7% on a spot basis and 7% to 8% on an FXN basis.
Non-GAAP earnings are expected to grow roughly 10% year over year to $1.36 per share.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.41 per share, up by a penny over the past 30 days.
For 2023, PayPal raised its guidance for non-GAAP earnings to $4.98 from $4.95, suggesting growth of roughly 21% over 2022.
Zacks Rank & Stocks to Consider
PayPal currently carries a Zacks Rank #3 (Hold).
NetEase NTES, Ballard Power Systems BLDP and Model N MODN are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have declined 33.8% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Ballard Power shares have declined 1.8% year to date. BLDP is set to report its third-quarter 2023 results on Nov 7.
Model N shares have returned 12.2% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.
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