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Will Portfolio Strength Benefit PayPal's (PYPL) Q2 Earnings?

Zacks Equity Research

PayPal Holdings, Inc. PYPL is set to report second-quarter 2019 results on Jul 24.

The company’s persistent efforts toward expansion of services portfolio is anticipated to be a catalyst backed by increasing demand for online payments and mobile-commerce services worldwide.

Additionally, the company’s two-sided platform enables it to develop and maintain direct financial relationship with both customers and merchants. The platform connects consumers and merchants facilitating unique end-to-end product experiences to both parties. Merchants are able to keep track of customer behavior and engagement utilizing PayPal’s data.

Further, the platform enables PayPal to maintain a deep and trusted relationship with its growing merchants and consumer base.

All these factors are likely to drive the Total Payment Volume (TPV) in the to-be-reported quarter, which happens to be the key metric for the company’s top line.

TPV in the last reported quarter increased 22% and 25% year over year on spot rate and currency neutral basis, respectively, to $161.5 billion. This was driven by accelerating mobile payments and Venmo, accounting for $66 billion and $21 billion of TPV, respectively.

The Zacks Consensus Estimate for TPV for the second quarter is pegged at $171.7 billion.

Click here to know how the company’s overall second-quarter performance is likely to be.

Robust Portfolio to Aid Growth

PayPal’s strengthening product portfolio is likely to drive the top line in the to-be-reported quarter.

The company’s robust product lines such as Venmo and One Touch are key growth drivers. Both the products are aiding growth in the company’s net new active accounts. Further, these are strengthening customer engagement on PayPal’s platform which is likely to drive total active accounts growth in the quarter under review.

Further, the company launched a new solution, PayPal Commerce Platform, which offers an amalgamation of its technologies, tools, services and financing for businesses of all sizes, and back-end systems like compliance and account authentication.

The service remains a tailwind for PayPal to gain momentum across e-commerce companies, marketplaces and crowdfunding platform by allowing merchants to accept payments and shoppers to checkout via their PayPal accounts globally.

Additionally, the service offers fraud protection services backed by AI and Machine Learning (ML) techniques that positions PayPal well to attract small sellers who do not have similar online shopping infrastructure leveraged by large merchants.

Apart from this, the company unveiled a new solution for the Canadian users which offers up to 75 percent shipping discounts to small businesses. This is likely to aid its presence in Canada.

All these endeavors are likely to drive PayPal’s second-quarter results.

PayPal Holdings, Inc. Revenue (TTM)

PayPal Holdings, Inc. Revenue (TTM)

PayPal Holdings, Inc. revenue-ttm | PayPal Holdings, Inc. Quote

Zacks Rank & Other Stocks to Consider

Currently, PayPal carries a Zacks Rank #2 (Buy).

Some other topr-ranked stock that can be considered in the broader technology sector is Alteryx, Inc. AYX, Chegg, Inc. CHGG and Atlassian Corporation PLC TEAM. While Alteryx sports a Zacks Rank #1 (Strong Buy), Chegg and Atlassian carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Chegg and Atlassian is currently pegged at 13.66%, 30% and 18.28%, respectively.

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PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
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