PayPal Reports Second Quarter 2019 Results
GAAP EPS of $0.69, increasing 58%; non-GAAP EPS of $0.86, increasing 47%
Cash flow from operations of $1.2 billion; Free cash flow of $1.0 billion
9.0 million net new active accounts added, bringing total active accounts to 286 million, up 17%
My Employer (proud to write it :)) PayPal Holdings, Inc. (PYPL) today announced second quarter results for the period ended June 30, 2019.
"PayPal delivered another solid quarter, and consequently we are raising EPS guidance for the year. Net new active accounts increased by a record 41 million over the last 12 months, and engagement per active account once again increased by 9% to 39 times a year. Venmo's momentum continues, with 70% growth in total payment volume to $24 billion. Earlier this month, Xoom expanded to 32 new send markets throughout Europe,"
said Dan Schulman, President and CEO of PayPal.
Financial highlights for second quarter 2019
Revenue of $4.31 billion; growing 12% on both a spot and foreign currency-neutral (FX-neutral or FXN) basis.
GAAP operating margin of 16.4% with non-GAAP operating margin of 23.2%.GAAP EPS of $0.69, increasing 58%; non-GAAP EPS of $0.86, increasing 47%.
Operating cash flow of $1.17 billion, free cash flow of $1.04 billion.
Operating highlights for second quarter 2019
9.0 million net new active accounts, bringing total active accounts to 286 million accounts, up 17%.3.0 billion payment transactions, up 28%.
$172 billion in total payment volume (TPV), up 24%, or 26% on an FX-neutral basis.
39.0 payment transactions per active account on a trailing twelve months basis, up 9%.
PayPal's key business drivers
Merchant Services volume grew 30% on an FX-neutral basis.
eBay Marketplaces volume declined 4% on an FX-neutral basis versus growth of 6% in Q2-18, and represented 9% of TPV for the quarter versus 12% a year ago.
Person-to-Person (P2P) volume grew 40% to $46 billion, and represented 27% of TPV.
Venmo processed $24 billion of TPV in the second quarter, growing 70%.
PayPal's platform and strategic investments
In the second quarter, PayPal announced the PayPal Commerce Platform, a new solution designed to meet the specific needs of marketplaces, e-commerce solution providers, and crowdfunding platforms by bringing together a comprehensive set of technologies, tools, services, and financing solutions for businesses.
In addition, PayPal extended its global partnership with Uber in the second quarter and announced plans to explore future commercial payment collaborations. PayPal also made a $500 million strategic investment in Uber.
In July, PayPal's Xoom product launched its international money transfer services in the UK and 31 other European markets. Customers across Europe can now use Xoom to send money, pay bills or reload phones to more than 130 markets internationally.
Cash, Cash Equivalents, and Investments - PayPal's cash, cash equivalents, and investments totaled $10.7 billion as of June 30, 2019.
Short-Term Borrowings - PayPal's notes payable totaled $2.5 billion as of June 30, 2019.
2019 Financial Guidance
Full year 2019 revenue and earnings guidance
PayPal expects revenue to grow 14 - 15% at current spot rates and 14 - 15% on an FX-neutral basis, to a range of $17.60 - $17.80 billion. As previously disclosed, full year 2019 revenue growth guidance includes an expected decline of approximately 3.5 percentage points for full year 2019 related to the sale of U.S. consumer credit receivables portfolio to Synchrony. PayPal expects GAAP earnings per diluted share in the range of $2.16 - $2.22 and non-GAAP earnings per diluted share in the range of $3.12 - $3.17. EPS guidance for full year 2019 includes $0.26 of unrealized gains from PayPal's strategic investments recognized in the first and second quarters of 2019 and an approximate $0.03 of expected net unrealized gains related to PayPal's strategic investment portfolio in Q3 2019.Estimated non-GAAP amounts for the twelve months ending December 31, 2019, reflect adjustments of approximately $1.37 - $1.43 billion, including estimated stock-based compensation expense and related payroll taxes in the range of $1.06 - $1.10 billion.Estimated revenue includes approximately 1.5 points of revenue growth from acquisitions that closed in 2018.The dilutive impact of acquisitions that closed in 2018 is estimated to be $0.40 to $0.44 on GAAP EPS and $0.08 to $0.10 on non-GAAP EPS.
Third quarter 2019 revenue and earnings guidance
PayPal expects revenue to grow 18 - 19% at current spot rates and 18 - 19% on an FX-neutral basis, to a range of $4.33 - $4.38 billion.
PayPal expects GAAP earnings per diluted share in the range of $0.32 - $0.35 and non-GAAP earnings per diluted share in the range of $0.69 - $0.71. GAAP and non-GAAP EPS guidance for third quarter 2019 includes an approximate $0.03 of expected net unrealized gains related to PayPal's strategic investment portfolio. GAAP EPS guidance also includes an estimated $0.15 of negative impact related to taxes associated with the acquisition of iZettle.
Estimated non-GAAP amounts for the three months ending September 30, 2019, reflect adjustments of approximately $300 - $330 million, including estimated stock-based compensation expense and related payroll taxes in the range of $250 - $265 million.
Estimated revenue includes approximately 1.5 points of revenue growth from acquisitions that closed in 2018.
The dilutive impact of acquisitions that closed in 2018 is estimated to be $0.19 to $0.23 on GAAP EPS and $0.01 to $0.02 on non-GAAP EPS.
Please see "Non-GAAP Financial Measures" and "Non-GAAP Measures of Financial Performance" for important additional information.
Quarterly conference call and webcast
PayPal Holdings, Inc. will host a conference call to discuss second quarter 2019 results at 2:00 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures, can be accessed through the company's Investor Relations website at https://investor.paypal-corp.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.
PayPal Holdings, Inc. uses its Investor Relations website (https://investor.paypal-corp.com), its PayPal Stories Blog (https://www.paypal.com/stories/us), Twitter handles (@PayPal and @PayPalNews), LinkedIn page (https://www.linkedin.com/company/paypal),
Facebook page (https://www.facebook.com/PayPalUSA/),
YouTube channel (https://www.youtube.com/paypal),
Dan Schulman's LinkedIn profile (https://www.linkedin.com/in/dan-schulman/),
John Rainey's LinkedIn profile (www.linkedin.com/in/john-rainey-pypl) and
Dan Schulman's Facebook page (https://www.facebook.com/DanSchulmanPayPal/) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to PayPal's press releases, SEC filings, public conference calls, and webcasts.