Paypal releases its Q3 earnings; announces Venmo pact with Amazon

Paypal is an American multinational company which is one of the largest online payment processing platforms in the world. It released its third-quarter earnings on Monday November 8, 2021 after the closing bell.

PayPal reported revenue growth for the third quarter of 13% on Monday and said it’s teaming up with Amazon to let U.S. customers pay with Venmo at checkout, starting in 2022.

Here are the essential takeaways for the latest disclosure.

  • Revenue: $6.18 billion vs. $6.23 billion expected
  • EPS: $1.11, adjusted, vs. $1.07 expected

Total payment volume rose 26% to $310 billion for the quarter ended Sept. 30, and the company added 13.3 million net new active accounts, bringing the total to 416PayPal said in a statement.

Analysts Estimates

The Zacks Consensus Estimate for the company’s earnings per share is pinned at $1.07. This indicated stagnant earnings since the suggested change was 0% year-over-year.

The Earnings Surprise Percentage (ESP) was -0.74%. This negative figure clearly indicated that the consensus didn’t expect Paypal to meet its expectations.

The estimated revenue was pegged at $6.23 billion. It indicated an increase of 13.78% from previous year’s revenue of $5.46 billion.

Earnings History

Paypal reported FY21 second quarter earnings that beat consensus estimates. The reported non-GAAP EPS was $1.15 which surpassed the Zacks Consensus Estimate by 1.77%. However, the revenue figure was lower than the estimate. The estimated revenue was pinned at $6.32 billion and the company reported $6.24 billion. Still it showed an increase of 17% year-over-year.

Key financial highlights of the second quarter earnings included:

  • Net revenue of $6.24 billion, growing 19%, and 17% on an FXN basis
  • GAAP operating margin of 18.1%, flat to the prior year period; non-GAAP operating margin of 26.5%, declining 171 basis points
  • GAAP EPS of $1.00, down 23%; non-GAAP EPS of $1.15, up 8%
  • GAAP and non-GAAP EPS include an approximate $0.11 benefit from the release of credit reserves compared to an approximate $0.07 negative impact from increased credit provisioning in Q2’20
  • GAAP EPS also includes a net unrealized gain of $0.20 on PayPal’s strategic investment portfolio compared to a $0.58 net unrealized gain in Q2’20

The company reported strong earnings in the first quarter of FY21. The EPS was $0.92 which showed an enormous 1200% increase year-over-year. The reported revenue was $6.03 billion which showed a growth of 29% from that of the previous year.

Earnings Forecast

Analysts estimate the EPS for the fourth quarter to be $1.28. This suggests a growth of 18.5% year-over-year. The estimated revenue is pinned at $7.25 billion which also indicates an increase of 18.5% than that of the previous year.

The ESP for next quarter is -2.02% which indicates the consensus this time as well doesn’t expect the company to meet its estimates.

The Annual Forecast estimates EPS to be $4.72 for FY21, indicating a growth of 21.6% year-over-year. The estimated revenue is pegged at $25.73, suggesting an increase of 20% than that of last year.

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