3 key takeaways from PayPal’s Q1 earnings report

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on May 5, 2021
  • PayPal Holdings reports record volume in the fiscal first quarter.
  • The online payments company beats Wall Street estimates in Q1.
  • PayPal Holdings forecasts a 20% growth in its revenue this year.

PayPal Holdings Inc. (NASDAQ: PYPL) reported record volume in the fiscal first quarter as the COVID-19 restrictions continued to fuel eCommerce in recent months. On the back of hawkish quarterly performance, the U.S. firm lifted its guidance for the full year.

1. Financial performance

PayPal said that its net income in the first quarter printed at £790 million that translates to 66.16 pence per share. In the same quarter last year, its net income was capped at a significantly lower £60.41 million or 5.03 pence per share.

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On an adjusted basis, the online payments platform earned a record 88 pence per share versus the year-ago figure of 47.46 pence per share. PayPal generated £4.34 billion of revenue in Q1 – an increase from £3.32 billion last year.

According to FactSet, experts had forecast the company to post £4.25 billion of revenue and 73 pence of adjusted EPS. In March, PayPal launched the “Checkout with Crypto” service that now enables its users to make payments using cryptocurrencies.

2. Payments volume and net new active accounts

Total payments volume, PayPal added, jumped to a record £204.95 billion in the first quarter versus £190.35 billion expected. The Q1 performance pushed the San Jose-based company’s total payment volume in the past 12 months above £720 billion for the first time.

According to PayPal, 14.5 million net new members joined its payments platform in the recent quarter. Transactions per active account stood at 42.2, translating to 4.5 billion transactions in total that it processed in the first quarter.

3. Guidance for the full financial year

For the full financial year, PayPal now forecasts a roughly 20% year over year growth in its revenue. The company is confident that its adjusted per-share earnings will jump about 21% this year. The Nasdaq-listed firm expects up to 55 million net new active accounts in fiscal 2021.

In separate news from the United States, eCommerce website Etsy also published its quarterly earnings report on Wednesday after the bell.

Impact on the share price

PayPal shares were reported about 5% up in after-hours trading on Wednesday. Including the price action, the stock is now exchanging hands at £187 per share. In comparison, it had started the year at a lower £167 per share. Learn more about how to pick winning stocks.

At the time of writing, the payments giant has a market cap of £209 billion and a price to earnings ratio of 69.89.

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