PayPal Stock – PayPal’s Q2 Performance: Revenue Up 8% Year-Over-Year, EPS Hits $1.19

PayPal Stock – PayPal Holdings Inc (NASDAQ: PYPL) has reported an impressive fiscal second-quarter revenue growth of 8% year-over-year, reaching $7.89 billion. This figure surpassed the analyst consensus estimate of $7.81 billion. The company also reported a quarterly adjusted earnings per share (EPS) of $1.19, significantly beating the analyst consensus estimate of $0.98. As a result, the stock price experienced an uptick following the earnings release.

Payment Volume and Transaction Growth

Total payment volumes for the quarter saw an 11% increase year-over-year, amounting to $416.8 billion. Additionally, payment transactions rose by 8% to $6.6 billion. The payment transactions per active account also grew by 11% on a trailing 12-month basis, indicating increased user engagement.

Active Accounts and Operating Margin Expansion

Despite a slight year-over-year decrease of 0.4% in total active accounts, which now stand at 429 million, the number of active accounts saw a sequential increase of 0.4%, or 1.8 million. PayPal’s operating margin expanded by 126 basis points to 16.8%, while the adjusted operating margin increased by 231 basis points to $18.5 billion. These improvements reflect the company’s efficiency and effective cost management.

Cash Flow and Liquidity Position

Operating cash flow for the quarter was $1.5 billion, and free cash flow was $1.4 billion. PayPal ended the quarter with a strong liquidity position, holding $18.3 billion in cash and equivalents as of June 30, 2024.

CEO’s Statement on Performance and Strategy

“PayPal delivered a strong second quarter and first half, and I’m confident we’re on the right track. We delivered our best transaction margin dollar growth since 2021, and we are making steady progress on our strategic transformation while investing in innovation and operating more efficiently,” said CEO Alex Chriss. His statement underscores the company’s commitment to growth and innovation.

Future Outlook

PayPal has provided an optimistic outlook for the third quarter and full year 2024. The company expects third-quarter revenues to increase by a mid-single-digit percentage compared to $7.42 billion in the prior year’s period and the consensus estimate of $7.81 billion. Adjusted EPS for the third quarter is expected to grow by a high single-digit percentage compared to $0.98 for the previous year’s period and the consensus estimate of $0.98.

For the full year 2024, PayPal anticipates adjusted EPS to increase by the low-mid-teens percentage, up from the prior guidance of mid- to high single-digit percentage, compared to $3.83 year-over-year. Current analyst estimates forecast an EPS of $4.23 per share.

Stock Performance and Analyst Projections

Despite the strong quarterly performance, PayPal Holdings stock has lost over 22% in the last 12 months. However, analysts remain optimistic about the potential upside from Venmo and PayPal digital wallets, highlighting these as key growth drivers for the company.

PayPal’s robust second-quarter results and positive outlook demonstrate its resilience and growth potential in the digital payments space. With strategic investments in innovation and efficiency, the company is well-positioned to continue delivering value to its shareholders and users alike.

FAQ: PayPal’s Q2 2024 Earnings Report

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