PayPal Releases Full 2019 and Q4 2019 Earnings Report

PayPal Holdings Headquarters

PayPal Holdings, Inc. announced fourth-quarter and full-year results for the period ended December 31, 2019.

“PayPal delivered strong results in 2019, achieving many records including revenue, net income and operating margin performance. We added 37.3 million net new active accounts, bringing total active accounts to 305 million, up 14% year over year. In Q4 alone, we processed nearly $200 billion of TPV and engagement grew 10% to 40.6 transactions per active account. We strengthened our value proposition for consumers and merchants, expanded our international scope and scale, and announced transformative strategic acquisitions, investments and commercial partnerships.”

 

Dan Schulman, President and CEO of PayPal

Financial Highlights For Fourth Quarter 2019

  • Revenue of $4.96 billion; growing 17% on a spot basis and 18% on a foreign currency-neutral (FX-neutral or FXN) basis.
  • GAAP operating income of $0.8 billion, increasing 34%; non-GAAP operating income of $1.2 billion, increasing 28%.
  • GAAP operating margin of 16.1% with a non-GAAP operating margin of 23.6%.
  • GAAP EPS of $0.43, decreasing 13%; non-GAAP EPS of $0.86, increasing 24%.
  • GAAP and non-GAAP EPS include a net unrealized gain of $0.02 on strategic investments, driven primarily by MercadoLibre (NASDAQ: MELI).
  • GAAP EPS also includes approximately $0.19 of negative impact from taxes related to the acquisition of iZettle.
  • Cash flow from operations of $1.3 billion with free cash flow of $1.1 billion.
  • Repurchased approximately 2.9 million shares of common stock, returning $305 million to stockholders.

Operating Highlights for Fourth Quarter 2019

  • 9.3 million net new active accounts, bringing total active accounts to 305 million accounts, up 14%.
  • 3.5 billion payment transactions, up 21%.
  • $199 billion in total payment volume (TPV), up 22% on a spot and FX-neutral basis.
  • Merchant Services volume grew 25% on a spot basis and 26% on an FX-neutral basis.
  • Venmo processed more than $29 billion of TPV, growing 56%.

Financial Highlights For Full-Year 2019

  • Revenue of $17.77 billion; growing 15% on a spot and FX-neutral basis.
  • The completed sale of the U.S. consumer credit receivables portfolio to Synchrony in July 2018 negatively affected revenue growth by approximately three and one-half percentage points.
  • GAAP operating income of $2.7 billion, increasing 24%; non-GAAP operating income of $4.1 billion, increasing 23%.
  • GAAP operating margin of 15.3% with a non-GAAP operating margin of 23.2%.
  • GAAP EPS of $2.07, increasing 21%; non-GAAP EPS of $3.10, increasing 28%.
  • GAAP and non-GAAP EPS include a net unrealized gain of $0.14 on strategic investments, driven primarily by MercadoLibre.
  • GAAP EPS also includes approximate $0.19 of negative impact from taxes related to the acquisition of iZettle.
  • Cash flow from operations of $4.6 billion with free cash flow of $3.9 billion.
  • Repurchased approximately 14 million shares of common stock, returning $1.4 billion to stockholders.

Operating Highlights For Full-Year 2019

  • 37.3 million net new active accounts, bringing total active accounts to 305 million accounts, up 14%.
  • 12.4 billion payment transactions, up 25%.
  • $712 billion in total payment volume (TPV), up 23%, or 25% on an FX-neutral basis.
  • Merchant Services volume grew 27% on a spot basis and 29% on an FX-neutral basis.
  • Venmo processed more than $102 billion, up 65%.
  • 40.6 payment transactions per active account on a trailing twelve months basis, up 10%.

PayPal’s Key Business Initiatives

In November, PayPal announced its agreement to acquire Honey Science Corporation, a rapidly-growing technology platform for shopping and rewards, for approximately $4 billion.

This transaction, which closed in January 2020, is expected to transform the shopping experience for PayPal’s consumers while increasing sales and customer engagement for merchants.

Following a strategic investment in March 2019, PayPal executed a commercial agreement with MercadoLibre in December. This agreement will allow PayPal and MercadoLibre to jointly leverage their scale and capabilities to strengthen both companies’ networks.

In December, PayPal completed its acquisition of a 70% equity interest in Guofubao Information Technology Co., Ltd. (GoPay), following approval of the transaction by the People’s Bank of China in September 2019.

With the completion of this deal, PayPal became the first foreign payment platform licensed to provide online payment services in China.

In January 2020, PayPal announced a strategic partnership with UnionPay International (UPI) whereby both companies will work together to better serve joint consumers and merchants.

As part of this partnership, UPI will support PayPal’s merchant and consumer initiatives in China and PayPal will support UPI acceptance globally where PayPal is accepted, providing UPI consumers more choice when shopping.

Full PayPal Earnings Report and Full Disclosure Information

This report is an abbreviated version of the earnings report and is not intended for investment decision purposes. For the complete earnings report and all legal disclosures, please follow this link.

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