Reflecting the rapid transition to digital payments, PayPal has reported its strongest growth in total payment volume (TPV) and revenue in its history, coupled with strong growth for Venmo, its P2P app.
Building on a record-breaking
This performance puts PayPal in stark contrast to many other companies that saw earnings plunge at the start of the pandemic. Even other payment companies, with strong digital capabilities, suffered if they were active in hard-hit verticals such as
“I’m pleased to say that PayPal had a very strong quarter across all of our key operating and financial metrics,” said Dan Schulman, PayPal’s president and CEO, in the company’s earnings call Monday. “Our performance is particularly noteworthy given the macro environment. We are battling a pandemic that shows no signs of slowing down.”
In detailing the performance, Schulman spotlighted Venmo. There were 65 million users on Venmo who drove a record $44.3 billion in TPV, up 61% year-over-year. Venmo continued to exceed executives’ expectations, and PayPal is now forecasting revenue for Venmo to approach $900 million in 2021, driven by investments in new capabilities. Schulman noted that the long-unprofitable Venmo will make a positive contribution to transaction margin dollars in 2021, as new capabilities are launched for the platform. Later in the call, Schulman said PayPal expects Venmo to reach profitability in 2022.
PayPal is at an inflection point in its history to help the world drive financial inclusion and keep people from falling into extreme poverty, Schulman said. He added that emerging technologies, coupled with mobile phones and financial platforms such as PayPal’s, can drive a future of inclusion and financial health where everyone, not just the affluent, can participate in the digital economy.
“We added 15.2 million net new actives [NNAs] in Q3, our second highest quarter for organic customer acquisitions after last quarter’s 21.3 million NNAs,” said Schulman. “We added over 1.5 million new merchants in the quarter — over two times our pre-COVID rate, and we now have 28 million merchants on our platform. We ended Q3 with 361 million active accounts and we remain on track to end the year with a record 70 million NNAs.”
PayPal’s earnings per share (EPS) for the third quarter reached $1.07, on a non-GAAP basis, up 41% from the same quarter a year earlier. The consensus analyst expectation was $0.94 EPS, according to
PayPal expects to have the Venmo credit card fully rolled out in the first quarter, with a personalized
The company expects to have the Venmo and PayPal apps undergo a fundamental transformation in 2021 to drive greater customer engagement, with an expected suite of products including enhanced direct deposit, bill pay, investment alternatives including crypto, budgeting tools, check cashing, buy now, pay later functionality along with all of Honey’s shopping tools.
“Our goal is to be the most ubiquitous payment capability in the offline market,” said Schulman. “Through a combination of QR codes, contactless cards, NFC inside our mobile apps, as well as our embedded PayPal wallet experiences inside Google Pay and Samsung Pay, among others.”
Schulman noted that PayPal’s move into the physical retail world will be a multi-year journey, but that PayPal is already seeing rapid adoption of its QR code solution, with 10 major retailers signed including CVS, Nike, Tumi, Bed Bath & Beyond and Samsonite. PayPal claimed that just with the signed deals alone, it will enable its QR code to be accepted at millions of merchant locations. PayPal also anticipates ending the year with 500,000 small and micro merchants accepting its QR codes.
