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PayPal says 86% profit jump flags shift from cash payments in stores

  • David Henry

    Reuters

New York, United States   /   Thu, July 30, 2020   /   11:11 am
PayPal says 86% profit jump flags shift from cash payments in stores Buying iZettle will expand PayPal's reach into shops in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden. (Shutterstock/File)

Payments processor PayPal Holdings Inc said on Wednesday that a surge in e-commerce transactions and new accounts that drove quarterly profits 86 percent higher was continuing and would support additional investments in mobile-payment tools.

The news lifted the stock as much as 6 percent in after-hours trading. The stock, seen as an e-commerce investment play, was already up 44 percent since PayPal last reported results on May 6.

The company said it expected the trends to continue and that it now expected earnings per share for the full year to increase about 25 percent on 22 percent revenue growth.

Three months ago, the company had withdrawn full-year guidance because of uncertainty about the economic consequences of the coronavirus pandemic.

“We have more confidence in the elevated e-commerce trends we are seeing,” Chief Financial Officer John Rainey told analysts.

What in late April felt like a potentially short-lived surge of panic buying supported by government stimulus checks has become a “durable and profound behavioral shift,” Rainey said.

The company processed US$222 billion in payments over the period, up 30 percent from a year earlier, adjusted for foreign exchange. The rate of payment growth compares with a year-earlier increase of 26 percent that had slowed to 19 percent in the first quarter when the pandemic broke and retail spending collapsed broadly.

The company added 21.3 million accounts during the quarter, up 137 percent from a year earlier.

The company said it would invest $300 million more this year, mostly on its mobile phone app that displays QR codes so that people can go into stores and pay without touching anything.

Net income increased to $1.53 billion, or $1.29 per share, in the quarter ended June 30, from $823 million, or 69 cents per share, a year earlier.

Revenue increased 25 percent to $5.26 billion, topping the average analyst estimate of $5.0 billion.