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Paypal (PYPL) Up 7.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal Q2 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings reported non-GAAP earnings of $1.19 per share for second-quarter 2024, which improved 36% on a year-over-year basis. The figure surpassed the Zacks Consensus Estimate by 23.96%.
Net revenues of $7.9 billion exhibited year-over-year growth of 9% on an FX-neutral basis and 8% on a reported basis. The figure topped the Zacks Consensus Estimate by 1.04%.
Growing transaction revenues drove year-over-year top-line growth in the reported quarter. Accelerating U.S. and international revenues further drove the results.
Top Line in Detail
By Type: Transaction revenues amounted to $7.15 billion (91% of net revenues), up 9% from the year-ago quarter. Other value-added services generated revenues of $732 million (accounting for 9% of net revenues), up 0.1% year over year.
By Geography: Revenues from the United States totaled $4.55 billion (58% of net revenues), up 8% on a year-over-year basis. International revenues were $3.33 billion (42% of net revenues), up 8% from the prior-year quarter.
Key Metrics to Consider
PayPal witnessed a year-over-year decline of 0.5% in total active accounts to 429 million in the quarter under review. The figure topped the Zacks Consensus Estimate of 428 million.
The total number of payment transactions was 6.6 billion, up 8% on a year-over-year basis. The figure missed the consensus mark of 6.9 billion.
PYPL’s payment transactions per active account were 60.9 million, which improved 11% from the year-ago quarter.
The total payment volume was $416.81 billion for the reported quarter, indicating year-over-year growth of 11% on a spot-rate basis, as well as on a currency-neutral basis. The reported figure lagged the Zacks Consensus Estimate of $419.54 billion.
Operating Details
PayPal’s operating expenses were $6.6 billion in the second quarter, up 6.6% from the prior-year quarter. As a percentage of net revenues, the figure contracted 130 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 18.5%, expanding 230 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash equivalents and investments were $13.6 billion, down from $14.3 billion as of Mar 31, 2024.
PayPal had a long-term debt balance of $9.73 billion as of Jun 30, 2024, compared with $9.68 billion as of Mar 31, 2024.
PYPL generated $1.5 billion in cash from operations in the reported quarter compared with $1.9 billion in the previous quarter. The free cash flow was $1.4 billion in the second quarter.
The company returned $1.5 billion to its shareholders by repurchasing 24 million shares.
Guidance
For third-quarter 2024, PayPal expects year-over-year mid-single-digit growth in revenues.
Non-GAAP earnings per share are expected to exhibit high-single-digit growth on a year-over-year basis.
For 2024, PayPal anticipates non-GAAP earnings per share to see growth of low to mid-teens from that reported in 2023.
The company expects low to mid-single-digit growth in the transaction margin.
The free cash flow is projected at $6 billion. Management also expects to repurchase shares worth $6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Paypal has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Paypal has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Paypal (PYPL) Up 7.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal Q2 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings reported non-GAAP earnings of $1.19 per share for second-quarter 2024, which improved 36% on a year-over-year basis. The figure surpassed the Zacks Consensus Estimate by 23.96%.
Net revenues of $7.9 billion exhibited year-over-year growth of 9% on an FX-neutral basis and 8% on a reported basis. The figure topped the Zacks Consensus Estimate by 1.04%.
Growing transaction revenues drove year-over-year top-line growth in the reported quarter. Accelerating U.S. and international revenues further drove the results.
Top Line in Detail
By Type: Transaction revenues amounted to $7.15 billion (91% of net revenues), up 9% from the year-ago quarter. Other value-added services generated revenues of $732 million (accounting for 9% of net revenues), up 0.1% year over year.
By Geography: Revenues from the United States totaled $4.55 billion (58% of net revenues), up 8% on a year-over-year basis. International revenues were $3.33 billion (42% of net revenues), up 8% from the prior-year quarter.
Key Metrics to Consider
PayPal witnessed a year-over-year decline of 0.5% in total active accounts to 429 million in the quarter under review. The figure topped the Zacks Consensus Estimate of 428 million.
The total number of payment transactions was 6.6 billion, up 8% on a year-over-year basis. The figure missed the consensus mark of 6.9 billion.
PYPL’s payment transactions per active account were 60.9 million, which improved 11% from the year-ago quarter.
The total payment volume was $416.81 billion for the reported quarter, indicating year-over-year growth of 11% on a spot-rate basis, as well as on a currency-neutral basis. The reported figure lagged the Zacks Consensus Estimate of $419.54 billion.
Operating Details
PayPal’s operating expenses were $6.6 billion in the second quarter, up 6.6% from the prior-year quarter. As a percentage of net revenues, the figure contracted 130 basis points (bps) on a year-over-year basis.
The non-GAAP operating margin was 18.5%, expanding 230 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash equivalents and investments were $13.6 billion, down from $14.3 billion as of Mar 31, 2024.
PayPal had a long-term debt balance of $9.73 billion as of Jun 30, 2024, compared with $9.68 billion as of Mar 31, 2024.
PYPL generated $1.5 billion in cash from operations in the reported quarter compared with $1.9 billion in the previous quarter. The free cash flow was $1.4 billion in the second quarter.
The company returned $1.5 billion to its shareholders by repurchasing 24 million shares.
Guidance
For third-quarter 2024, PayPal expects year-over-year mid-single-digit growth in revenues.
Non-GAAP earnings per share are expected to exhibit high-single-digit growth on a year-over-year basis.
For 2024, PayPal anticipates non-GAAP earnings per share to see growth of low to mid-teens from that reported in 2023.
The company expects low to mid-single-digit growth in the transaction margin.
The free cash flow is projected at $6 billion. Management also expects to repurchase shares worth $6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Paypal has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Paypal has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.