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PayPal Holdings Inc.’s top management made it plain late Wednesday they’re not backing down from a strategy they outlined three months ago that made it seem the payments giant was abandoning an emphasis on sheer growth in favor of increased user engagement . That impression disappointed analysts who follow the company and shaved nearly 20% off its stock price the following day.
But on Wednesday chief executive Dan Schulman added some context to that strategy, emphasizing PayPal is seeking growth through existing and new products, including its newly revamped digital wallet and an improved checkout for online merchants. That strategy, he made plain, leaves little room for overnight expansion via acquisitions.
“Transformative acquisitions are not on our agenda at this time,” he told equity analysts during a call to discuss PayPal’s first-quarter results. “Make no mistake. We have strong convictions on the growth prospects for our business, however, we believe the secular tailwinds from digitization and e-commerce are transformative. We believe we will continue to grow revenue faster than e-commerce growth.”
At the same time, Schulman acknowledged PayPal’s plunging stock price—a trend that began well before that Feb. 1 earnings call—has hurt investors. PayPal closed at $82.61 per share Wednesday, down from well over $200 six months ago. “Our investors expect more from us than we have delivered. We need to do better,” he said.
As he has in prior earnings calls, Schulman underlined engagement, the number of transactions performed per account, as a clear priority. This number stood at 47 in the first quarter on 429 million active accounts, up from 42.2 on 392 million accounts in the first period of 2021. Here, he said, the new wallet, which PayPal dubbed a “super app” upon its debut last year, will play a key role. “We clearly think the world is continuing to digitize, and the wallet is going to be one of the key elements of how we continue to drive engagement,” he said.
The new wallet offers a panoply of features, including an array of payments, shopping, and financial capabilities, and represents the company’s first complete redesign of its app in seven years. It also enables cryptocurrency transactions. Now, Schulman said, it can help PayPal unlock more volume, referring to the fact that 30% of PayPal’s users account for 80% of current payment volume. “There’s a ton of growth we can have,” he said.
Meanwhile, increasing checkouts is now a priority, as Schulman cited a statistic indicating fewer than five out of 100 consumers who visit a merchant’s site proceed to check out, “We are thinking about the next generation of checkout,” he said. “There’s a lot of interest from merchants, and no one can do that as well as we can.” He acknowledged, however, that “checkout is a hard business.”
The tactical emphasis on checkout and the new digital wallet comes as PayPal bids farewell to its longtime chief financial officer, John Rainey, who is leaving to join Walmart Inc. His role is being filled by Gabrielle Rabinovitch, who is serving as interim CFO.
For the quarter, PayPal processed $323 billion in total payment volume, up 13% year-over-year. Revenue totaled $6.48 billion, a 7% increase.
