Saturday , January 28, 2023

‘We Are…Regaining Our Momentum,’ Says PayPal’s Boss As Payments Volumes Grow

After a few stumbles in recent months, PayPal Holdings Inc. returned to growth mode in its June quarter as the big payments provider refocused its energies on its basic businesses, including checkout, peer-to-peer payments, and the Braintree processing operation. “We are well under way toward regaining our momentum,” chief executive Dan Schulman told equity analysts late Tuesday afternoon during a session to discuss his company’s second-quarter results.

PayPal saw encouraging results in a number of key ventures during the quarter, and Schulman told his audience the company is now looking at interoperability between its core PayPal product and Venmo for P2P payments, now that Venmo alone is nearing 90 million accounts. And its buy now, pay later products generated $4.9 billion in volume in the quarter, a 220% increase over the same period in 2021, as more than 200,000 merchants now display the company’s BNPL option on their checkout pages.

But it’s in wallets, checkout, and the key Braintree operation where Schulman clearly sees PayPal’s main strengths. “Checkout is our bread and butter,” he said. “It’s the place where we can make incremental improvements, and in some cases, major improvements.” At the same time, he sees bigger results coming from Braintree, though PayPal does not break out results separately for that unit. “Braintree has tremendous momentum,” Schulman said.

A factor whose implications are unknown at the moment emerged late Tuesday with a more than $2-billion stake from the activist investor Elliott Investment Management. The move, which drove PayPal’s share price up 12% after the close of the market, was hailed by Schulman. “We’ve been working on a number of initiatives with Elliott,” he said. He did not spell these out, though he pointed to $900 million in cost savings PayPal has squeezed out so far this year, a number Schulman sees growing to $1.3 billion by the end of next year.

For now, PayPal management is pleased to discuss the company’s return to overall growth. Payment volume, which dipped in the first quarter, reached nearly $340 billion, slightly exceeding the fourth-quarter 2021 total. Transactions grew 16% year over year, to 5.5 billion. Active accounts, though, remained frozen at 429 million after steady growth throughout last year.

But Schulman exuded confidence PayPal can lap fintech rivals stymied by the slowdown in e-commerce processing following the fading of pandemic-related restrictions. “We believe the recent turmoil in the e-commerce and fintech market have created an unparalleled opportunity for PayPal,” he told the analysts. “We are clearly seeing a flight to quality.” For the quarter, PayPal reported $6.8 billion in revenue, up 9% year-over-year, well under double-digit rates the company reported each quarter last year. The company’s U.S. revenue, however, grew at twice that overall rate.

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