PayPal (NASDAQ: PYPL) is scheduled to announce Q3 earnings results on Monday, November 2nd, after market close.
For the third quarter, PayPal expects revenues to reflect a year-over-year improvement in the range of 23% at the current spot rate and 25% on an FX-neutral basis. The Zacks Consensus Estimate for revenues is pegged at $5.4 billion, indicating an improvement of 23.4% from the prior-year quarter.
PayPal anticipates non-GAAP earnings to grow by 25%. The Zacks Consensus The estimate for earnings stands at 94 cents per share, suggesting growth of 54.1% from the year-ago reported figure.
Notably, the company surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. It has a trailing four-quarter earnings surprise of 9.08%, on average.
Factors at Play:
PayPal’s persistent efforts toward strengthening the services portfolio are likely to have aided the company in gaining traction across customers in the third quarter.
The company made the PayPal Business Debit Mastercard available in five European countries, which include Ireland, Italy, Spain, Austria, and France in the soon-to-be-reported quarter. This is likely to get reflected in the third-quarter results.
Further, the company’s third-quarter results are likely to reflect gains from the strength in product lines, including Venmo and One Touch. Moreover, Venmo and One-Touch is expected to have contributed to growth in its net new active accounts.
Further, these two products are known for accelerating customer engagement on PayPal’s platform, which is expected to have bolstered total active accounts in the to-be-reported quarter.
Additionally, the growing momentum of core peer to peer and PayPal Checkout experiences are anticipated to have remained a tailwind.
Further, the new QR Code Payment facility, which ensures touch-free payment service, is likely to have gained strong traction among customers during the coronavirus-hit third quarter.
Additionally, acquisitions of Honey, iZettle, Hyperwallet, GoPay, and Xoom, which have bolstered PayPal’s digital payment capabilities, are expected to have contributed to the to-be-reported quarter’s performance.
Key Metrics to Consider:
Total payment volume (TPV), active customer accounts, payment transactions per active account, and the total number of payment transactions are the key metrics for analyzing PayPal’s business growth.
For the third quarter, the Zacks Consensus Estimate for active customer accounts is pegged at 363 million, up 23.1% from the year-ago quarter’s reported figure.
The consensus mark for payment transactions per active user is pegged at 39.79 million, suggesting a slight decline of 0.02% from the year-ago quarter’s reported number.
Further, the consensus estimate for the total number of payment transactions stands at 3.9 billion, indicating an improvement of 26.4% from the prior-year quarter’s reported figure.
Furthermore, the Zacks Consensus Estimate for TPV is pegged at $232.6 billion, suggesting growth of 30.2% on a year-over-year basis.
PayPal Long (Buy)
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