PayPal (NASDAQ: PYPL) is slated to report Q3 earnings after the market closes on Monday, Nov 8.
The company projects third-quarter revenues between $6.15 billion and $6.25 billion, with 13-14% year-over-year growth at a current spot rate. The Zacks Consensus Estimate for revenues is pegged at $6.2 billion, indicating an improvement of 13.9% from the prior-year quarter’s reported figure.
The company projects non-GAAP earnings at $1.07 per share. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 0.9% from the year-ago reported figure.
Factors to Note:
PayPal’s robust product portfolio, including One Touch and Venmo, is anticipated to get reflected in third-quarter results.
Strong monetization efforts of Venmo are likely to have aided its adoption rate in the to-be-reported quarter.
Robust merchant services and PayPal Checkout experiences are expected to have sustained the company’s momentum in the to-be-reported quarter.
PayPal is expected to have gained from the growing proliferation of online payment transactions in the third quarter amid the pandemic.
Strengthening user engagements on PayPal’s platform, owing to shifting customer preference toward contactless payments amid the coronavirus pandemic, is expected to have accelerated the company’s payment volume in the to-be-reported quarter.
It is anticipated to have accelerated growth of the company’s net new active accounts in the quarter under review.
Solid momentum in P2P, courtesy of its innovative and advanced products and services, is expected to have driven the above-mentioned metrics. Also, rising in-store digital payments are anticipated to have benefited the company’s P2P payment volume in the quarter to be reported.
However, the impacts of intensifying competition in the digital payment market and foreign exchange headwinds are expected to get reflected in the upcoming results.
Key Metrics to Consider:
Total payment volume (TPV), active customer accounts, payment transactions per active account, and the total number of payment transactions are considered to be the key metrics for analyzing PayPal’s business growth.
For the third quarter, the Zacks Consensus Estimate for active customer accounts is pegged at 417 million, up 15.5% from the year-ago quarter’s reported figure.
The consensus mark for payment transactions per active user is pegged at 44.16 million, suggesting a growth of 10.1% from the year-ago quarter’s reported figure.
The consensus estimate for the total number of payment transactions is pegged at 4.9 billion, indicating an improvement of 22.9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for TPV is pegged at $314.7 billion, suggesting growth of 27.6% on a year-over-year basis.
During its recent Q4 earnings call, Visa reported that card-not-present (CNP) volume (Figure below) has continued to hold up despite card-present volumes bouncing back strongly. Card-not-present volumes (proxy e-commerce) in the US grew 17% in Q3 vs ~26% YoY in Q2 2021, a deceleration of 9% sequentially.
PayPal’s (NASDAQ:PYPL) payment volumes grew 40% in Q2 2021. We estimate a 27% growth in Q3 2021, translating into a 13% deceleration sequentially.
Guidance from the company in Q2 2021 estimated total payment volumes growing 33% to 35% for 2021, meaning payment volumes are expected to grow in the region of 24% to 27% for 2H 2021.
PayPal Long (Buy)
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