PayPal (NASDAQ: PYPL) is scheduled to announce Q4 earnings results on Tuesday, February 1st, after market close.
The company projects fourth-quarter revenues between $6.85 billion and $6.95 billion, with a growth of 12-14% (at a current spot rate) from the year-ago reported figure. The Zacks Consensus Estimate for revenues is pegged at $6.9 billion, indicating an improvement of 12.4% from the prior-year quarter’s reported figure.
PayPal expects non-GAAP earnings of $1.12 per share, reflecting 4% year-over-year growth. The Zacks Consensus Estimate for earnings also stands at $1.12 per share, which has been unchanged over the past 30 days.
Notably, the company surpassed the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 8.58%, on average.
Key Factors to Note:
The impacts of PayPal’s robust product portfolio, including One Touch and Venmo, are anticipated to get reflected in the fourth-quarter results.
Strong monetization efforts of Venmo are likely to have aided its adoption rate in the to-be-reported quarter.
Strengthening user engagements on the company’s platform, owing to shifting customer preference toward contactless payments amid the coronavirus pandemic, is expected to have accelerated its payment volume in the to-be-reported quarter.
It is likely to have accelerated growth of the company’s net new active accounts in the quarter under review.
Further, solid momentum in P2P, courtesy of its innovative and advanced products and services, is anticipated to have driven the above-mentioned metric.
The increasing number of cryptocurrency transactions on the company’s platform on the back of its strengthening services is expected to have contributed well to the quarterly 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 considered the key metrics for analyzing PayPal’s business growth.
TPV in the last reported quarter improved 26% and 24% year over year on a spot rate and currency-neutral basis, respectively, to $309.9 billion. This can be attributed to well-performing Venmo, which accounted for $60 billion of TPV.
For fourth-quarter 2021, the Zacks Consensus Estimate for active customer accounts is pegged at 425 million, suggesting a 12.7% rise from the year-ago quarter’s reported figure.
The consensus mark for payment transactions per active user is pegged at 45.9 million, suggesting a growth of 12.2% from the year-ago quarter’s reported number.
The consensus estimate for the total number of payment transactions stands at 5.4 billion, indicating an improvement of 22.3% from the prior-year quarter.
The Zacks Consensus Estimate for TPV is pegged at $344.42 billion, suggesting year-over-year growth of 24.3%.
Uncertainties related to the ongoing coronavirus pandemic are anticipated to have continued to be major concerns for the company in the fourth quarter.
Further, the impacts of PayPal’s mounting expenses and intensifying competition in the online payment and cryptocurrency markets are expected to get reflected in its upcoming results.
PayPal Long (Buy)
Enter at: 175.13