In This Article:
For a while, it seemed PayPal Holdings, Inc. (NASDAQ: PYPL) could do no wrong. The digital payments company has been enjoying an impressive run, with its shares more than doubling over the last year.
PayPal reported its financial results after the market closed on Wednesday, exceeding analysts' expectations on both the top and bottom lines. Unfortunately, the forecast it provided for the coming year was not as robust as investors had hoped, causing the stock to fall after closing near all-time highs. In addition, an announcement by longtime partner eBay (NASDAQ: EBAY) took investors by surprise, causing the sell-off to accelerate.
eBay's announcement overshadowed PayPal's impressive earnings. Image source: PayPal.
Impressive growth continues
For the just completed fourth quarter, PayPal's revenue grew to $3.74 billion, an increase of 26% year over year, and also 26% on a constant currency basis. This showing exceeded the high end of the company's forecast in a range of $3.57 billion to $3.63 billion, while beating analysts' consensus estimates of $3.63 billion.
PayPal reported net income of $620 million, which grew 59% over the prior-year quarter, though those results were skewed by several one-time adjustments. GAAP earnings per diluted share grew 57% to $0.50, which adjusted for one-time gains and costs would have been $0.55 per share, beating analysts' expectations of $0.52 per share.
PayPal had two one-time items that affected its results. During the quarter, PayPal agreed to sell $5.8 billion in consumer loans to Synchrony Financial (NYSE: SYF). Revaluing this transaction because of the proposed sale resulted in an increase of $0.25 to its GAAP earnings per share. The recently enacted tax legislation also complicated matters, resulting in a one-time tax charge of $180 million, which reduced GAAP earnings per share by $0.15.
Increasing user base
PayPal continued to scale its user base, adding 8.7 million active customer accounts during the quarter, up 61% year over year, and growing to 227 million.
PayPal's payments continued their impressive growth, up 25% year over year to 2.2 billion transactions. Customer engagement also grew, increasing to 33.6 transactions per active customer account over the trailing-12-month period, up 8% over the prior year.
The company processed $131 billion in total payment volume (TPV), up 32% year over year, or 29% on a currency-neutral basis. Mobile engagement continued to climb, as approximately 37% of TPV, or $48 billion, originated on mobile devices, up 53% year over year.