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A month has gone by since the last earnings report for Paypal (PYPL). Shares have lost about 12.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paypal due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal's Q4 Earnings Beat Estimates, Revenues Up Y/Y
PayPal Holdings reported fourth-quarter 2024 non-GAAP earnings of $1.19 per share, which surpassed the Zacks Consensus Estimate by 5.31% and climbed 4.4% year over year.
Net revenues of $8.366 billion increased 4.2% year over year on a reported basis and 7% on a forex-neutral basis. The figure beat the consensus mark by 1.67%.
The company’s non-GAAP operating margin contracted 30 bps on a year-over-year basis to 18%.
PYPL’s Revenue Details
The total payment volume was $437.836 billion for the reported quarter, up 7% year over year, both on a reported basis and a forex-neutral basis. The reported figure beat the Zacks Consensus Estimate by 0.59%.
Transaction margin of $3.935 billion grew more than 7% on a reported basis.
Transaction revenues were $7.588 billion (90.7% of net revenues), up 4.2% year over year. Value Added Services revenues were $778 million (9.3% of net revenues), up 4.7% year over year.
Revenues from the United States totaled $4.518 billion (57% of net revenues), up 2% on a year-over-year basis. International revenues were $3.634 billion (43% of net revenues), up 7% year over year, both on a reported basis and forex-neutral basis.
PayPal witnessed year-over-year growth of 2% in total active accounts to 434 million in the reported quarter. The figure missed the Zacks Consensus Estimate by 0.05%.
The total number of payment transactions was 6.619 billion, down 3% on a year-over-year basis. The figure missed the consensus mark by 4.49%.
PYPL’s payment transactions per active account were 60.6 million, up 3% year over year.
PYPL’s Operating Details
PayPal’s operating expenses were $6.925 billion in the fourth quarter, up 10% year over year. As a percentage of net revenues, the figure increased 430 basis points (bps) on a year-over-year basis to 82.8%.
Transaction expense rate was 0.91% in the reported quarter compared with 0.97% reported in the year-ago quarter.
Transaction margin improved 120 bps to 47%.
PYPL’s Balance Sheet Remains Strong
As of Dec. 31, 2024, cash, cash equivalents and investments (including long-term) were $15.406 billion. The long-term debt balance was $9.879 billion.
PYPL generated $2.394 billion in cash from operations, while adjusted free cash flow was $2.098 billion in the fourth quarter.
The company returned $1.2 billion to shareholders through share repurchases. Moreover, PayPal authorized a new $15 billion stock repurchase program.