PayPal reported strong fourth-quarter earnings and revenue, exceeding analysts' forecasts. The company also announced a new $15 billion share buyback program. Despite these positive developments, PayPal's stock price declined in premarket trading.
PayPal exceeded expectations with its fourth-quarter earnings and revenue, announced on Tuesday. The company reported better-than-anticipated results, exceeding analysts' projections for both metrics. Despite these positive figures, PayPal's share price slumped over 6% in premarket trading. For the first quarter, PayPal anticipates adjusted earnings per share ranging from $1.15 to $1.17, surpassing the average analyst estimate of $1.13. Full-year earnings are projected to fall between $4.
95 and $5.10 per share, outperforming the average estimate of $4.90, according to LSEG data. Furthermore, PayPal unveiled a new $15 billion share buyback program, aiming to repurchase approximately $6 billion worth of shares in 2025. Total payment volume, a key indicator of the digital payments landscape's health, slightly missed projections, reaching $437.8 billion for the fourth quarter compared to the anticipated $438.2 billion. While PayPal's take rate dipped to 1.91% from 1.96% a year earlier, its transaction margin, a measure of the company's core business profitability, climbed to 47% from 45.8%.In 2024, transaction margin dollars increased by 7% to $14.7 billion, driven by Braintree, a service the company acquired. PayPal anticipates a 4% to 5% growth in transaction margin dollars in 2025, reaching $15.2 billion to $15.4 billion. Alex Chriss, CEO appointed in September 2023, has been spearheading efforts to revitalize PayPal's growth, which had been struggling due to intensified competition and a declining take rate. Chriss's focus centers on prioritizing profitable growth and maximizing revenue from strategic acquisitions like Braintree and the payments app Venmo. In the short term, Chriss identifies Venmo's debit card, enabling customers to spend both online and offline with their balance, and Pay With Venmo, facilitating seamless online payments, as two key monetization levers. Monthly active accounts for the debit card experienced over 30% growth in 2024, while Pay With Venmo monthly actives surged by more than 20%. One of Chriss's strategies to address the diminishing margin involves offering merchants enhanced value-added services, such as connecting data points at checkout to reduce cart abandonment rates. This product, dubbed 'branded checkout,' saw a volume surge exceeding 6% in 2024, partly attributed to strength across large enterprise platforms. 'The improvements we made to branded checkout, peer-to-peer, and Venmo, plus the progress we made on our price-to-value strategy, are beginning to show up in our results,' Chriss stated in the earnings release
PAYPAL Earnings Revenue Share Buyback Digital Payments Transaction Margin Growth Strategy
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