PayPal reported better-than-expected fourth-quarter earnings and revenue, fueled by growth in transaction margin and key acquisitions like Braintree and Venmo. The company also unveiled a new $15 billion share buyback program.
PayPal announced better-than-anticipated fourth-quarter earnings and revenue in its quarterly report released on Tuesday. The company exceeded analysts' expectations for both earnings and revenue, prompting a share price decline of over 6% in premarket trading. PayPal anticipates adjusted earnings per share ranging from $1.15 to $1.17 for the first quarter, surpassing the average analyst estimate of $1.13. For the full year, the company projects earnings between $4.95 and $5.
10 per share, exceeding the average estimate of $4.90.To further bolster investor confidence, PayPal launched a new $15 billion share buyback program, aiming to repurchase approximately $6 billion in shares by 2025. While total payment volume, a key indicator of digital payment trends, fell slightly short of projections at $437.8 billion for the fourth quarter compared to the anticipated $438.2 billion, PayPal demonstrated strength in its core business metrics. The company's take rate, representing the percentage of revenue retained from each transaction, dipped to 1.91% from 1.96% a year earlier. However, transaction margin, a crucial measure of profitability, rose to 47% from 45.8%. In 2024, transaction margin dollars surged by 7% to $14.7 billion, driven by the company's Braintree service. PayPal projects a 4% to 5% growth in transaction margin dollars for 2025, reaching $15.2 billion to $15.4 billion.CEO Alex Chriss, who assumed leadership in September 2023, is actively working to revitalize PayPal's growth, addressing the company's previous struggles with increased competition and declining take rates. Chriss has prioritized profitable growth and enhancing the monetization of key acquisitions, such as Braintree and the Venmo payments app. In the near term, Chriss has identified two primary monetization strategies: Venmo's debit card, enabling customers to spend their balances online and offline, and Pay With Venmo, facilitating seamless online payments. Monthly active accounts for Venmo's debit card experienced a growth of over 30% in 2024, while Pay with Venmo monthly actives increased by more than 20%. Chriss also implemented a strategy to address the shrinking margins by offering merchants value-added services, such as integrating data points at checkout to reduce cart abandonment rates. PayPal's branded checkout volume rose by over 6% in 2024, partly attributed to the success of these initiatives. '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 Transaction Margin Braintree Venmo Alex Chriss
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