PayPal Holdings Inc beat Wall Street estimates for quarterly earnings and profit on Monday, boosted by a surge in electronic payments as COVID-19 lockdowns globally drove more businesses on the internet, but it forecast current-quarter profit below expectations.
Shares of this electronic payments processor fell more than 6% in extended trade.
For the fourth quarter, PayPal expects corrected profit to grow in a range of 17% to 18 percent, below analysts’ estimated growth of about 24%, according to IBES data from Refinitiv.
PayPal Chief Executive Dan Schulman said in a call with analysts that the company was giving a more prudent estimate for the fourth quarter in part because of uncertainty due to the pandemic and its impact on the global economy, as well as todays US presidential election and concerns about social unrest.
Like other companies in the digital payments sector, PayPal has been profiting from a boom in online transactions this year, heavily driven by pandemic restrictions that have pushed more business into the virtual realm.
The San Jose, California-based company processed a total of $247 billion in payments in the third quarter, up 36% from the year-earlier period, and added 15.2 million net new active customers.
The company said it was on track to process just shy of $1 trillion in payments this year.
While pandemic lockdowns eased in many regions during the third quarter, PayPal said momentum for digital payments continued, and it recorded its all-time highest daily payments volume level in October.
“The world continues to accelerate towards a digital first market,” Schulman said in an interview.
“That drove a remarkably strong quarter for us.”
Revenue rose about 25% to $5.46 billion, compared with analysts’ average estimate of $5.43 billion.
Venmo, the company’s service that allows people in the United States to send each other money via an app, processed $44 billion in payments in the third quarter, up 61%.
The company forecasts revenue for Venmo to approach $900 million in 2021, Schulman said.
PayPal has been focusing on expanding the breadth of solutions available to clients of its online wallets.
In October PayPal declared it would allow customers to hold bitcoin along with other digital coins in its online wallet and shop using cryptocurrencies at the 26 million merchants on its own network.
On an adjusted basis, PayPal earned $1.07 per share. Analysts had anticipated to make 94 cents per share.
Net income jumped to $1.02 billion, or 86 cents per share, for the quarter ended September the 30th, from $462 million, or 39 cents per share, a year earlier.
The team at Platform Executive hope you have enjoyed the ‘PayPal tops estimates amid surge in online shopping but outlook disappoints‘ article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Niket Nishant and Eva Mathews in Bengaluru and Anna Irrera in London. Editing by Leslie Adler.
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