PayPal profits soar

Paypal dan schulman results

PayPal is off to a flying start in 2016 with profits up, revenue up and 4.5m new customer accounts on its books taking total users to 184m at the end of March. Independent of former parent eBay since last summer, the firm says net income climbed 28% year on year in the first three months of the year to USD452m hit as its swelling scale and push on mobile helps drive more money back to its coffers. The payments firm grew its revenues in the three months to March 31 by just under a fifth (19%) in the period to $2.5n, boosted by growth in mobile payments as it moves to match its dominance online to smartphones and tablets.

PayPal results at a glance
> Profit up 28% year on year to USD452m
> Revenues up 19% to $2.5bn
> 4.5m active customer accounts added, taking total to 184m
> 1.4bn transactions processed
> USD81bn total payment volume, up 31%

The firm is successfully funnelling more payments through its platform, saying the number of transactions it processed increased 26% to hit 1.4bn in the first quarter of the year. Repeat custom and user loyalty is a key focus for the company as competition in money transfer and payments continues to heat up and the firm. PayPal says that on average an active account is making 28 payments on a trailing 12 month basis, up 12% year on year and coming in at just over two transactions per month.

PayPal processed $81bn in Q1

In total the company processed a whopping $81bn across its platform in the first quarter of 2016, up 31% year on year on an FX-neutral basis. So how does that carve up? Well, 82% of total payments volume was driven by merchant services. The firm says it now has 14m active merchant accounts using this side of its business, with brands including Air France, Sephora and Fresh Direct all on its books.

More than a quarter (26%) of the payments PayPal processed in Q1 were on mobile, up 54% compared to year earlier and reflecting the growing shift toward smartphones and tablets for making payments. The uptick suggests the firm’s investment in its mobile presence, rolling out its overhauled app to 145m markets earlier this year was a timely move.

mobs

Speaking of which, the firm’s decision to buy Venmo appears to be paying dividends in terms fo driving transactions across its books. Venmo, the firm’s social payments service, processed $3.2bn up 154% year on year. The firm says it will make the service, which is popular among millennial consumers in the US, “more available” to users. In total the company says it has processed $175bn in mobile transactions over the past decade.

Meanwhile, a year or so after PayPal’s acquisition of remittance firm Xoom for around $1bn the firm says it’s rolled out the service to 11 new markets and touted its integration with mobile money service M-Pesa in Kenya. It says two thirds of remittance payments sent on Xoom are happening on mobile, but stayed schtum on transaction volumes.

Where the money’s coming from
> Merchant services made up 82% total payments volume
> Mobile transactions hit $21bn, up 54%
> Venmo processed $3.2bn in Q1, up 154% year on year

The firm’s operating margins grew by 90 basis points to 16% compared to 2015.

Looking ahead to the full year, the firm expects revenues to climb between 16% and 19% (on an FX neutral basis) and 14% to 16% on current rates to between $10.5bn and $10.7bn, predicting a 3 point headwind on revenues from currency.

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