Paypal exceeds forecasts and gives positive outlook, but shares still fall

PayPal generated more revenue and earnings in both the last quarter and the full year 2024 than in the respective accounting periods of the previous year. This exceeded the expectations of market experts. The number of active PayPal users and their average number of transactions also increased. Nevertheless, the stock market is not satisfied, causing the payment service provider's share price to fall slightly.

According to its figures, the payment service now has 434 million PayPal accounts, of which 229 million accounts were recently used at least once a month. In both cases, this corresponds to growth of two percent compared to the previous year. However, the number of payment transactions in the fourth quarter fell by three percent to 6.6 billion compared to 2023. Nevertheless, the number of transactions increased by three percent year-on-year to 60.6 per PayPal account.

According to PayPal, the volume of payments processed in the fourth quarter increased by seven percent to 437.8 billion US dollars compared to 2023. Last year as a whole, this figure even increased by 10 percent to 1.68 trillion dollars. The fees charged by PayPal for these transactions represent the turnover, which rose by four percent to 8.4 billion dollars in the past quarter. However, this rate of 1.91 percent is lower than the 1.96 percent of the previous year, as CNBC notes.

Good result also thanks to Braintree and Venmo

The transaction margin resulting from sales increased by seven percent to 3.9 billion dollars, but PayPal's operating profit fell by 17 percent to 1.4 billion dollars in the fourth quarter. In 2024 as a whole, the US payment service's revenue increased by seven percent to 31.8 billion dollars. The transaction margin increased by the same amount to 14.7 billion dollars, and the operating profit for 2024 rose by six percent to 5.3 billion dollars. This increase is largely attributed to PayPal subsidiary Braintree, whose services Meta Platforms uses to process credit card transactions.

The mobile payment service Venmo, which is only available in the USA and has been part of PayPal since 2013, recorded 10 percent more transaction volume in the fourth quarter than in the previous year, as other retailers such as Starbucks and Ticketmaster now accept Venmo as a payment option. However, PayPal's turnover on eBay fell by one percent and growth in payment processing for other providers shrank to two percent. In the previous year, PayPal recorded 29 percent more transactions as an external payment service provider, i.e., not under the PayPal brand.

Shares down despite positive outlook

For the current first quarter of 2025, PayPal expects a transaction range of between 3.6 and 3.65 billion dollars, which would correspond to an increase of 4 to 5 percent compared to the previous year. The new PayPal CEO Alex Chriss, who took office in summer 2023, wants to increase revenue in 2025, especially from Venmo, but also emphasizes efficiency and effectiveness within the company. PayPal should therefore focus its resources on the most important initiatives, such as Venmo.

PayPal shares have gained around 30 percent in value over the last twelve months, but fell by around 9 percent following the announcement of the latest figures.

(fds)