The PayPal application can be seen on a mobile phone.
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The shares rose as much as 6.3% after the report, before reversing course during the earnings call and falling more than 5%. PayPal reduced its forecast for the year on economic concerns.
Here’s how the company did versus expectations:
- Earnings per share: $1.11, adjusted, vs. $1.07 expected in a Refinitiv survey of analysts
- Revenue: $6.18 billion vs. $6.23 billion expected
Total payment volume rose 26% to $310 billion for the quarter ended Sept. 30, and the company added 13.3 million net new active accounts, bringing the total to 416, PayPal said in a statement.
PayPal’s Venmo app, which began supporting cryptocurrency services in April, saw payment volume jump 36% to $60 billion. Starting next year, customers will be able to make purchases on Amazon.com and the Amazon mobile shopping app using their Venmo accounts.
The deal with Amazon comes as PayPal prepares an eBay-less future. Six years after the companies split apart, eBay is in the process of transitioning sellers off PayPal and onto its own payment system. PayPal said volume on eBay marketplaces dropped 45% in the quarter and now represents less than 4% of revenue.
“This is obviously a very significant effort in our Venmo monetization efforts,” PayPal CEO Dan Schulman said in the earnings call after the report. It “marks the beginning of an exciting journey with Amazon, now that we’re no longer constrained by the contractual obligations of the eBay operating agreement.”
PayPal made a big push into crypto in the past year, allowing users in the U.S. to buy, sell, and check out with digital currencies. With its network of 33 million retailers, PayPal’s crypto ambitions have positioned the company as a rival to Coinbase, the country’s most popular crypto exchange.
For the fourth quarter, PayPal sees adjusted earnings of $1.12 per share on net revenue of between $6.85 billion and $6.95 billion. Analysts surveyed by Refinitiv had expected $1.27 in adjusted earnings per share on $7.24 billion in revenue.
PayPal faces a challenging macro environment due to the end of stimulus payments and the spread of the Delta variant, which affected travel. The company lowered its full-year guidance amid concerns about economic growth.
Revenue guidance was revised down to 18% growth for the year, putting it in the range of $25.3 billion to $25.4 billion. Analysts had expected $25.78 billion.
As e-commerce surged during the pandemic, PayPal was a major pandemic beneficiary, with its stock more than doubling last year. However, the shares are down 2% in 2021, excluding the after-hours move, while the Nasdaq is up 24% over the same period.
Investors turned particularly bearish on PayPal last month after reports surfaced that the company was in late-stage talks to acquire social media app Pinterest. PayPal subsequently said it was not pursuing an acquisition of Pinterest “at this time.”
Schulman addressed the matter on the earnings call, telling analysts that he wanted to respond to “recent rumors that made their way through the news.” He didn’t name Pinterest.
“Exploring all potential opportunities to enhance shareholder value is our responsibility,” Schulman said. “But obviously, only a select few deals will meet our very strict financial, strategic and capital allocation criteria.”