PayPal Reports First Quarter 2024 Results

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PayPal Holdings, Inc. (NASDAQ: PYPL) released its first quarter 2024 results, reporting a 9% increase in revenue to $7.7 billion, with a 10% increase on a currency-neutral basis. The company saw an 18% increase in GAAP EPS to $0.83 and a 27% increase in non-GAAP EPS to $1.08. PayPal also reported growth in total payment volume, payment transactions, and active accounts. The company returned $1.5 billion to stockholders through share repurchases.

Positive

• 9% increase in revenue to $7.7 billion, with a 10% increase on a currency-neutral basis

• 18% increase in GAAP EPS to $0.83

• 27% increase in non-GAAP EPS to $1.08

• 14% increase in total payment volume to $403.9 billion

• 11% increase in payment transactions to 6.5 billion

• 1% increase in active accounts sequentially

• Cash flow from operations of $1.9 billion and free cash flow of $1.8 billion

• Returned $1.5 billion to stockholders through share repurchases

Negative

• Active accounts decreased 1% to 427 million

• Adjusted free cash flow of $1.9 billion excludes certain impacts

• Debt totaled $11.0 billion as of March 31, 2024

Financial Analyst

PayPal's reported increase in Q1'24 revenue by 9% and 10% on a currency-neutral basis is significant for identifying trends in consumer behavior and the payment processing industry. A 27% increase in non-GAAP EPS indicates operational efficiency and a stronger profitability model, especially considering the integration of stock-based compensation into the non-GAAP calculations. The company's stock repurchase of $1.5 billion, representing approximately 25 million shares, also signals confidence in future performance and a commitment to returning value to shareholders.

Market Research Analyst

PayPal’s expansion of the GAAP operating margin by 98 basis points to 15.2% and non-GAAP operating margin by 84 basis points to 18.2% suggests an effective cost management strategy. The 14% increase in total payment volume is reflective of PayPal's growing market penetration. However, active accounts showing only a marginal increase on a sequential basis could be a point of concern and warrants monitoring to assess user engagement and possible market saturation.

Investment Analyst

Investors will appreciate the emphasis on free cash flow, with PayPal reporting $1.9 billion in adjusted free cash flow for Q1'24. This metric is vital for assessing the company's liquidity and financial health. Moreover, PayPal's guidance for Q2'24 and FY'24, with expected non-GAAP EPS growth in low double-digit and mid to high single-digit percentages respectively, despite an anticipated decrease in GAAP EPS compared to the prior year, reflects strategic optimism balanced with cautionary awareness of market conditions.

Q1'24 revenue increased 9% to $7.7 billion; 10% on a currency-neutral basis (FXN)

Q1'24 GAAP EPS increased 18% to $0.83; non-GAAP EPS increased 27% to $1.08 (based on new non-GAAP methodology as described below)

SAN JOSE, Calif., April 30, 2024 /PRNewswire/ -- PayPal Holdings, Inc. (NASDAQ: PYPL) today announced its first quarter 2024 results for the period ended March 31, 2024. The earnings release and related materials discussing these results can be found on PayPal's investor relations website at https://investor.pypl.com/financials/quarterly-results/default.aspx.

Q1'24 Financial Results

As announced on February 7, 2024, the Company’s non-GAAP results are based on a new methodology that includes the impact of stock-based compensation (SBC) expense and related employer payroll taxes. Non-GAAP results for 2023, 2022 and 2021 have been recast to reflect this change. See Exhibit 99.2 of the Form 8-K filed on April 30, 2024 for historical reconciliations.

• Net revenues increased 9% to $7.7 billion; 10% FXN.
• Transaction margin dollars increased 4% to $3.5 billion.
• GAAP operating income increased 17% to $1.2 billion; non-GAAP operating income increased 15% to $1.4 billion.
• GAAP operating margin expanded 98 basis points to 15.2%; non-GAAP operating margin expanded 84 basis points to 18.2%.
• GAAP EPS increased 18% to $0.831; non-GAAP EPS increased 27% to $1.08 (from $0.85 in Q1'23 based on the new non-GAAP methodology).
• Under the company’s prior non-GAAP methodology, which excluded the impact of SBC expense and related employer payroll taxes, non-GAAP EPS would have increased 20% to $1.40 (from $1.17 in Q1'23 based on the prior non-GAAP methodology) compared to guidance² of a mid-single digit increase.

Q1'24 Operating Results

• Total payment volume increased 14% to $403.9 billion; 14% FXN.
• Payment transactions increased 11% to 6.5 billion.
• Payment transactions per active account on a trailing 12-month basis increased 13% to 60.0.
• Active accounts decreased 1% to 427 million. On a sequential basis, active accounts increased 0.4%, or by 2 million.

Cash Flow

• Cash flow from operations of $1.9 billion and free cash flow³ of $1.8 billion.
• On a trailing 12-month basis, cash flow from operations of $5.6 billion and free cash flow of $5.0 billion.
• Adjusted free cash flow³ of $1.9 billion, which excludes the net timing impact between originating European buy now, pay later (BNPL) receivables as held for sale and the subsequent sale of these receivables.
• On a trailing 12-month basis, adjusted free cash flow of $5.4 billion.

Balance Sheet and Liquidity

• Cash, cash equivalents, and investments totaled $17.7 billion as of March 31, 2024.
• Debt totaled $11.0 billion as of March 31, 2024.
• Returned $1.5 billion to stockholders by repurchasing approximately 25 million shares of common stock.
• On a trailing 12-month basis, returned $5.1 billion to stockholders by repurchasing approximately 81 million shares of common stock

Financial Guidance

Q2'24 Guidance

• Net revenues expected to increase approximately 6.5% and 7% FXN.
• GAAP earnings per diluted share expected to be $0.83 compared to $0.92 in the prior year period.
  • In the second quarter of 2023, GAAP EPS included a positive impact of approximately $0.09 from PayPal’s strategic investment portfolio.
• Non-GAAP earnings per diluted share expected to increase by a low double-digit percentage compared to $0.87 (based on the new non-GAAP methodology) in the prior year period.
  • Estimated non-GAAP amounts for the three months ending June 30, 2024 reflect adjustments of approximately $150 million, including estimated restructuring charges of approximately $70 million to $90 million.

FY'24 Guidance

• GAAP earnings per diluted share expected to be approximately $3.65, compared to $3.84 in the prior year.
  • In 2023, GAAP EPS included positive impacts of approximately $0.24 from the gain on sale of Happy Returns and approximately $0.14 from PayPal’s strategic investment portfolio.
• Non-GAAP earnings per diluted share expected to increase by a mid to high single-digit percentage compared to $3.83 (based on the new non-GAAP methodology) in the prior year.
  • Estimated non-GAAP amounts for the twelve months ending December 31, 2024 reflect adjustments of approximately $490 million, including restructuring charges of $175 million in Q1'24 and additional estimated restructuring charges of approximately $70 million to $90 million in Q2'24.

Please see "Non-GAAP Financial Measures" and "Non-GAAP Measures of Financial Performance" for important additional information.

PayPal Holdings, Inc. will host a conference call to discuss these results at 5:30 a.m. Pacific time (8:30 a.m. Eastern time) today. A live webcast of the conference call will be available at https://investor.pypl.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

About PayPal

PayPal has been revolutionizing commerce globally for more than 25 years. Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy.

Investor Relations Contact
investorrelations@paypal.com 

Media Relations Contact
mediarelations@paypal.com

View original content:https://www.prnewswire.com/news-releases/paypal-reports-first-quarter-2024-results-302131537.html

SOURCE PayPal Holdings, Inc.

FAQ

What was PayPal's Q1'24 revenue?

PayPal's Q1'24 revenue increased 9% to $7.7 billion.

What was the increase in GAAP EPS for Q1'24?

The GAAP EPS for Q1'24 increased by 18% to $0.83.

How many payment transactions were recorded in Q1'24?

Q1'24 saw an 11% increase in payment transactions to 6.5 billion.

What was the total payment volume in Q1'24?

The total payment volume in Q1'24 increased by 14% to $403.9 billion.

What was the balance of cash and investments as of March 31, 2024?

As of March 31, 2024, cash, cash equivalents, and investments totaled $17.7 billion.