10-QPeriod: Q1 FY2018

PayPal Holdings, Inc. Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 26, 2018For Securities:PYPL

Summary

PayPal Holdings, Inc. reported solid financial results for the first quarter of 2018, with net revenues increasing by 24% year-over-year to $3.69 billion. This growth was primarily driven by a 32% increase in Total Payment Volume (TPV), indicating strong customer engagement and transaction activity on its platform. The company also saw a significant rise in Net Income, up 33% to $511 million, and Diluted Earnings Per Share (EPS) of $0.42, reflecting improved profitability. Key operational highlights include substantial growth in active accounts and payment transactions, underscoring the continued expansion of PayPal's user base and platform usage. The company continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Despite the positive financial performance, the company also noted increased operating expenses, partly due to strategic investments and acquisitions, as well as ongoing regulatory and legal matters that require careful management.

Financial Highlights

51 data points
Beta

Revenue

$3.69B

Net Income

$511.00M

13.9% Net Margin

EPS (Diluted)

$0.42

Total Assets

$42.32B

Cash & Equivalents

$2.88B

Free Cash Flow

-$527.00M

Financial Statements
Beta
Revenue$3.69B
R&D Expenses$258.00M
Operating Expenses$3.15B
Operating Income$534.00M
Interest Expense$16.00M
Net Income$511.00M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net revenues grew 24% to $3.69 billion, driven by a 32% increase in Total Payment Volume (TPV).
  • 2Net income increased 33% to $511 million, with diluted EPS rising to $0.42 from $0.32 in the prior year.
  • 3Active accounts increased by 15% to 237 million, and payment transactions grew by 25% to 2.21 billion.
  • 4The company significantly expanded its credit portfolio, with total consumer and merchant loans receivable increasing by 46% year-over-year.
  • 5Operating expenses increased by 24%, largely due to higher transaction expenses and restructuring charges.
  • 6The company repurchased approximately $1.8 billion of its common stock during the quarter, reflecting its commitment to capital return.
  • 7Legal and regulatory matters, including an FTC investigation into Venmo and a derivative lawsuit, are ongoing and require significant management attention.

Frequently Asked Questions

The primary driver of PayPal's revenue growth was a 32% increase in Total Payment Volume (TPV), which reflects the total value of payments successfully completed through its platform. This growth was fueled by an increase in active accounts and a higher number of payment transactions.

PayPal's credit business showed significant expansion. The total balance of consumer and merchant loans and interest receivable, including those held for sale, increased by 46% year-over-year to $8.3 billion. This growth contributed to an increase in revenues from other value-added services.

Operating expenses increased by 24% year-over-year. This rise was attributed to several factors including higher transaction expenses (reflecting the growth in TPV), increased restructuring charges (related to workforce reductions and winding down TIO operations), and investments in sales & marketing, product development, and general & administrative functions, partly due to recent acquisitions.

PayPal continued its share repurchase program, buying back approximately $1.8 billion of its common stock during the quarter through open market repurchases and an accelerated share repurchase (ASR) agreement. As of the end of the quarter, approximately $3.2 billion remained available under its $5 billion authorization.