10-QPeriod: Q1 FY2019

PayPal Holdings, Inc. Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 25, 2019For Securities:PYPL

Summary

PayPal Holdings, Inc. reported its first-quarter 2019 financial results, showcasing robust revenue growth driven by expanding transaction volumes. Net revenues increased by 12% year-over-year, reaching $4.13 billion, primarily fueled by a 22% surge in Total Payment Volume (TPV). This growth was supported by a 17% increase in transaction revenues, though offset by a 19% decline in other value-added services, largely due to the sale of the U.S. consumer credit receivables portfolio. The company managed its operating expenses effectively, with a 15% increase that was slightly higher than revenue growth, leading to a marginal 3% decrease in operating income. However, a significant increase in other income, driven by unrealized gains on strategic investments, substantially boosted net income by 31% to $667 million. Diluted EPS also saw a healthy increase of 34% to $0.56. The company's cash flow from operations turned positive in the quarter, indicating improved operational cash generation.

Financial Highlights

51 data points
Beta

Revenue

$4.13B

Net Income

$667.00M

16.2% Net Margin

EPS (Diluted)

$0.56

Total Assets

$46.28B

Cash & Equivalents

$4.51B

Free Cash Flow

$809.00M

Financial Statements
Beta
Revenue$4.13B
Operating Expenses$3.61B
Operating Income$518.00M
Interest Expense$22.00M
Net Income$667.00M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)1.17B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net revenues grew 12% year-over-year to $4.13 billion, driven by a 22% increase in Total Payment Volume (TPV).
  • 2Transaction revenues increased by 17%, while other value-added services saw a 19% decrease, largely due to the sale of the U.S. consumer credit receivables portfolio.
  • 3Operating income saw a slight decrease of 3% to $518 million, as operating expenses grew faster than revenues.
  • 4Net income surged by 31% to $667 million, significantly boosted by $180 million in unrealized gains from strategic investments.
  • 5Diluted earnings per share (EPS) increased by 34% to $0.56.
  • 6The company generated positive cash flow from operating activities of $1.03 billion, a significant improvement from a negative $349 million in the prior year's quarter.
  • 7Cash and cash equivalents decreased from $7.58 billion at the end of 2018 to $4.52 billion at the end of Q1 2019, reflecting significant investments and share repurchases.

Frequently Asked Questions

Revenue growth was primarily driven by a 22% increase in Total Payment Volume (TPV), leading to a 17% rise in transaction revenues. This indicates strong performance in payment processing volumes across PayPal's platform.

The decline in 'Other value-added services' revenue was mainly due to the sale of PayPal's U.S. consumer credit receivables portfolio to Synchrony Bank in July 2018. This significantly reduced interest and fee income from that segment.

While operating income saw a slight decrease of 3%, net income experienced a substantial increase of 31% to $667 million. This was largely attributed to a significant boost from other income, specifically unrealized gains on strategic investments.

PayPal continued its share repurchase program, making an upfront payment of $750 million for an accelerated share repurchase (ASR) agreement. As of March 31, 2019, approximately $724 million and $10 billion remained available under its April 2017 and July 2018 stock repurchase programs, respectively.