10-QPeriod: Q3 FY2019

PayPal Holdings, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 24, 2019For Securities:PYPL

Summary

PayPal Holdings, Inc. reported solid financial performance for the third quarter and first nine months of 2019, demonstrating continued growth and operational efficiency. Net revenues increased by 19% year-over-year for the third quarter, reaching $4.38 billion, and by 14% for the nine-month period, totaling $12.81 billion. This growth was primarily driven by a 25% increase in Total Payment Volume (TPV) for the quarter and 24% for the nine months, indicating strong user engagement and transaction activity across its platform. Operating income saw significant improvement, rising 42% in the third quarter and 20% for the nine months, leading to enhanced operating margins. Net income also grew, up 6% for the quarter to $462 million and 33% for the nine months to $1.95 billion, resulting in diluted earnings per share of $0.39 and $1.64, respectively. The company also strengthened its financial position by issuing $5 billion in fixed-rate notes and establishing new revolving credit facilities, demonstrating robust liquidity management.

Financial Highlights

51 data points
Beta

Revenue

$4.38B

Net Income

$462.00M

10.6% Net Margin

EPS (Diluted)

$0.39

Total Assets

$50.22B

Cash & Equivalents

$6.88B

Free Cash Flow

$923.00M

Financial Statements
Beta
Revenue$4.38B
Operating Expenses$3.68B
Operating Income$697.00M
Interest Expense$29.00M
Net Income$462.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)1.18B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net revenues grew by 19% year-over-year to $4.38 billion in Q3 2019, driven by a 25% increase in Total Payment Volume (TPV).
  • 2Operating income increased significantly by 42% year-over-year to $697 million in Q3 2019, leading to an improved operating margin of 16% compared to 13% in the prior year.
  • 3Net income rose by 6% year-over-year to $462 million in Q3 2019, with diluted EPS at $0.39.
  • 4For the nine months ended September 30, 2019, net revenues increased 14% to $12.81 billion, and net income grew 33% to $1.95 billion.
  • 5The company issued $5.0 billion in fixed-rate notes in September 2019, strengthening its liquidity position.
  • 6New revolving credit facilities totaling $6.0 billion were established in September 2019, providing significant borrowing capacity.
  • 7Active accounts increased 16% year-over-year to 295 million as of September 30, 2019.

Frequently Asked Questions

PayPal reported a strong third quarter in 2019 with net revenues increasing 19% year-over-year to $4.38 billion. Operating income saw a substantial 42% increase to $697 million, resulting in an improved operating margin of 16%. Net income grew 6% to $462 million, with diluted earnings per share of $0.39.

The primary driver of revenue growth was a significant increase in Total Payment Volume (TPV), which grew by 25% year-over-year in the third quarter of 2019. This was supported by a 16% increase in active accounts and a 25% rise in the number of payment transactions.

PayPal maintained a strong liquidity position. In September 2019, the company issued $5.0 billion in fixed-rate notes, enhancing its financial flexibility. Additionally, it established new revolving credit facilities totaling $6.0 billion, with no borrowings outstanding as of September 30, 2019, indicating significant available borrowing capacity.

Acquisitions completed in 2018 contributed positively to revenue growth, adding approximately two percentage points to net revenue growth in Q3 and the nine-month period. However, these acquisitions had a negative impact on operating income growth, contributing approximately three percentage points to the expense growth in Q3 and the nine-month period.