10-QPeriod: Q3 FY2021

PayPal Holdings, Inc. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 9, 2021For Securities:PYPL

Summary

PayPal Holdings, Inc. reported solid financial results for the nine months ended September 30, 2021, with net revenues increasing by 20% year-over-year to $18.45 billion and net income growing by 28% to $3.37 billion. This growth was primarily driven by a 38% increase in Total Payment Volume (TPV) and a significant reduction in transaction and credit losses. The company benefited from the ongoing shift towards digital payments accelerated by the COVID-19 pandemic, though it notes the ongoing uncertainty and potential for consumers to revert to pre-pandemic behaviors. For the third quarter of 2021, net revenues grew 13% to $6.18 billion, and net income increased 6% to $1.09 billion. Operating income showed healthy growth for both the quarter and year-to-date periods, reflecting effective cost management alongside revenue expansion. The company's balance sheet remains robust, with total assets increasing to $74.5 billion. Strategic investments and acquisitions, such as Paidy, Inc., continue to be a focus for expanding market reach and capabilities.

Financial Highlights

52 data points
Beta

Revenue

$6.18B

Net Income

$1.09B

17.6% Net Margin

EPS (Diluted)

$0.92

Total Assets

$74.53B

Cash & Equivalents

$7.78B

Free Cash Flow

$1.29B

Financial Statements
Beta
Revenue$6.18B
Operating Expenses$5.14B
Operating Income$1.04B
Interest Expense$58.00M
Net Income$1.09B
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)1.17B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net revenues increased by 20% to $18.45 billion for the nine months ended September 30, 2021, compared to the same period in 2020.
  • 2Net income rose by 28% to $3.37 billion for the nine months ended September 30, 2021, compared to the same period in 2020.
  • 3Total Payment Volume (TPV) surged by 38% for the nine months ended September 30, 2021, indicating strong platform usage.
  • 4Transaction and credit losses decreased significantly by 48% for the nine months ended September 30, 2021, contributing to improved profitability.
  • 5Active accounts grew by 15% to 416 million as of September 30, 2021, showing continued user acquisition.
  • 6The company repurchased approximately $1.9 billion of its common stock in the nine months ended September 30, 2021, demonstrating a commitment to shareholder returns.
  • 7Acquisition of Paidy, Inc. for approximately $2.7 billion in October 2021 to expand into the Japanese market, particularly in buy now, pay later solutions.

Frequently Asked Questions

Revenue growth was primarily driven by a substantial increase in Total Payment Volume (TPV), which grew by 38%, and a 27% increase in the number of payment transactions. The company also benefited from the ongoing shift to digital payments, recovery in travel and events sectors, and growth in other value-added services, including revenue share with Synchrony Bank and fees from servicing Paycheck Protection Program (PPP) loans.

While total operating expenses increased by 17% for the nine months ended September 30, 2021, this was outpaced by revenue growth. Key expense categories like transaction expense and sales and marketing saw increases, but transaction and credit losses decreased by 48%. This expense management, combined with revenue growth, led to a significant 38% increase in operating income and an improvement in operating margin to 17% from 15% in the prior year period.

PayPal maintains a strong financial position. As of September 30, 2021, the company had $7.78 billion in cash and cash equivalents and total assets of $74.53 billion. The company generated $4.58 billion in cash from operating activities for the nine months ended September 30, 2021, indicating robust operational liquidity.

PayPal completed the acquisition of Paidy, Inc. for approximately $2.7 billion in October 2021 to enhance its presence in Japan's buy now, pay later market. Additionally, the company completed three other acquisitions totaling $524 million in the second quarter of 2021 and continues to invest in its platform and global expansion.