10-QPeriod: Q2 FY2022

PayPal Holdings, Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 3, 2022For Securities:PYPL

Summary

PayPal Holdings, Inc. (PYPL) reported its financial results for the quarter ending June 30, 2022. The company experienced a net loss of $341 million for the quarter, a significant decrease from the $1.18 billion net income reported in the same period last year. This decline was driven by increased operating expenses, particularly transaction expenses and credit losses, which outpaced revenue growth. Revenue, however, did see a 9% increase year-over-year, reaching $6.8 billion, primarily fueled by a 9% growth in Total Payment Volume (TPV). Despite the quarterly loss, PayPal's balance sheet remains substantial, with total assets of $77.8 billion. However, the company's liabilities also increased, notably long-term debt which rose to $10.2 billion from $8.0 billion. Key areas of focus for investors include the rising transaction and credit losses, which more than doubled year-over-year, and the substantial increase in operating expenses. The company also announced a significant new stock repurchase program, authorizing up to $15 billion in additional repurchases.

Financial Highlights

51 data points
Beta

Revenue

$6.81B

Net Income

-$341.00M

-5.0% Net Margin

EPS (Diluted)

$-0.29

Total Assets

$77.81B

Cash & Equivalents

$4.58B

Free Cash Flow

$1.07B

Financial Statements
Beta
Revenue$6.81B
Operating Expenses$6.04B
Operating Income$764.00M
Interest Expense$69.00M
Net Income-$341.00M
EPS (Basic)$-0.29
EPS (Diluted)$-0.29
Shares Outstanding (Basic)1.16B
Shares Outstanding (Diluted)1.16B

Key Highlights

  • 1Net loss of $341 million for the quarter, compared to a net income of $1.18 billion in the prior year's quarter.
  • 2Net revenues increased by 9% year-over-year to $6.8 billion, driven by a 9% increase in Total Payment Volume (TPV).
  • 3Transaction and credit losses surged by 165% to $448 million, significantly impacting profitability.
  • 4Total operating expenses increased by 18% to $6.04 billion, outpacing revenue growth.
  • 5Long-term debt increased to $10.2 billion from $8.0 billion at the end of the previous year.
  • 6The company announced a new stock repurchase program, authorizing up to an additional $15 billion.
  • 7Active accounts grew by 6% to 429 million.

Frequently Asked Questions

The net loss of $341 million was primarily caused by a substantial increase in operating expenses, which grew by 18% year-over-year to $6.04 billion. This increase was largely driven by higher transaction expenses and a significant surge in transaction and credit losses, which more than doubled compared to the prior year. These rising costs outpaced the 9% growth in net revenues, leading to a decrease in operating income and resulting in a net loss.

PayPal's net revenues increased by 9% year-over-year to $6.8 billion. This growth was primarily fueled by a 9% increase in Total Payment Volume (TPV), reaching $340 billion for the quarter. While overall revenue growth was positive, the transaction revenue component saw slower growth than TPV due to a decline in foreign currency exchange fees and reduced revenue from eBay's marketplace platform, although this was partially offset by growth in Venmo and other services.

PayPal maintains a substantial asset base, with total assets of $77.8 billion as of June 30, 2022. However, total liabilities also increased to $58.0 billion. Notably, long-term debt rose to $10.2 billion from $8.0 billion at the end of 2021. The company held $4.6 billion in cash and cash equivalents and $4.7 billion in short-term investments, indicating a solid liquidity position, though the increase in debt warrants attention.

The authorization of an additional $15 billion for stock repurchases signals the company's commitment to returning value to shareholders and potentially reducing the outstanding share count. This move could be interpreted as management's confidence in the company's long-term prospects and its ability to generate sufficient cash flow to fund these repurchases while also addressing the current challenges in profitability.