Summary
PayPal Holdings, Inc. (PYPL) has filed an 8-K report on April 10, 2018, to announce updated definitions for two key performance metrics: "active accounts" and "total payment volume" (TPV). These revisions are designed to better reflect the company's evolving business model, including strategic partnerships, new product offerings, and acquisitions. The updated definitions will be applied retroactively to prior period results starting with the first quarter of 2018. Importantly, these definitional changes will not impact previously reported total revenue, operating income, or earnings per share. The revised definitions broaden the scope of what constitutes an active account and TPV. Active accounts now include users from co-branded credit card programs and platform access partners, capturing a more comprehensive view of customer engagement. TPV has been expanded to encompass new partner payment solutions, such as certain tokenized transactions and contextual commerce, as well as revenue from the merchant debit card program. While these changes will lead to a reclassification of some revenue from "other value added services" to "transaction revenues," the overall "total net revenues" will remain unchanged.
Key Highlights
- 1Updated definitions for "active accounts" and "total payment volume (TPV)" to align with PayPal's diversified business and growth strategies.
- 2Revised definitions will be applied retroactively to prior periods, starting with the Q1 2018 Form 10-Q.
- 3The changes will not affect previously reported total revenue, operating income, or earnings per share.
- 4Active accounts definition now includes co-branded credit card programs and platform access partners.
- 5TPV definition expanded to include new partner payment solutions (e.g., tokenized transactions, contextual commerce) and merchant debit card program.
- 6Revenue from the merchant debit card program will be reclassified from 'other value added services' to 'transaction revenues,' with no impact on 'total net revenues'.
- 7The revisions resulted in modest increases to reported historical active accounts, TPV, and payment transactions.