PayPal (NASDAQ:PYPL) shares gained about 7% on Thursday after the fintech company raised its full-year profit outlook.
The company also reported increased spending on its platforms, which was driven by strong consumer confidence amid moderating inflation. Moreover, shares reacted positively to updates from the earnings call, which was the first for new CEO Alex Chriss.
‘Solid’ Results
PayPal reported earnings per share of $1.30, which came in ahead of the expected $1.23. Revenue rose 8% annually to $7.42 billion, just ahead of the expected $7.38 billion.
Total payment volume (TPV) was $387.7 billion in the third quarter, growing 15% year-over-year and 13% at the constant currency. PayPal also reported a 6.3 billion payment transaction, which marks a growth of 11% YoY. On a trailing twelve-month basis, the number of transactions per active account rose 13% to 56.6.
The company also said it generated an operating cash flow of $1.3 billion and a free cash flow of $1.1 billion. Adjusted operating margin declined 18 basis points to 22.2%.
“PayPal delivered solid third quarter results, with currency-neutral revenue growth and EPS ahead of our expectations. Our performance demonstrates disciplined expense management and capital allocation. We are focused on accelerating our profitable growth,” said acting CFO, Gabrielle Rabinovitch.
For this quarter, the company said it sees revenue growing 6-7% on a spot basis. Adjusted EPS is seen rising about 10% to $1.36, which came in lower than the expected $1.41.
On a full-year basis, the company sees adjusted EPS at $4.98, up about 21% YoY. This marks an improvement from the previously expected $4.95 and higher than the analyst consensus of $4.92.
PayPal also said it expects to buy back about $5 billion of its stock in FY23. At the end of Q3, it repurchased around 23 million shares of common stock, returning $1.4 billion to stockholders.
Moreover, PayPal is poised to benefit from the approval of a spot Bitcoin ETF, as well as from the increased integration of cryptocurrency into mainstream finance. This aligns with PayPal’s push into the cryptocurrency space, including the launch of its own USD stablecoin.
Furthermore, the company announced the appointment of Jamie Miller, who will be occupying the role of CFO. He is expected to start on November 06. PayPal Holdings also announced the promotion of Archie Deskus to Executive Vice President and Chief Technology Officer (CTO).
“Jamie is an accomplished CFO with decades of experience in both senior finance and operations roles, guiding companies through dynamic environments and meaningful transformation, including GE and Cargill, and was most recently CFO of EY,” PayPal said in a press release.
PayPal reported 428 million active accounts at the end of the quarter, down about 4 million compared to the same period last year.
New CEO Gets a Nod From Wall Street
CEO Chriss seems to be keen on addressing key investor concerns and prioritizing profitable growth, which has been one of the biggest concerns in recent years and the reasons why PYPL stock underperformed.
Shares are down over 80% from the 2025 peak, costing the company’s market cap over $300 billion in lost value. Just recently, PayPal stock hit the lowest levels since 2017.
“We will become more efficient so we can innovate and execute with higher velocity. The opportunity to drive greater impact for our customers and unlock profitable growth makes it an exciting time to be at PayPal,” Chriss said in the earnings release.
During his first earnings call, he emphasized “profitable growth” numerous times, indicating his commitment to addressing investor feedback. Chriss’s solid track record with small businesses suggests potential for global expansion, which could further strengthen PayPal’s already strong 35 million-strong merchant base.
Chriss joined from Intuit as a seasoned and highly successful business executive. His extensive experience in technology and product leadership positions, particularly his role as Executive Vice President and General Manager of Intuit’s Small Business and Self-Employed Group since January 2019 was likely a key reason why PayPal opted for him to lead the business.
Over the five years he led this segment, he achieved notable growth, with customers and revenues increasing at a compound annual growth rate of 20% and 23%, respectively. PayPal highlighted this consistent growth, which demonstrates his ability to drive business expansion and revenue generation effectively.
“With his depth of experience in product development, his passion for serving customers and his longstanding commitment to empowering and enabling small businesses, and his proven track record of developing and inspiring his team, Alex is the perfect leader to take PayPal forward and accelerate the company’s growth opportunities,” said John Donahoe, Chair of the PayPal Board of Directors.
Chriss was also involved in Intuit’s successful $12 billion acquisition of Mailchimp in 2021, which showcased his M&A abilities. Chriss replaced Dan Schulman, who led the business for eight years of being an independent company.
In addition to the focus on bottom-line and reaccelerating revenue growth, Chriss is likely to focus on leveraging value-added services to enhance unbranded checkout yields and compete with rivals like Apple Pay.
“A focus on profitability moving forward, PYPL isn’t likely to have a quick fix, but new commentary suggests consolidation and refocus of investments to create stabilization in the business model,” Oppenheimer analysts said.
Summary
PayPal shares moved higher on Thursday following the better-than-feared earnings report for the third quarter, which paved the way for a modest raise in the full-year profit outlook. Moreover, investors reacted positively to the first earnings call conducted by new CEO Alex Chriss, who reiterated his focus on profitability.
