PayPal on Tuesday posted stronger-than-expected results for the first quarter with healthy transaction revenue and reduced operating costs under
Total revenue for the quarter that ended March 31, 2024, rose 9%, to $7.7 billion, from $7 billion during the same period a year earlier, while total payment volume increased 14%, to $404 billion, from $355 billion year over year. Payment transactions per active account were up 13% for the quarter, to 60, compared with 53 from the same period a year earlier.
During a conference call to discuss the results, Chriss credited PayPal's progress to a variety of moves to streamline processes for enterprises and small businesses that accept PayPal and Venmo. He also cited "surgical changes" to improve efficiencies and control costs.
"We also see substantial need for continued retooling of the company," Chriss said, noting that 2024 will be a year of transition — and critical choices about which parts of the business to build up or abandon.
Xoom, PayPal's cross-border payments unit, will stay, Chriss said. After closely evaluating options for the "stagnating" business that has been underperforming for several quarters, Chriss said PayPal will rebuild the unit this year to be more competitive.
"We plan to reduce the cost of cross-border transfers and provide consumers the option to eliminate transaction fees altogether when funding with our
He will analyze every other one of PayPal's businesses and markets this year to clean up underperforming areas and decide which ones deserve the turnaround treatment, while others might not "meet that cut," Chriss said.
Core areas will be revamped, including small-business acceptance, where PayPal "took its eye off the ball" in recent years, according to Chriss, who was considered a small-business guru during his previous stints, including 19 years at Intuit.
PayPal is also placing high hopes on converting more of its transactions to its higher-revenue branded checkout experiences that include a range of value-added services including fraud protection, versus the firm's bare-bones unbranded checkout process. Recent testing of its new branded checkout approach, Fastlane by PayPal, is helping to increase PayPal's market share among all sizes of businesses, Chriss said, noting the new checkout flow will roll out widely during the second half of this year.
PayPal also revamped its core app again during the first quarter, emphasizing different ways for consumers to earn rewards when shopping within the app, Chriss said.
The CEO is also seeking new ways for businesses of all sizes to accept Venmo, so that its active users might spend more accumulated funds from peer-to-peer transfers received through the Venmo app instead of rapidly transferring them to other accounts.
"There's $18 billion of net new funds that flow into the platform of Venmo every single month and 80% of those dollars leave within 10 days," Chriss said.
For e-commerce merchants like BigCommerce whose customers check out using PayPal, the payments firm is adding a package-tracking service, he said.
"Package tracking not only allows consumers to track their shipments within the PayPal app, but will also enable us to make personalized purchase recommendations and present relevant offers through the app and with our AI-powered smart receipts," Chriss said.
Overall, Chriss is applying a laser focus to improve corporate efficiency.
"We are instilling a rigorous cost-benefit discipline throughout the company and leaving no stone unturned when it comes to reducing unproductive costs," Chriss said.
PayPal may feel a sting from the Consumer Financial Protection Bureau's
"We're indirectly impacted through our revenue share with our consumer credit partner," Miller said, noting that if the late-fee cap goes into effect May 14, it could dent PayPal's earnings per share by about 3% this year. PayPal has already taken some "mitigation" moves to offset the rule's effect, and expects the impact will be minimal by next year.
PayPal's operating income for the quarter rose 17%, to $1.2 billion, from $999 million during the same period a year earlier. Active accounts decreased 1%, to 427 million, over the same period a year earlier. PayPal noted that it added 2 million new accounts during the first quarter of this year, up 0.4% over the final quarter of 2023.
Analysts rated PayPal's first-quarter results as solid, but much work is needed to build and sustain growth momentum.
"We think the company's efforts to increase branded checkout engagement and price unbranded checkout to value are big asks of the new management team and will take several years to bear fruit," said analysts at BTIG Research & Strategy in a Tuesday note to investors.
