PayPal Holdings Inc (Nasdaq: PYPL) reported better than anticipated fiscal 2023 first quarter results. The company also upwardly revised its FY 2023 earnings per share view. However, the payment processing company issued weak second-quarter earnings per share outlook. The stock closed Tuesday’s trading session at $65.90, down $9.61 or 12.73% from its prior close.
PayPal, based in San Jose, California, reported first-quarter revenues of $7.04 billion, up 9% from $6.48 billion in the comparable quarter last year.
For the first quarter, which ended March 31, 2023, the company posted earnings of $795 million, or $0.70 per share, compared with $509 million, or $0.43 per share, in the quarter ended March 31, 2022.
Excluding non-GAAP operating income adjustments and net gains on strategic investments, among others, PayPal recorded 1Q23 non-GAAP net income of $1.33 billion, or $1.17 per share, up from $1.03 billion, or $0.88 per share, in 1Q 2022.
Analysts surveyed by Refinitiv had anticipated the company to post non-GAAP earnings of $0.98 per share on revenues of $6.98 billion.
Commenting on the results, PayPal President and CEO, Dan Schulman, stated “We’re working hard to continually improve our already popular checkout and digital wallet experiences, and it is beginning to pay off.”
Segment wise:
- Transaction revenues increased 6% y-o-y to $6.36 billion.
- Revenues from value-added services were $676 million, up 39% from the previous year.
PayPal ended the first quarter with 433 million accounts, up 1% on a y-o-y basis. The reported figure includes 35 million vendor (merchant) accounts. Also, transactions per active account surged 13% to 53.10. On a currency-neutral basis, total payments volume increased by 12% to $355 billion. Notably, p2p total payments volume (TPV), which includes PayPal, Xoom, and Venmo, rose 2% to $91 billion and accounted for 26% of TPV. Venmo’s TPV grew by 9% to $62.70 billion. Also, cross-border TPV accounted for 14% of total TPV.
Notably, PayPal’s reserve coverage ratio grew to 7.80% in Q1 2023 from 7.40% in 4Q 2022.
Looking ahead, PayPal projects second-quarter earnings of between $1.15 and $1.17 per share. Furthermore, the company also upwardly revised its FY 2023 earnings outlook to $4.95 per share (reflecting a y-o-y increase of 20%) from $4.87 per share (reflecting a y-o-y growth of 18%).
The quarterly earnings beat coupled with a weak second-quarter earnings per share outlook is expected to keep the stock of PayPal rangebound in the short term.
The historical price chart indicates that the stock of PayPal has formed a double bottom at 65. This indicates a likely rebound in the days ahead. Additionally, the stochastic indicator is near the oversold region. Therefore, we anticipate PayPal’s stock to begin an uptrend in the days ahead. The next major resistance is anticipated near 72.
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