Financial service provider PayPal Holdings Inc (Nasdaq: PYPL) reported better-than-anticipated fiscal 2020 fourth-quarter results. Notably, 2020 was the best year in its history, aided by exceptional performance in the final quarter. The company also issued an upbeat 1Q 2021 and FY 2021 outlook.
Interestingly, the company facilitated buying and selling of cryptos at the end of 2020. Following the optimistic quarterly results, the stock gained 7.36% or $18.53 to close at $270.23.
The San Jose, California-based digital payments company reported four-quarter 2020 net revenues of $6.116 billion, an increase of 23% from $4.961 billion in the comparable quarter last year.
For the quarter ended December 31, 2020, net income more than tripled to $1.567 billion or $1.32 per share, from $507 million, or $0.43 a share in the quarter ended December 31, 2019.
Excluding net gains on strategic investments and tax effect of non-GAAP adjustments, among others, 4Q 2020 non-GAAP net income was $1.281 billion, or $1.08 per share, compared with $988 million, or $0.83 a share, in 4Q 2019.
Analysts polled by Thomson Reuters had anticipated the company to report earnings of $1 per share on revenues of $6.09 billion.
Dan Schulman, President and CEO of PayPal, stated that the company “delivered a record performance in 2020 as businesses of all sizes have digitized in the wake of the pandemic.”
John Rainey, CFO, and EVP Global Customer Operations opined that “2020 was a pivotal year for PayPal and the broader payments ecosystem. We have just completed the strongest year in our history […].”
Non-GAAP operating margin inched upwards to 25% in Q4 2020, from 24% in Q4 2019.
Segment-wise,
- Transaction revenues increased 12% y-o-y to $5.682 billion
- Revenues from other value-added services were $434 million, an increase of 13% on a y-o-y basis.
Region-wise,
- US net revenues were $3.073 billion, up 9% from last year.
- International net revenues rose by 15% y-o-y to $3.043 billion.
The company recorded a 4% increase in active accounts to 377 million. Likewise, the number of payment transactions grew by 10% to 4.408 billion. Total payment volume rose by 12% to $277.07 billion. Transaction margin fell slightly to 55.9%, from 56.7% in the prior-year period.
During the recent quarter, non-GAAP free cash flow increased to $1.121 billion, from $748 million last year. At the end of December 31, 2020, PayPal’s cash, cash equivalents, and investments aggregated to $19.20 billion. In the fourth quarter of 2020, PayPal returned $265 million to its shareholders by repurchasing about 1.30 million shares of common stock.
In its investor update, the company revealed that clients who bought cryptocurrencies have been logging into its platform twice the number of times they visited before purchasing cryptocurrencies.
The best performance encouraged PayPal to issue first-quarter and FY 2021 guidance. For the first quarter of fiscal 21, the company expects revenues to grow at ~28%. PayPal also anticipates ~$0.70 per share of GAAP earnings, compared with $0.07 per share in the prior-year period. Non-GAAP earnings are forecast to rise by ~50%.
For FY 2021, the company expects revenues to grow by 19% to roughly $25.5 billion. PayPal expects GAAP earnings of $3.20 per share (Vs. $3.54 in FY 2020) and non-GAAP earnings per share to grow by 17%. The company intends to add 50 million accounts in FY 2021.
The impressive quarterly results and solid first-quarter and FY 2021 outlook are expected to keep the stock bullish in the days ahead.
Technically, the stock is having reliable support from the ascending trend line. Additionally, the MACD indicator has a positive reading. Therefore, we are anticipating the store to remain bullish in the short-term.
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