PayPal (PYPL) Shares Fall 7% as Q2 2023 Report Disappoints Investors

Despite investor disappointment, CEO Dan Schulman is confident that Q2 2023 shows that PayPal is on the right path to growth.

Online payments company PayPal Holdings Inc (NASDAQ: PYPL) has released its Q2 2023 report showing figures that disappointed investors. The company’s shares fell 7% in response to the figures.

PayPal reported its adjusted operating margin for Q2 2023 at 21.4%, lower than the 22% expected. This was likely due to the poor performance of branded products following competition from other giants like Apple.

However, PayPal also reported growth across a few metrics. For instance, its net revenue grew 7% to $7.3 billion, with a total of 431 million active accounts, higher than the 429 million reported in the same period last year. PayPal also recorded a 12% increase to 54.7 payment transactions per active account on a trailing twelve-month basis and a 10% jump in the total number of payment transactions to 6.1 billion.

PayPal CEO Dan Schulman is optimistic about the company’s growth and believes that Q2 2023 points to better performance in the future. Schulman said:

“Our second quarter results show continued momentum. We have high confidence that our business is on the right path and we’re seeing clear signs that the investments we’ve made are paying off. Our teams are energized, and I’m confident that we’re well positioned to continue to grow our leadership in digital payments.”

PayPal mentioned a partnership with leading investment firm KKR as part of its projections for the rest of the year. The “exclusive multi-year relationship for European buy now, pay later receivables” will close sometime in the second half of 2023. The agreement will see KKR-managed private accounts and credit funds buy up to €40 billion of existing and future BNPL loans in the UK and Europe. PayPal says it expects around $1.8 billion worth of the proceeds.

Other Highlights from Q2 2023 Report

PayPal provided a few other highlights in the report. For instance, earnings per diluted share came in at $0.92, while net revenue was $7.287 billion, up 7% from $6.806 billion in Q2 2022. Its operating margin was 15.5%, up from 11.2% in the same period last year.

The Q2 2023 report also includes financial guidance for Q3 and the full year. The company expected net revenue to hit $7.4 billion, while GAAP earnings per diluted share dropped to $0.85-$0.87. This is also a fall from $1.15 in the previous year.

For full-year guidance, the company expects GAAP earnings per diluted share at $3.49, nearly 70% higher than the $2.09 from the full year 2022.

In April, Coinspeaker reported that PayPal cut CEO Schulman’s salary by 32% from last year. Following the company’s poor performance and inability to meet targets, the company paid Schulman $22 million for the financial year, down from $32 million paid the previous year. PayPal missed targets for adjusted operating margin, new net active users, and revenue. The payment cut is also a way for the company to reduce spending in hopes of supporting its balance sheet. Despite cutting the CEO’s pay, PayPal’s board still trusts that Schulman is the right man for the job.

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Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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