PayPal Beats Q1 Expectations as Total Payment Volume Surges

By Luigi Wewege Thursday, May 6, 2021

PayPal reported better-than-expected quarterly earnings to mark the strongest Q1 results in the history of the company.

PayPal logo on a tablet.

Payment Volume Surges, Cryptocurrency the Next Area to Focus On

PayPal reported it made a profit of $1.22 per share to easily beat the $1.01 expected from market analysts. Business sales for Q1 were reported at $60.3 billion, again higher than the market consensus of $5.90 billion. Higher revenues came as total payment volume (TPV) grew 50% to hit $285 billion, while Wall Street analysts were calling for $265 billion.

“Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy. Our addressable market continues to grow as we launch new products and services for our 392 million active accounts,” said Dan Schulman, president and CEO of the company.

The company said it added 14.5 million net new active accounts to increase its total user base to 392 million. Net profit came in at $1.10 billion, while business sales recorded a 31% year-over-year (YOY) increase as the pandemic accelerated the shift to online payments and ecommerce.

For Q2, PayPal said it is looking to earn $1.12 per share on sales of $6.25 billion. This is higher than earnings per share of $1.10 and business revenues of $6.16 billion that surveyed market analysts were expecting.

For 2021, the company is projecting 20% growth in business sales to $25.75 billion, while the earnings per share is forecasted to come in at $4.70. These projections compare to $4.57 earnings per share and business sales of $25.71 billion.

“Our record-breaking first quarter results underscore the ongoing strength, diversification, and relevance of our scaled, two-sided, global payments platform. We are raising our FY’21 guidance based on these strong results,” commented CFO and Executive Vice President of Global Customer Operation, John Rainey.

In a call with analysts, CEO Dan Schulman noted the cryptocurrency transaction as an extremely important growth engine for the company going forward. The company witnessed strong activity from its users in this business sector, with about a half of all cryptocurrency traders on PayPal opening their app on a daily basis.

“We’ve got a tremendous amount of really great results going on tactically with our crypto efforts,” said Schulman.

PayPal’s cryptocurrency products expanded in Q1 to allow US customers to transact business using cryptocurrency. Last month, the company launched a new feature on its Venmo platform which allows users to buy, hold, and sell cryptocurrency assets.

In Q4 last year, PayPal also reported strong business growth, with one analyst saying PayPal has established itself as a “financial super app.”

PayPal stock is up 4.1% in early trading Thursday. On a year-to-end (YTD) basis, shares of PayPal are up a bit over 5.6%, following a year with extremely strong gains.

Summary

PayPal, a major payment-processing company, reported stronger-than-expected earnings as a result of a surge in total payment volume processed on the network. The company noted the cryptocurrency sector as the next key growth driver for business sales and profits.

About the Author


Headshot for author Luigi Wewege

Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.

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