PayPal Q3 2023 Earnings: Revenue Up 8%, Earnings Up 14%

PayPal Inc. declared its third-quarter 2023 financial results. PayPal delivered strong financial results in the third quarter. The company’s revenue and earnings growth were both above analyst expectations, and its TPV growth was particularly strong. PayPal is also well-positioned for continued growth in the coming quarters.

PayPal Q3 2023 Earnings: Highlights

  • Total Payment Volume (TPV): $388 billion, a 15% increase.
  • Revenue: $7.4 billion, an 8% increase.
  • Net Gross Earnings Before Interest and Taxes (NG EBIT): $1.6 billion, an 8% increase with a margin of 22% (down by 18 bps).
  • NG Net Income: $1.4 billion, a 14% increase with a margin of 19% (up by 92 bps).
  • Operating Cash Flow (OCF): $1.3 billion, with a margin of 17% (down by 866 bps).
  • Free Cash Flow (FCF): $1.1 billion, a 30% decrease with a margin of 15% (down by 813 bps, including $0.8 billion from HFS).

PayPal Q3 2023 Earnings: Key Business Metrics

  • TPV: $388 billion, a 15% increase.
  • Peer-to-Peer TPV (PayPal, Venmo, Xoom): $97 billion, a 4% increase, contributing to approximately 25% of TPV.
  • Venmo TPV: $68 billion, a 7% increase.
  • PayPal Branded Checkout TPV: Up by 6% (comprising approximately 30% of TPV in FY22).
  • Braintree PSP TPV (unbranded processing): A substantial increase of 32% (representing approximately 30% of TPV in FY22).
  • Cross-Border Trade: $47 billion, a 9% increase (accounting for 12% of the total).
  • Total Active Accounts: 428 million, a 1% decrease.
  • Payment Transactions: 6.3 billion, an 11% increase.
  • Payment Transactions per Active Account: 56.6, a 13% increase.
  • Total Take Rate: 1.91%, a 3 bps increase compared to the previous quarter.
  • Transaction Take Rate: 1.72%, a 3 bps decrease compared to the previous quarter.
  • Transaction Expense Rate: 0.93%.
  • Transaction and Credit Loss Rate: 0.12%.
  • Transaction Margin: 45.4%, a 50 bps decrease compared to the previous quarter.

PayPal Q3 2023 Earnings: Management Guidance

  • Fourth-quarter revenue of $7.4 billion, up 7% year-over-year
  • Fourth-quarter non-GAAP EPS of $1.36
  • Full-year non-GAAP EPS of $4.83, up 21% year-over-year
  • Full-year free cash flow of $4.6 billion or more

PayPal Q3 2023 Earnings: Analysis

PayPal delivered solid third-quarter results, with revenue and earnings beating analyst expectations. The company’s TPV growth was particularly strong, driven by cross-border trade and its Braintree payment processing platform.

PayPal also benefited from strong growth in its peer-to-peer (P2P) payments business, with Venmo TPV up 7% year-over-year. The company’s PayPal branded checkout volume also grew 6% year-over-year, accounting for approximately 30% of total TPV.

While PayPal’s active account growth was weak in the third quarter, the company attributed this to a decline in new account openings in Russia and Ukraine. PayPal also noted that its engagement metrics remain strong, with payment transactions per active account up 13% year-over-year.

Looking ahead, PayPal is guiding for fourth-quarter and full-year revenue and earnings above analyst expectations. The company also expects a full-year free cash flow of $4.6 billion or more.

Overall, PayPal delivered a strong third quarter and is well-positioned for continued growth in the coming quarters. The company’s diversified business model, strong brand, and global reach give it a competitive advantage in the payments industry.

PayPal Q3 2023 Earnings