PayPal (PYPL) Holdings reported its first quarter earnings early Tuesday. The digital payments company noted that earnings increased 27 percent compared to a year earlier after adopting a new accounting method. The company also reported an increase in revenue compared with Wall Street analysts’ estimates. It increased its future guidance for the year, and its shares saw a 3 percent increase.
PayPal reported a net revenue of $7.7 billion, higher than the $7.515 billion estimated by FactSet. The company’s net income rose by 10 percent. Its total payment volumes saw a 14 percent increase to $403.9 billion in the first quarter, while analysts’ estimates were lower at $393.64 billion.
The digital payments company’s adjusted operating margin improved by 84 basis points to 18.2 percent in the quarter ending March 31. It also reported $1.08 per share, up from 85 cents in the same quarter a year ago.
PayPal also raised its outlook for the year. Its new forecast says adjusted profit would be in “mid-to-high single-digit percentage.” The earlier guidance was that it would remain flat in 2024.
CWEB has noted that the new management has made the company leaner and has implemented cost discipline. There are opportunities for robust growth and an increase in stock price. The stock is held for the short term and bought for the long term.
Although the stock stumbled the previous year after the entry of tech giants such as Apple and Google Pay, it has grown this year. Its unbranded business continues to grow while branded product Venmo still creates some anxiety in investors’ minds.
PayPal has also repurchased $1.5 billion in shares in the first quarter and is planning a buyback of $5 billion by the end of the year. CWEB notes that companies often buy back shares when they see potential for growth and want to strengthen the value of their stock.
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