uploads///PayPals Adj earnings

What Drove PayPal’s Finances in 2Q16?

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Dec. 4 2020, Updated 10:53 a.m. ET

PayPal’s bottom line boosted by higher transaction revenue

PayPal (PYPL) reported 2Q16 adjusted EPS (earnings per share) of $0.36, which came in line with analysts’ consensus estimate and rose by 11% YoY (year-over-year) thanks to higher transaction revenue.

On a GAAP (generally accepted accounting principles) basis, PYPL’s EPS rose by 7% YoY to reach $0.27. Meanwhile, the company repurchased about $300 million worth of shares during 2Q16.

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PayPal’s top line exceeded analysts’ estimates

PayPal’s top line for 2Q16 rose by 16% YoY (year-over-year) to $2.7 billion, exceeding analysts’ expectations of $2.59 billion. Excluding the impact of currency, PYPL’s top line rose by 19% YoY. The company noted that the strong performance of its core business and Braintree segment led to the overall growth in its top line.

On a currency-neutral basis, transaction revenue witnessed a rise of 23% in 2Q16, reflecting an improved performance from the previous quarter. Large merchant growth at its core business coupled with continued strength in its Braintree segment led to the overall growth in transaction revenue. The company’s revenue from other value-added services largely remained flat.

PayPal’s transaction take rate fell by 22 basis points YoY to 2.7% in 2Q16. A mix shift toward the Braintree segment and larger merchant growth, which carries a low take rate, lower currency hedging, and growth in peer-to-peer businesses including Venmo, led to a fall in the company’s overall take rate.

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