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How PayPal’s 4Q17 Returns Stacked Up to Expectations

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PayPal beats on revenue and earnings expectations

A continued uptake of its products by consumers and merchants as well as more use of those products led PayPal (PYPL) to report 4Q17 results that beat consensus expectations on key items.

PayPal added nearly 9 million active customer accounts in 4Q17, with payment transactions per account increasing 8% YoY (year-over-year).

Strong customer activity saw PayPal generate $3.7 billion of revenue in 4Q17. Wall Street was expecting $3.6 billion. Throughout 2017, PayPal reported quarterly revenues that topped expectations.

Earnings topped expectations throughout 2017

For its bottom line, PayPal suffered an adverse hit in 4Q17 due to the overhaul of the US tax code in December 2017. It resulted in the company posting EPS (earnings per share) of $0.50. Excluding the impact of the new tax law, PayPal posted adjusted EPS of $0.55 in 4Q17, which exceeded EPS of $0.52 that Wall Street was expecting in the quarter. PayPal topped quarterly earnings expectations throughout 2017.

How PayPal’s rivals and partners fared

Synchrony Financial (SYF), the company that agreed to purchase PayPal’s consumer loan portfolio worth more than $6 billion, posted EPS of $0.70 in 4Q17, topping the consensus estimate by $0.05. Fiserv (FISV), a rival of PayPal in the payment processor market, posted EPS of $1.41 in 4Q17, beating the consensus estimate by $0.03. eBay (EBAY), the company from which PayPal split, posted in-line EPS of $0.59 in 4Q17.

Amazon (AMZN), a rival of PayPal in the online lending business, posted EPS of $3.75 in 4Q17, beating the consensus estimate by $1.90. That was supported by tax benefits stemming from the overhaul of the US tax code in December.

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