How PayPal’s Venmo App Is Boosting Its Revenue Growth



PayPal’s Q3 revenues

Payment company PayPal (PYPL), which spun off from eBay (EBAY) in 2015, delivered 14.0% revenue growth to $3.68 billion in the third quarter. This growth topped analysts’ estimates of $3.66 billion. However, this growth could have reached 21.0% if the company had not sold PayPal’s US consumer credit portfolio to Synchrony Financial (SYF) in July. 

The Synchrony deal is expected to weigh on PayPal’s revenues in the near term. PayPal expects the deal to negatively impact its fourth-quarter revenue growth by 7 percentage points. The company also expects this deal to have an impact of 3.5 percentage points on its 2018 revenue growth.

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Including the negative impact, PayPal expects its fourth-quarter revenues to grow 13.0%–15.0% (on spot rates and on a currency-neutral basis) to $4.195 billion–$4.275 billion. PayPal’s full-year revenues are expected to grow 18.0%–19.0% at current spot rates and 17.0%–18.0% on a currency-neutral basis to $15.42 billion–$15.50 billion.

PayPal’s Venmo app

Venmo is considered one of the key drivers of PayPal’s revenue growth. PayPal’s Venmo payment app processed $17.0 billion in payments in the third quarter, an increase of nearly 78.0% YoY.

Pay with Venmo and the Venmo debit card have boosted the company’s user base. Pay with Venmo, which allows Venmo users to make online purchases, saw monthly active user (or MAU) growth of 185.0% from August to September. The Venmo debit card, launched in June, saw MAU growth of 320.0%.

The company is on track to monetize Venmo, and nearly 24.0% of Venmo users have participated in the monetizing transaction, higher than 17.0% in the preceding quarter.

Venmo competes with Square’s (SQ) mobile payment service Cash App and bank-backed Zelle, both of which allow mobile money transfers between family and friends. PayPal, Square, and Amazon (AMZN) also extend small loans to their customers.


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