PayPal expects continued growth
PayPal (PYPL) is expected to report its first-quarter earnings results next month. In January, PayPal issued a performance outlook that showed it was expecting its first-quarter revenue to come in the range of $4.08 billion–$4.13 billion, indicating potential growth of up to 12% YoY (year-over-year). The company guided for adjusted EPS in the range of $0.66–$0.68. The bigger picture here is that PayPal expects to continue growing even as it comes up against more intense competition from Square (SQ), Amazon (AMZN), and other rivals.
In the fourth quarter, its most recently reported period, PayPal recorded a 13% YoY increase in revenue to $4.23 billion. Square, Amazon, and eBay (EBAY) reported revenue rises of 51%, 20%, and 6.0% YoY, respectively, in the quarter. Revenue rose 2.0% YoY at Fiserv (FISV) but fell 24% YoY at First Data Corporation (FDC) in the quarter.
PayPal’s business drivers
Recently, growth at PayPal has been driven by increases in its number of active customers as well as increases in its number of transactions per customer. In the fourth quarter, for instance, PayPal added more than 13 million new active customers, exiting 2018 with 267 million customers worldwide.
PayPal’s global expansion can also be seen bearing fruit. The company reported a 20% YoY increase in international revenue to more than $2.0 billion in the fourth quarter. In the past two years or so, PayPal has made a number of moves to extend its footprint in several key international markets. In 2017, it launched domestic operations in India, a top-priority market for many digital companies. PayPal also recently announced its intention to partner with MercadoLibre (MELI) to strengthen its payment business in Latin America. PayPal also recently announced the launch of its business loan service in Mexico.
PayPal’s (PYPL) marketing expenses continued to rise quarter after quarter throughout 2018, and the trend looks set to continue this year.
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