Payment services provider PayPal today announced the company’s second-quarter fiscal year 2022 financial results. PayPal reported net revenue of $6.806 billion for the second quarter, up 9 percent from $6.238 billion in the prior-year period, and up 10 percent excluding the impact of currency fluctuations; a net loss of $341 million, compared with a net income of $1.184 billion in the prior-year period, representing a 129 percent decline; and diluted loss per share of $0.29, compared with diluted earnings per share of $1.00 in the prior-year period. This compares to diluted earnings per share of $1.00 in the prior year period.
PayPal’s second-quarter revenue and adjusted earnings per share both beat Wall Street analysts’ expectations, driving its shares up more than 11 percent after hours.
Key Results.
For the quarter ended June 30, PayPal reported a net loss of $341 million, compared to net income of $1.184 billion for the same period a year earlier, which equates to a 129 percent year-over-year decline; and a diluted loss per share of $0.29, compared to diluted earnings per share of $1.00 for the same period a year earlier.
Excluding certain one-time items (not in accordance with U.S. GAAP), PayPal reported an adjusted net income of $1.079 billion for the second quarter, down 21 percent from $1.362 billion a year earlier, and adjusted diluted earnings per share of $0.93, down 19 percent from $1.15 a year earlier, but the results beat analysts’ previous expectations. According to data provided by Yahoo Finance, 38 analysts on average expected PayPal’s second-quarter earnings per share to reach $0.86.
PayPal’s net revenue for the second quarter was $6.806 billion, up 9 percent compared with $6.238 billion a year earlier, and up 10 percent year-over-year excluding the impact of currency changes, which also exceeded analysts’ previous expectations. According to data provided by Yahoo Finance, 36 analysts on average expected PayPal’s second-quarter revenue to reach $6.79 billion.
PayPal’s total payment volume (TPV) for the second quarter was US$339.791 billion, up 9 percent compared with US$310.992 billion in the same period last year, and up 13 percent excluding the impact of currency changes.
PayPal’s total operating expenses for the second quarter were $6.042 billion, compared with $5.111 billion in the same period last year. Of this total, transaction expenses were $3.044 billion, compared with $2.524 billion in the prior year quarter; transaction and credit losses were $448 million, compared with $169 million in the prior year quarter; customer support and operations expenses were $536 million, compared with $521 million in the prior year quarter; sales and marketing expenses were $595 million, compared with Technology and development expenses were $815 million, compared with $746 million in the prior-year period; general and administrative expenses were $514 million, compared with $522 million in the prior-year period; and restructuring and other expenses were $90 million, compared with $1 million in the prior-year period.
PayPal’s operating profit for the second quarter was $764 million, compared with $1.127 billion a year earlier, a decrease of 32 percent. Excluding certain one-time items (not in accordance with GAAP), PayPal’s adjusted operating profit for the second quarter was $1.302 billion, compared to $1.654 billion in the same period last year, a decrease of 21 percent, and PayPal’s operating margin for the second quarter was 11.2 percent, down 684 basis points from 18.1 percent in the same period last year. Excluding certain one-time items (not in accordance with U.S. GAAP), PayPal’s second-quarter adjusted operating margin was 19.1 percent, down 738 basis points from 26.5 percent in the prior-year quarter.
PayPal’s second quarter effective tax rate was 795.9 percent, up 783.2 percentage points from 12.7 percent in the prior-year quarter. Excluding certain one-time items (not in accordance with GAAP), PayPal’s adjusted effective tax rate for the second quarter was 14.3 percent, down 0.6 percentage points from 14.9 percent in the prior-year quarter.
Other Financial Information and Performance Metrics.
PayPal’s second-quarter operating cash flow was $1.466 billion, up 12 percent from $1.306 billion in the year-ago quarter, and free cash flow was $1.291 billion, up 22 percent from $1.059 billion in the year-ago quarter.
As of June 30, 2022, PayPal held cash and cash equivalents and investments totaling $15.6 billion. As of June 30, 2022, PayPal’s total debt was $10.6 billion. During the second quarter, PayPal repurchased approximately 8 million shares of common stock and returned $750 million in cash to shareholders.
PayPal added 400,000 new active user accounts in the second quarter, bringing the total number of active accounts to 429 million, up 6 percent year-over-year. During the second quarter, PayPal processed 5.5 billion transactions, up 16 percent year-over-year. Over the past 12 months, PayPal processed 48.7 transactions per active account, an increase of 12 percent compared to the same period last year.
Performance Outlook.
Third-quarter earnings outlook.
PayPal expects net revenue for the third quarter of fiscal 2022 to reach $6.80 billion, up 10 percent year-over-year, or 12 percent year-over-year excluding the impact of currency movements, but missing analysts’ expectations; earnings per share are expected to reach $0.61 to $0.63, compared with $0.92 a year ago; adjusted earnings per share, excluding GAAP, are expected to reach $0.94. Earnings are expected to range from $0.94 to $0.96 per share, compared to $1.11 per share in the same period last year, reflecting an adjustment of approximately $450 million, primarily representing an estimated equity award expense of approximately $320 million and related employer compensation taxes, an outlook that also fell short of expectations.
According to data provided by Yahoo Finance, 36 analysts on average expected PayPal’s third-quarter revenue to reach $7.02 billion and 38 analysts on average expected PayPal’s third-quarter adjusted earnings per share to reach $0.97.
Full-year earnings outlook.
PayPal expects the company’s full-year fiscal 2022 total payments to increase by 12 percent year-over-year and 16 percent year-over-year excluding the impact of currency movements; net revenue to reach $27.85 billion, up 10 percent year-over-year and 11 percent year-over-year excluding the impact of currency movements, missing analysts’ expectations; and earnings per share expected to reach $1.52 to $1.62 Adjusted earnings per share, excluding GAAP, are expected to range from $3.87 to $3.97, compared to $4.60 a year ago, reflecting an adjustment of approximately $2.1 billion, primarily representing estimated equity award expense of approximately $1.5 billion and related employer compensation taxes, an outlook that exceeded analysts’ expectations. This outlook exceeded analysts’ expectations.
According to data provided by Yahoo Finance, 48 analysts on average expect PayPal’s full-year revenue to reach $28.18 billion and 46 analysts on average expect PayPal’s full-year adjusted earnings per share to reach $3.85.
Stock Price Movement.
On the same day, PayPal shares rose $1.06, or 1.20 percent, to close at $89.63 in regular trading on the Nasdaq. In subsequent after-hours trading through 5:25 p.m. ET on the 2nd (5:25 a.m. GMT on the 3rd), PayPal shares rose another $10.26, or 11.45 percent, to $99.89. In the past 52 weeks, PayPal’s high price was $296.70 and its low price was $67.58.
