PayPal’s Q3 Earnings: $7.8B Revenue Miss, But 22% EPS Growth Fuels 2025 Potential

PayPal’s Q3 report was mixed, revenue was below expectations but EPS was 22% and $1.20, beating estimates by $0.13.

Revenue missed by $90 million at $7.8 billion. 5.4% YoY revenue growth, 1% q/q decline. TPV up 9% to $422.6 billion, 6% increase in transactions. Good sign for the payments ecosystem.

Q3 Key Financial Highlights:

• Revenue: $7.8 billion (+5.4% YoY)

• Adjusted EPS: $1.20 (+22% YoY)

• Operating Income: $1.5 billion, up 18%

• Operating Margin: 18.8%, increased by 194 basis points

Building Strategic Partnerships and Payment Solutions

To drive growth, PayPal is expanding its partnerships and optimizing its payment solutions. Partnerships with Amazon, Spotify and Global Payments are helping PayPal get into the enterprise space.

Fastlane checkout for larger enterprises is gaining traction, improving customer experience and conversion rates. Guest checkout, biometric authentication and the new mobile app are all designed to increase user engagement.

For small and medium businesses, the Complete Payments solution, launching in 2025, gives merchants access to the PayPal user base. Early results for “Pay with Venmo” are positive, with higher adoption and transaction rates and revenue.

Venmo and Advertising: 2025 Growth Drivers

Venmo is a growth driver. Only 5% of Venmo users have a Venmo debit card. 30% of Venmo users got a card in Q3. “Pay with Venmo” has 8% adoption among active users and 3x revenue per user. This untapped user base and PayPal’s plans to scale the ads platform in 2025 is a big opportunity for growth.

$PYPL PayPal Holdings, Inc just reported Q3 2024 Earnings:

Revenue: $7.8B up 6% YOY(vs $7.89B expected) Miss

Non-GAAP EPS: $1.2 up 22% YOY(vs $1.07 expected) Beat

Total payment volume increased 9% to $422.6 billion

Active accounts increased 0.9% to 432 million

Q4 FY 2024…

— Earningsforesight (@Earnings4sight) October 29, 2024

PayPal will use Venmo and branded checkout through NFC cards to drive more transactions and deeper merchant relationships. CEO Alex Chriss is bullish on this. “We want to be the top choice for both consumers and merchants.”

Investor Outlook: Strong Buy with Asymmetric Upside

Despite revenue below expectations and conservative holiday quarter guidance, PayPal is a cash machine with $1.45 billion in free cash flow this quarter and plans to buyback $6 billion in shares by year end.

The buybacks and new products will add to long term value. Competitive pressure is a risk but the investments in Fastlane and Venmo will drive revenue growth in 2025.

Investor Takeaway: PayPal presents a unique investment opportunity with strong free cash flow, strategic buybacks, and growth potential across enterprise and consumer segments.