PayPal (PYPL) Q4 earnings

PayPal reported better-than-expected fourth-quarter results on Tuesday and issued guidance that also topped analysts’ expectations.

Here’s how the company did compared with Wall Street estimates, based on a survey of analysts by LSEG:

• Earnings per share: $1.19, adjusted vs. $1.12 expected
• Revenue: $8.37 billion vs. $8.26 billion expected

For the first quarter, PayPal expects adjusted earnings per share of $1.15 to $1.17, which is higher than the average analyst estimate of $1.13. Earnings for the year will come in at $4.95 to $5.10 a share, topping the $4.90 average estimate, according to LSEG.  

PayPal also announced a new $15 billion share buyback program, and expects to make around $6 billion in repurchases in 2025.

Revenue increased about 4% in the quarter from $8.03 billion a year ago.

Total payment volume, an indication of how digital payments are faring in the broader economy, was just short of estimates, coming in at $437.8 billion for the fourth quarter, versus the $438.2 billion analysts projected.

While PayPal’s take rate slipped to 1.91% from 1.96% a year earlier, transaction margin, which is how the company gauges the profitability of its core business, rose to 47% from 45.8%. In 2024, transaction margin dollars grew 7% to $14.7 billion, bolstered by Braintree, a service Meta uses for credit-card processing.

The company said it anticipates growth of 4% to 5% in transaction margin dollars in 2025 to $15.2 billion to $15.4 billion

PayPal’s stock is up 43% in the past year, as of Monday’s close. CEO Alex Chriss, who joined the company in September 2023, is trying to revive growth at PayPal, which had been been mired in a deep slump due to increased competition and a declining take rate, or the percentage of revenue PayPal keeps from each transaction.

Chriss has focused on prioritizing profitable growth and better monetizing key acquisitions like Braintree and payments app Venmo.

Venmo’s total payment volume rose 10% in the quarter from a year earlier. DoorDash, Starbucks and Ticketmaster are among businesses now accepting Venmo as one way that consumers can pay.

In the short term, Chriss has said the two primary monetization levers are Venmo’s debit card, which allows customers to spend with their balance both online and offline, and Pay With Venmo, which provides a seamless way for customers to pay online. Monthly active accounts for the debit card grew more than 30% in 2024, and Pay with Venmo monthly actives increased more than 20%.

The company added 8.8 million active accounts last year.

One of Chriss’ strategies to address the deteriorating margin was to offer merchants increased value-added services, such as connecting data points at checkout to drive down the rate of cart abandonment. That product, dubbed Fastlane, launched in August, and is a one-click payment option for online sales that can go head-to-head with Apple Pay and Shop Pay by Shopify.

In 2024, branded checkout volume rose more than 6%, thanks in part to strength across large enterprise platforms.

The other big product launch in 2024 was PayPal Everywhere, which went live in early September. The initiative offers 5% cash back for using a PayPal debit card within the mobile app.

“The improvements we made to branded checkout, peer-to-peer, and Venmo, plus the progress we made on our price-to-value strategy, are beginning to show up in our results,” Chriss said in the earnings statement.

The company will hold an earnings call at 8:00 A.M. Eastern time.