PayPal continues to rock ’n roll as profits soared 43% year-on-year (YOY) in the first quarter (1Q/16) driven by total payment volume (TPV) up 29% YOY. However, the transaction margin declined 380 basis points (bps) in the quarter, compared to 1Q/15.
Transaction revenues for 1Q/16 increased 17% YOY to $2.24 billion, compared to $2.26 billion in 4Q/15 and $1.91 billion in 1Q/15.
Besides PayPal, transaction revenue includes PayPal Credit, Venmo, Braintree and Xoom products.
Total net revenues for 1Q/16 grew 19% YOY to $2.54 billion, compared to $2.56 billion in the prior quarter and $2.13 billion in the year ago quarter. Total net revenues includes transactions revenues and value added services such as subscription fees, gateway fees, partnerships and Paydiant products.
Net income for 1Q/16 jumped 43% YOY to $365 million, compared to $367 million in 4Q/15 and $255 million in 1Q/15.
Active accounts for 1Q/16 rose 11% YOY to 184 million, compared to 179.0 million in the prior quarter and 165 million in the year ago quarter. Active accounts represents customers making at least one PayPal payment in the prior 12 months.
Payments transactions for 1Q/16 soared by 26% YOY to 1414 million, compared to 1428 million in 4Q/15 and 1123 million in 1Q/15. Payment transactions excludes transactions via the PayPal gateway and Paydiant products.
Payments transactions per account for 1Q/16 increased 12% YOY to 28.4, compared to 27.5 million in 4Q/15 and 24.2 million in 1Q/15.
TPV for 1Q/16 grew by 29% YOY to $81.1 billion, compared to $81.5 billion in the prior quarter and $63.0 billion in the year ago quarter. TPV excludes volume via the PayPal gateway and Paydiant products.
The transaction expense rate for 1Q/16 increased 2 bps YOY to 0.93%, compared to 0.92% in 4Q/15 and 0.91% in 1Q/15.
The transaction loss rate for 4Q/15 increased 1 bps YOY to 0.31%, compared to 0.30% in the prior quarter and 0.30% in the year ago quarter.
The transaction margin for 1Q/16 sank by 380 bps YOY to 60.4%, compared to 61.1% in 4Q/15 and 64.2% in 1Q/15.
1Q/15: $1.91 billion
2Q/15: $1.97 billion
3Q/15: $1.98 billion
4Q/15: $2.26 billion
1Q/16: $2.24 billion
TOTAL NET REVENUES
1Q/15: $2.13 billion
2Q/15: $2.29 billion
3Q/15: $2.25 billion
4Q/15: $2.56 billion
1Q/16: $2.54 billion
1Q/15: $255 million
2Q/15: $305 million
3Q/15: $301 million
4Q/15: $367 million
1Q/16: $365 million
1Q/15: 165 million
2Q/15: 169 million
3Q/15: 173 million
4Q/15: 179 million
1Q/16: 184 million
1Q/15: 1123 million
2Q/15: 1161 million
3Q/15: 1216 million
4Q/15: 1428 million
1Q/16: 1414 million
PAYMENT TRANSACTIONS PER ACCOUNT
TOTAL PAYMENT VOLUME
1Q/15: $63.0 billion
2Q/15: $67.5 billion
3Q/15: $69.7 billion
4Q/15: $81.5 billion
1Q/16: $81.1 billion
TRANSACTION EXPENSE RATE
TRANSACTION LOSS RATE
PayPal commented on 1Q/16:
In the first quarter, PayPal gained market share and extended its leadership position. PayPal processed $81 billion in TPV, representing FX-neutral growth of 31%, which was faster than the growth rate of e-commerce. Merchant services TPV growth accelerated to 39% on an FX-neutral basis, and represented 82% of overall TPV for the quarter. PayPal processed $21 billion in mobile payment volume, up 54%, representing 26% of TPV for the quarter. Venmo, the company’s social payments platform, processed $3.2 billion of TPV, up 154% year-over-year.
PayPal added powerful new merchants to the platform, ending the quarter with more than 14 million active merchant accounts. The list of leading brands choosing PayPal now includes Air France, Crate and Barrel, Fresh Direct, Panera Bread, Sephora, and Woolworths in Australia. PayPal extended its partnership with Alibaba Wholesaler during the quarter to include new countries and additional merchants.
PayPal continues to roll out the Pay with Venmo pilot. Early customer feedback has validated the demand for Venmo as a way to pay in apps that millennials use, and PayPal plans to make the product more available to merchants and consumers later this year.
PayPal expanded its One Touch product to an additional 121 markets, making it available in 144 markets. One Touch is one of the most rapidly adopted products launched by PayPal, with approximately 21 million consumers having opted-in globally and over 1 million merchants having enabled One Touch.
The company launched PayPal Commerce, a set of contextual commerce tools, which are currently in beta, that allows merchants to securely sell across email, social shares, blogs, articles, ads, in-page, in-app and anywhere consumers are online or on their mobile devices.
PayPal launched its new mobile app simultaneously in 145 markets with a simpler and more personal experience for consumers. The company celebrated the tenth anniversary of PayPal revolutionizing and transforming mobile payments. Over the past decade, PayPal processed $175 billion in mobile TPV, demonstrating the company’s role as a driving force in making money more available and accessible via mobile devices.
PayPal expects net revenues to grow 16% – 18% on an FX-neutral basis, and 12% – 14% at current spot rates to a range of $2.570 to $2.620 billion. PayPal anticipates that currency will be an approximate 4 point headwind on net revenues. As previously disclosed, PayPal expects an approximate 6 point decline in revenue growth from the first quarter to the second quarter of 2016, primarily as a result of the revenue recognized in the second quarter of 2015 from the sale of a portion of its credit receivables and its amended agreement with Synchrony Financial in 2015.
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