|PayPal Shares Up On Earnings; Revenue Rises 17%|
by Katie Roof ( @Katie_Roof)
January 27, 2016
PayPal reported earnings after the bell Wednesday, and the stock quickly ticked up 6% in after hours trading.The payments company authorized a $2 billion stock repurchase program and reported revenue and earnings that exceeded the company’s full year guidance.
PayPal’s fourth quarter adjusted revenue came in at $2.56 billion, up 17% year-over-year. Adjusted net income was $443 million or 36 cents per share, showcasing 27% growth since the same quarter last year. Analysts surveyed by Thomson Reuters were forecasting 35 centers per share on $2.51 billion in revenue.
Spun off from eBay last July, PayPal has fallen 22% since its high last summer. PayPal is the bigger of the two companies, with a market cap of $39 billion. eBay stands at $32 billion
While some people view PayPal as the digital payments platform of yesteryear, they often don’t recognize that PayPal owns Braintree, the mobile payments system that powers scores of apps, ranging from Uber to Airbnb. In other words, every time you take an Uber, PayPal makes money!
PayPal is also the owner of Venmo, a peer-to-peer mobile payments app that is very popular with Millennials. Venmo has done little to monetize, but it is expanding these initiatives.
Yet it is a competitive landscape for digital payments, as Apple, Square and Android continue to make strides in this space.
James Cakmak, analyst at Monness Crespi Hardt, wrote in a research note on Monday that “PayPal’s competitors function on a far leaner basis and we believe the company can operate with significantly more efficiency.”
On the investor relations call Wednesday, PayPal CEO Dan Schulman said “payments is a hard business to crack,” adding “our biggest competition is our ability to execute against our game plan.”
PayPal also acquired Xoom last year, a company that specializes in overseas transfers.
PayPal closed Wednesday at $31.59.