Technology Stocks
PayPal Inc. - PYPL
An SI Board Since September 2001
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Emcee:  Xenogenetic Type:  Unmoderated
PayPal enables any business or consumer with email to send and receive online payments securely, conveniently and cost-effectively. Our network builds on the existing financial infrastructure of bank accounts and credit cards to create a global, real-time payment solution. We deliver a product ideally suited for small businesses, online merchants, individuals and others currently underserved by traditional payment mechanisms.

We seek to become the global standard for online payments. We offer our account-based system to users in 36 countries including the United States. For the three months ended June 30, 2001, our payment volume to business accounts, which we refer to as Gross Merchant Sales or GMS, totaled $663.0 million. GMS equaled 88.8% of our total payment volume of $746.9 million for this period. Our GMS consists mainly of payments to small businesses. Currently, a majority of these payments relate to sales of goods and services through online auctions. As of September 1, 2001, we had 10.0 million registered users, including 2.0 million business accounts and 8.0 million personal accounts.

The small business market presents us with a potentially significant opportunity. According to the U.S. Census Bureau, approximately 22.6 million small businesses in the U.S., those with less than $1.0 million in annual receipts, generate an aggregate of $1.6 trillion in annual sales. In addition, according to The Nilson Report, only 3.1 million merchants in the U.S. currently accept credit cards, leaving a large number of sellers unable to accept traditional electronic payments. By enhancing the existing payment infrastructure, the PayPal product serves the need of these sellers for a secure, convenient and cost-effective online payment solution.

To send a payment, a PayPal account holder enters the email address of the recipient and the payment amount, and selects a funding source--credit card, bank account or PayPal balance. When a consumer who has not yet registered with PayPal visits the website of a merchant that has integrated our Web Accept feature, the consumer can open a PayPal account from the merchant's site in order to make a purchase.

Payment recipients may use their funds to make payments to others, leave the funds in their PayPal accounts and earn a money market rate of return, or withdraw the funds at any time by requesting a bank account transfer or a check delivered by mail or by using the PayPal ATM/debit card. When a PayPal sender makes an email payment to a recipient who does not yet have a PayPal account, the recipient follows a link in the payment notification email to register with PayPal and gain access to the funds.

We have achieved our rapid growth through a combination of the "push" nature of email payments to non-registered recipients and the "pull" nature of Web Accept. During the three months ended June 30, 2001, our account base grew by an average of 18,000 per day, with virtually no traditional sales or marketing.

During the three months ended June 30, 2001, we processed an average of 165,000 payments per day totaling $8.2 million in daily volume. Our target transaction size ranges from $10 to $1,000. For the same period, 84.7% of our transactions fell within this range, and our average payment amount equaled approximately $50.

We earn revenues primarily from transaction fees on GMS, from international fees and from fees on our ATM/debit card. For the three months ended June 30, 2001, we generated revenues of $19.9 million, of which GMS fees comprised 81.9%, or $16.3 million. For the same period, our transaction fees equaled 2.5% of total payment volume, compared to our transaction processing expenses of 1.4% of total payment volume.

To establish PayPal as the online payment standard, we will continue to identify transactions and markets not served adequately by existing payment systems and to develop product features that improve upon those legacy systems. In addition to growing our customer base, our business strategy includes the following:

o o Expand small business payment volume; o Strengthen our position as the payment method of choice on online auctions; o Expand recurring revenue; o Increase volume of international payments; o Maintain low variable costs, particularly transaction losses; and o Grow PayPal ATM/debit card usage.

Company Information

You may contact us at our principal executive offices, 1840 Embarcadero Road, Palo Alto, California, 94303, or by telephone, (650) 251-1100. You may find us on the web at We do not incorporate by reference any information contained in our website into this prospectus, and you should not consider information contained in our website as part of this prospectus.

We have registered the "PayPal" trademark. This prospectus also contains additional trade names, trademarks and service marks of ours and of other companies. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of, us by these other parties.

We use the terms "balance" and "account balance" to refer to funds that our customers hold until they decide to withdraw the funds, transfer the funds to others through PayPal or invest the funds in the PayPal Money Market Reserve Fund. We pool these customer funds and, as agent for our customers, we deposit the funds in bank accounts or invest the funds in short-term investment grade securities. Beginning in October 2001, we plan to deposit all customer funds not transferred to the PayPal Money Market Reserve Fund into bank accounts. We believe that, in handling customer funds, we act solely as an agent and custodian and not as a depositary.

We use the term "credit cards" to refer, where applicable, to traditional credit cards as well as debit cards participating in the Visa or MasterCard networks.

We use the term "premier account" on our website to describe fee paying accounts held by individuals. We refer to premier accounts and business accounts collectively as "business accounts."

We present operating data, such as payment volume and number of users, only for the PayPal product. To ensure continuity of the information presented, we include data for Confinity, Inc. prior to the merger with Corporation in March 2000.

We expect the payments industry to remain highly competitive. The major competitive factors affecting our business include:

o convenience; o size of the network; o price; o security and privacy; o brand recognition; and o customer service.

We anticipate continued challenges from current competitors, who may enjoy greater competitive resources, as well as by new entrants into the industry. We compete or potentially compete with a number of companies, both directly in the specific online point-to-point payments market and indirectly in the payments market generally. Direct competitors include, eBay Online Payments, which is owned jointly by eBay and Wells Fargo, Yahoo!'s PayDirect, Citibank's c2it, which has distribution through AOL and Microsoft, the U.S. Postal Service, and Western Union's MoneyZap. Potential direct competitors, should they decide to enter the market, may include CheckFree and American Express. Indirectly, we compete with traditional payment methods such as checks, credit cards and wire transfers, in addition to online wallets such as Microsoft's Passport.
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92The Accounting Tack That Makes PayPal’s Numbers Look So Good By Glenn Petersen-8/4/2017
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86Stunning quarter for PayPal.Intelim-4/30/2017
85PayPal Reports First Quarter 2017 Results and Raises Financial Guidance for FullJakeStraw-4/26/2017
84Millenials already tend to spend more than they earn. There is no stopping them Intelim-4/25/2017
83 How Peer-To-Peer Payment Pioneer Venmo Grew Up And Got Serious Under parent cGlenn Petersen14/24/2017
82I cannot say this is completely unthinkable to me. I mean if Snapchat can be a tIntelim-3/15/2017
81Is Venmo the Next Big Social Network? barrons.comJakeStraw-3/9/2017
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79Yesterday I read this blog from a Merchant account provider saying that Paypal jagman141-1/16/2017
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77Lots of insider buys in the last week. I know that should be taken with a grain more100-10/19/2016
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75While at Home Depot the other day I noticed Paypal as a payment option on the sed[-_-]b-9/24/2016
74PayPal Costs Going Up on Visa, MasterCard Deals, Says Canaccord blogs.barrons.coJakeStraw-9/19/2016
73PayPal (PYPL +2.4%) has added about $0.50 per share to its price in the past fewJakeStraw-6/28/2016
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69PayPal Shares Up On Earnings; Revenue Rises 17% by Katie Roof ( @Katie_Roof) TGlenn Petersen-1/27/2016
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