PayPal earnings beat lands as merger talk hangs over report
PayPal topped second-quarter profit expectations while Reuters-reported takeover interest kept Wall Street focused on deal prospects.
By Frankie Delgado · News Reporter
3 min read
PayPal earnings merger chatter framed Tuesday’s update after the payments company topped Wall Street’s profit forecast and reported signs of steadier activity in its core checkout business.
PayPal said adjusted earnings for the second quarter came to $1.38 a share, ahead of the $1.28 consensus estimate cited by MarketWatch. The company now expects about $5.38 a share for the full year, compared with $5.31 a year earlier.
That marked a step up from PayPal’s earlier guidance, which had called for performance ranging from a low-single-digit decline to slightly positive results.
Shares of PayPal were up slightly in premarket trading Tuesday, according to MarketWatch, as investors weighed the earnings beat against the bigger question hanging over the stock: whether a buyer is circling.
Is PayPal getting bought?
Reuters reported earlier this month that Stripe and private-equity firm Advent International had submitted a bid for PayPal. PayPal did not address the reported bid in its earnings release, according to MarketWatch.
The stock jumped 17% in the trading session after that Reuters report, underscoring how much attention Wall Street is paying to the company’s possible deal value.
A BofA analyst said before the earnings report that PayPal’s near-term share performance would likely depend more on deal developments and investor views of the company’s assets and long-term earnings power than on the quarterly numbers alone, MarketWatch reported.
What did PayPal report in its second quarter?
PayPal said its branded-checkout business grew 2% in the quarter, matching its first-quarter pace. The company described that as stabilization in a segment that includes the familiar PayPal checkout button.
The company also reported 1% growth in transaction-margin dollars, a measure tied to the profitability of payment activity. Excluding interest on customer balances, that growth was 3%.
For the third quarter, PayPal said it expects transaction-margin dollars, again excluding interest on customer balances, to rise from slightly positive to the low single digits.
PayPal’s core business faces tougher competition in digital payments. MarketWatch cited Apple Pay’s wider adoption during the COVID-19 era and browser tools that store payment credentials as pressures on one of PayPal’s traditional selling points.
The company pointed to faster-growing areas outside its old checkout lane. PayPal said volume from debit cards and tap-to-pay options rose more than 60%, while buy-now-pay-later volume increased 26%.
PayPal, which owns Venmo, also said monthly active accounts for the Venmo debit card grew by more than 50%.
On the product side, PayPal said its push into passkey verification has reduced friction at checkout. Passkeys are a login method designed to replace or reduce password use, helping customers verify themselves faster when they pay.
In the company’s release, CEO Enrique Lores said PayPal’s transformation is underway and that the company is executing on priorities aimed at long-term profitable growth.
This story draws on original reporting from MarketWatch.