PayPal Shares Fall after It Misses Revenue Target, Full-Year Outlook Now Dimmer

Payments giant PayPal today missed estimates for second-quarter revenue and is now looking at a weaker full-year outlook.

Shares take a beating

Soon after PayPal announced that it had missed its Q2 revenue estimates, the company’s shares fell by 6% in after-hours trading. Its revenue grew to $4.31 billion, marking a 12% rise year-on-year. However, it still missed the Refinitiv consensus expectation of $4.33 billion. The adjusted earnings per share (EPS) was $0.72.

While announcing the results, the California-based company also slashed its full-year revenue guidance. It noted that product integration delays and some pricing initiatives, which will be implemented later in the year, will be responsible for the lower than expected yearly outlook. Currency pressures have also been attributed as the cause of weaker yearly results.

Looking at the future of PayPal

The company is now looking at full-year revenue between $17.6 billion and $17.8 billion. The Wall Street expected it chime in about $17.92 billion. The rate of growth will also remain between 14% to 15% for this year. However, despite these issues, the company has raised its guidance for full-year EPS. FactSet states that the company’s total payment volume of $172.36 billion was slightly higher than expected volume of $171.49 billion.

The company’s P2P payments app could not match analyst expectations of $28 billion volume and brought in only $24 billion. The app had 40 million users in the last quarter. However, the company may receive some good news from Venmo. Analysts are watching closely at the results of this solution, hoping it will become profitable.

Its CEO Dan Schulman noted,

“With another quarter of outstanding net new active growth, Venmo continues to offer a significant opportunity for merchants to attract a valuable, engaged, consumer base. We continue to enrich the Venmo experience by making it more engaging and personalized.”

He also said that the net new active accounts have increased by a record 41 million in the past 12 months. Engagement per active account has also increased by 9% to 39 times per year. Venmo, he noted, continues to be a strong point for the company with a 70% growth in total payment volume. Another venture Xoom expanded into 32 new send markets in Europe.

Note that despite some issues in the current quarter, the shares of the payments company are still up 44% year-to-date and have outdone the S&P 500 by 2x.