Global payments provider PayPal (NASDAQ: PYPL) on Wednesday reported Q1 2021 net revenues of $6.03 billion, up 29% year-over-year, and beating the $5.9 billion estimate of analysts surveyed by TipRanks.
PayPal said non-GAAP earnings per share (EPS) was $1.22, 20 cents better than Seeking Alpha’s estimate, and GAAP EPS was 92 cents, 28 cents ahead of estimates. GAAP EPS increased 1,200% over Q1 2020 and non-GAAP EPS was up 84%.
The stock price was up more than 4% in after-market trading following the release of the earnings results.
More than 14.5 million net new active accounts were added in the quarter as total payment volume (TPV) rose 46% to $285 billion. The company said it has 392 million active accounts and expects to add between 52 million and 55 million in 2021. Merchants on the platform now exceed 33 million.
“Customers across the world have clearly embraced the digital economy and PayPal has become the [choice of many],” Dan Schulman, president and CEO, said on the investor earnings call. “We continue to see a strong demand for a comprehensive set of services from both our merchants and consumers.”
Schulman added that PayPal is not expecting consumers to alter their behaviors, even in a post-COVID-19 world.
Operating income grew 162% year-over-year on a GAAP basis to $1.04 billion, and 84% on a non-GAAP basis to $1.67 billion.
In its earnings release, PayPal said the numbers represent the “strongest first-quarter results in PayPal’s history.”
“Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy,” Schulman said. “Our addressable market continues to grow as we launch new products and services for our 392 million active accounts.”
John Rainey, CFO and EVP of global customer operations, said the results have caused PayPal to increase its full-year guidance.
The company projected full-year 2021 GAAP EPS to be in the range of $3.33, compared to $3.54 in 2020, and non-GAAP EPS to grow about 21% to $4.70.
In Q1, PayPal conducted 4.4 billion payment transactions, up 34% year-over-year, powered by Merchant Services, which grew 54% on a spot basis and 50% FXN (FXN refers to FX-neutral results, which are calculated by translating the current period local currency results by the prior period exchange rate). Merchant Services represented 94% of total TPV.
Each active account conducted an average of 42.2 payment transactions on a trailing 12-month basis, the company said, a 7% increase over the prior 12-month period.
PayPal’s cash, cash equivalents and investments totaled $19.1 billion as of March 31, and its debt totaled $8.9 billion. Cash flow from operations was $1.76 billion, growing 24%, and free cash flow was $1.54 billion, growing 27%.
In the quarter, PayPal repurchased approximately 5.3 million shares of common stock.
PayPal said it expects revenues to grow about 19% in Q2 at current spot rates, to $6.25 billion, and GAAP EPS of about 76 cents compared to $1.29 in Q2 2020. Non-GAAP EPS will grow about 5% to $1.12, it said.
In terms of companywide initiatives, PayPay reported strong performances across the board. Its Global Pay Later initiatives generated more than $1 billion in total TPV transactions in Q1, up 36% from Q4, and saw 3.3 million unique consumers, up 19% versus Q4. The service is used by over 330,000 unique merchants, a 33% growth in merchant count over Q4.
“Early results continue to show a 15% engagement lift in transactions and TPV,” Schulman said.
Venmo contributed $51.4 billion TPV, up 63% year-over-year. In April, PayPal announced users of its Venmo app could buy and sell cryptocurrencies. Customers using crypto on Venmo can choose from four types of cryptocurrency: Bitcoin (BTC-USD), Ethereum (ETH-USD), Bitcoin Cash (BCH-USD) and Litecoin (LTC-USD). Venmo customers can buy cryptocurrencies for as little as $1 using either the available balance in their Venmo accounts or a linked bank account or debit card. Customers can also share their crypto journey on the Venmo feed for other Venmo customers to see and learn from.
In March, PayPal introduced Checkout with Crypto, an offering that enables PayPal Wallet holders of cryptocurrencies such as Bitcoin to use that currency at checkout and PayPal will automatically convert the payment to U.S. dollars with no additional integrations or fees for businesses. Transactions in other currencies will be settled based on PayPal conversion rates, the company said.
Also in March, PayPal acquired Curv, a provider of cloud-based infrastructure for digital asset securities such as cryptocurrencies. The payment provider first announced in November that U.S. account holders could buy, sell and hold cryptocurrencies in their PayPal wallets, with a weekly purchase limit of $20,000.
Schulman said the company has an “extensive roadmap” for cryptocurrency products and will work with global and local governments as well as financial institutions to ensure those products meet the needs of consumers and all regulatory requirements.
PayPal saw a 31% increase in cross-border transactions (CBT) in Q4, and that continued in Q1, with CBT TPV reaching approximately $48 billion, up 44% on an FXN basis. Schulman said the company has signed an agreement with Alibaba — the Chinese equivalent of Amazon — that will allow consumers outside China to use PayPal to purchase items on the e-commerce platform.
A deal was also reached with Flutterwave, an African-based fintech company offering payment infrastructure for global merchants in Africa, and an agreement was made with TelrShops, a United Arab Emirates e-commerce platform that sells throughout the Middle East.