PayPal Holdings Inc. edged above expectations with its quarterly revenue and earnings outlook Wednesday, though the company fell short of a margin metric for the latest quarter due to dynamics within its credit business.
The payments company reported second-quarter net income of $1.03 billion, or 92 cents a share, whereas PayPal
recorded a net loss of $341 million, or 29 cents a share, in the year-earlier period. On an adjusted basis, PayPal earned $1.16 a share, up from 93 cents a share a year prior, while the FactSet consensus was for $1.15 a share.
Revenue increased to $7.29 billion from $6.81 billion, whereas analysts were modeling $7.27 billion.
The company logged $376.5 billion in total payment volume for the period, while analysts had been expecting $368.9 billion.
“We have high confidence that our business is on the right path and we’re seeing clear signs that the investments we’ve made are paying off,” Chief Executive Dan Schulman said in a statement.
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PayPal reported an adjusted operating margin of 21.4% for the second quarter, below the 22% outlook that the company had given previously. In its investor deck, the company attributed the shortfall primarily to its credit portfolio, where PayPal generated less revenue than it had anticipated and increased its loss provisions.
Shares were falling 5% in after-hours trading.
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It still expects to drive at least 100 basis points of operating-margin expansion for the full year, and it also continues to anticipate about $4.95 in adjusted EPS for 2023. PayPal expects second-half revenue to at least match its first-quarter revenue total.
For the third quarter, PayPal expects $1.22 to $1.24 in adjusted earnings per share, along with revenue of about $7.4 billion. The FactSet consensus was for $1.21 in adjusted EPS and $7.3 billion in revenue.