PayPal Shares Drop Despite Second Quarter Earnings Beat

Shares of online payments company PayPal saw a drop last Wednesday in pre-market trading, despite the company reporting an earnings beat in its second quarter.

It was last Wednesday that PayPal Holdings Inc. reported better-than-expected second quarter but also lowered its guidance. The company now expects full-year revenue growth of 14% to 15% at current spot rates. Previously the forecast expected growth of 16% to 17%.

The company also expects $4.33 billion to $4.38 billion in revenue and 69 cents to 71 cents in adjusted EPS for Q3. The FactSet consensus had expected $4.44 billion and 70 cents, respectively.

Chief Executive Dan Schulman told MarketWatch that the reduced outlook was the result of delayed partner implementations. Schulman remarked that PayPal would eventually realize impact from the partnerships subject to implementation delays, saying the revenues “are just a matter of when, not if.”

PayPal reported net income of $823 million, or 69 cents, for the second quarter. This is an increase from $526 million, or 44 cents, in the year ago quarter.

Adjusted earnings per share hit 86 cents from 58 cents a year earlier, and beat the FactSet consensus of 69 cents.

Revenue hit $4.31 billion, an increase from $3.86 billion from the year ago quarter. Analysts had been expecting $4.33 billion. Total payment volume increase to $172 billion from $139 billion. It also was inline with expectations.

The company’s Venmo unit saw $24 billion in volume and total peer-to-peer volume represented $46 billion.
There were 9 million net new active accounts added in the period.

According to Schulman, the company is in the “final stages” of its commercial agreement with MercadoLibre.
PayPal shares have seen gains of 44% so far this year.

Disclaimer: We have no position in Paypal Holdings Inc. (NASDAQ: PYPL) and have not been compensated for this article.