PayPal earnings top estimates, but revenue outlook falls short

PayPal reported second-quarter earnings that topped Wall Street estimates on Wednesday, but its third-quarter revenue outlook fell short.

Here’s how the company did compared with what Wall Street expected:

  • Earnings per share: 58 cents vs. 57 cents, forecast by Thomson Reuters
  • Revenue: $3.86 billion vs. $3.81 billion, forecast by Thomson Reuters

For the third-quarter, PayPal’s profit forecast was in-line with analyst expectations, but its revenue outlook fell short. The company said it expects adjusted earnings per share between 53 cents and 55 cents on revenue between $3.62 billion and $3.67 billion. Analysts had projected third-quarter earnings of 54 cents a share on revenue of $3.71 billion, according to Thomson Reuters consensus estimates.

Shares of PayPal fell more than 3 percent in after-hours trade.

The stock has been on a tear, setting a fresh all-time intraday high of $92.35 in Wednesday’s session. PayPal has gained 24 percent so far in 2018 and more than 56 percent in the past 12 months.

For the second quarter, PayPal’s net income climbed to $703 million, or 58 cents per share, from $554 million, or 46 cents a share, a year earlier.

PayPal also said its board approved up to $10 billion in share buybacks.

The financial technology company also raised its full-year forecast, saying it now expects adjusted earnings per share between $2.32 and $2.35 on revenue between $15.3 billion and $15.5 billion. PayPal previously projected adjusted full-year earnings per share between $2.31 and $2.34 on revenue between $15.2 billion and $15.4 billion.

On Monday, Third Point hedge fund-manager Daniel Loeb revealed that his fund added a new position in PayPal during the second quarter. He forecasts that the stock price will rise to $125 within eighteen months, representing a 43 percent upside to Friday’s close.

“We see parallels between PayPal and other best‐in‐class internet platforms like Netflix and Amazon: high and rising market share, untapped pricing power, and significant margin expansion potential,” Loeb said in a letter to clients.

When reached for comment, a PayPal spokesperson said the company appreciates the investment.

In May, PayPal unveiled a $2.2 billion deal to buy European payments start-up iZettle ahead of its IPO. The Sweden-based company had planned on listing on the Nasdaq in Stockholm prior to the announcement.

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