Dan Schulman, chairman and CEO of PayPal Holdings Inc., arrives at the morning session of Allen & Co.’s media and technology conference. in Sun Valley, Idaho, USA on Wednesday, July 10, 2019. The 36th annual event brings together many of America’s richest and most powerful people in media, technology and sports.
Patrick T. Fallon | Bloomberg | Getty Images
Shares of PayPal rose as much as 13% in extended trading on Tuesday after the financial services company issued stronger-than-expected second-quarter results. In its earnings materials, PayPal said it had entered into an information sharing agreement on value creation with Elliott Management.
“As one of PayPal’s largest investors, with an investment of approximately $2 billion, Elliott strongly believes in PayPal’s value proposition. PayPal has an unmatched and industry-leading footprint in its payments business and has right to win in the short and long term.” said Elliott managing partner Jesse Cohn in a PayPal earnings presentation. The news comes a day after Elliott said it had become the lead investor in social media operator Pinterest.
Here’s how PayPal did in the second quarter:
Earnings: 93 cents per share, adjusted, versus 86 cents per share as expected by analysts, according to Refinitiv.Income: $6.81 billion, versus $6.79 billion as analysts expected, according to Refinitiv.
Revenue grew 9% a year earlier, but the company reported a net loss of $341 million, compared with a profit of $1.18 billion in the year-ago quarter. At the end of the quarter, PayPal had 429 million active accounts, up 6% from a year earlier, but below the 432.8 million consensus among analysts polled by StreetAccount.
PayPal highlighted the progress it has made in capital efficiency. It expects to cut costs by $900 million this year and said annualized benefits from the cuts and other changes should save at least $1.3 billion by 2023. PayPal announced a new $15 billion share buyback program of dollars, four years after starting a $10 billion program. .
And along with its agreement with Elliott Management, the company has a “commitment to work with Elliott Investment Management LP on a comprehensive evaluation of capital return alternatives.”
PayPal said it is looking for a replacement for Mark Britto, its chief product officer for the past two years. Britto will retire at the end of this year.
For the full year, PayPal said it expects $3.87 to $3.97 in adjusted earnings per share, down from the $3.81 to $3.93 range it provided. in April. Analysts polled by Refinitiv had expected $3.82 per share.
During the second quarter, PayPal added about 400,000 new net active accounts, which the company calls NNAs. In the first quarter, PayPal reported 2.4 million NNAs, for a total of about 2.8 million in the first half of 2022. But PayPal still intends to add 10 million NNAs throughout the year .
“However, as with all of our forecasts, ANN growth could be impacted by broader economic factors, as the channels that drive organic customer acquisition may be negatively impacted by the decline in consumer sentiment and reduced demand for discretionary goods,” CEO Dan Schulman told analysts. in a conference call.
Despite the after-hours move, PayPal’s stock had fallen 52% so far this year.
This story is developing. Check back for updates.
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