GAAP EPS grew 33% to $0.42; non-GAAP EPS grew 29% to $0.57
Revenue grew 24% to $3.69 billion; 22% FX-neutral revenue growth
SAN JOSE, Calif.--(BUSINESS WIRE)--
Global technology platform and digital payments leader PayPal Holdings,
Inc. (NASDAQ: PYPL) today announced first quarter results for the period
ended March 31, 2018.
"After a strong 2017, we entered 2018 with continued momentum.
Our partner relationships in the U.S. and across the globe continue
to grow and flourish. As the digital economy gathers speed, we
are excited to provide new and innovative capabilities to better serve
our consumer and merchant customers," said Dan Schulman, President and
CEO of PayPal.
Financial highlights for first quarter 2018 include:
-
Revenue growth of 24% to $3.69 billion, or 22% on a foreign
currency-neutral (FX-neutral) basis
-
GAAP operating margin of 14.5%, with non-GAAP operating margin of 22.5%
-
GAAP EPS growth of 33% to $0.42, with non-GAAP EPS growth of 29% to
$0.57
-
Repurchased 23.6 million shares of common stock, returning $1.83
billion to stockholders
Operating highlights for first quarter 2018 include:
-
8.1 million active accounts added, with net new actives up 35%
-
2.2 billion payment transactions, up 25%
-
$132 billion in total payment volume (TPV), up 32%, or 27% on an
FX-neutral basis
-
34.7 payment transactions per active account on a trailing twelve
months basis, up 8%
PayPal's expanding value proposition
PayPal processed $132 billion in TPV in the first quarter, representing
growth of 32%, or 27% on an FX-neutral basis. Merchant Services TPV grew
30% on an FX-neutral basis, and represented 87% of overall TPV for the
quarter versus approximately 85% a year ago. eBay Marketplaces volume
grew 6% on an FX-neutral basis.
Person-to-Person (P2P) volume grew 50% to nearly $30 billion, and
represented approximately 23% of TPV in the first quarter. Venmo, the
company's social payments platform, processed more than $40 billion of
TPV over the past twelve months. In the first quarter, Venmo processed
more than $12 billion of TPV, growing 80% over the same period last year.
Driven by strong mobile engagement on our platform, PayPal processed
approximately $49 billion in mobile payment volume in the first quarter,
representing approximately 52% growth year over year. One Touch,
PayPal's innovative checkout experience, ended the first quarter with 92
million consumers opted in. At the end of the first quarter, 8.6 million
merchants offered One Touch.
|
|
|
First Quarter 2018 Financial and
Operating Highlights
|
|
|
|
|
|
First Quarter
|
|
(presented in millions, except per share data and percentages)
|
|
2018
|
|
2017
|
|
YoY Growth
|
|
FX-Neutral
YoY
Growth
|
|
Total Payment Volume (TPV)(1) |
|
$
|
132,364
|
|
|
$
|
100,639
|
|
|
$
|
31,725
|
|
32
|
%
|
|
27%
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
3,685
|
|
|
$
|
2,975
|
|
|
$
|
710
|
|
24
|
%
|
|
22%
|
|
Operating margin
|
|
14.5
|
%
|
|
14.5
|
%
|
|
**
|
0bps
|
|
N/A
|
|
Effective tax rate
|
|
6.8
|
%
|
|
12.3
|
%
|
|
**
|
(558
|
)bps
|
|
N/A
|
|
Net income
|
|
$
|
511
|
|
|
$
|
384
|
|
|
$
|
127
|
|
33
|
%
|
|
N/A
|
|
Earnings per diluted share
|
|
$
|
0.42
|
|
|
$
|
0.32
|
|
|
$
|
0.10
|
|
33
|
%
|
|
N/A
|
|
Net cash (used in) provided by operating activities(2)
|
|
$
|
(349
|
)
|
|
$
|
751
|
|
|
$
|
(1,100
|
)
|
(146
|
%)
|
|
N/A
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
3,685
|
|
|
$
|
2,975
|
|
|
$
|
710
|
|
24
|
%
|
|
22%
|
|
Operating margin
|
|
22.5
|
%
|
|
21.6
|
%
|
|
**
|
88bps
|
|
N/A
|
|
Effective tax rate
|
|
17.9
|
%
|
|
17.8
|
%
|
|
**
|
7bps
|
|
N/A
|
|
Net income
|
|
$
|
692
|
|
|
$
|
534
|
|
|
$
|
158
|
|
30
|
%
|
|
N/A
|
|
Earnings per diluted share
|
|
$
|
0.57
|
|
|
$
|
0.44
|
|
|
$
|
0.13
|
|
29
|
%
|
|
N/A
|
|
Free cash flow(2)
|
|
$
|
(527
|
)
|
|
$
|
603
|
|
|
$
|
(1,130
|
)
|
(187
|
%)
|
|
N/A
|
|
|
|
(1) All metrics are presented consistent with
the updated definitions in the Form 8-K filed on April 10, 2018.
|
|
(2) Cash flow from operations and free cash flow
in the first quarter of 2018 reflect the impact of held for sale
accounting. Adjusting for the impact of held for sale accounting
of $1.3 billion on the U.S. consumer credit portfolio, free cash
flow in the quarter would have been $733 million.
|
|
** Not meaningful.
|
|
|
Cash, Cash Equivalents and Investments - PayPal's cash, cash
equivalents and investments totaled $7.8 billion as of March 31, 2018.
Short-Term Borrowings - PayPal's notes payable totaled $3.0
billion as of March 31, 2018.
2018 Financial Guidance
Full year 2018 revenue and earnings guidance
-
PayPal expects revenue to grow 16 - 18% at current spot rates and 15 -
16% on an FX-neutral basis, to a range of $15.20 - $15.40 billion. As
previously disclosed, full year 2018 revenue guidance includes an
expected impact related to the sale of U.S. consumer credit
receivables to Synchrony Financial of ~3.5 percentage points for full
year 2018, assuming the transaction closes on July 1, 2018.
-
PayPal expects GAAP earnings per diluted share in the range of $1.73 -
$1.76 and non-GAAP earnings per diluted share in the range of $2.31 -
$2.34.
-
Estimated non-GAAP amounts above for the twelve months ending December
31, 2018, reflect adjustments of approximately $1.00 - $1.04 billion,
primarily representing estimated stock-based compensation expense and
related payroll taxes in the range of $885 - $915 million.
Second quarter 2018 revenue and earnings guidance
-
PayPal expects revenue to grow 21% - 22% at current spot rates and 19%
- 20% on an FX-neutral basis, to a range of $3.78 - $3.83 billion.
-
PayPal expects GAAP earnings per diluted share in the range of $0.41 -
$0.43 and non-GAAP earnings per diluted share in the range of $0.54 -
$0.56.
-
Estimated non-GAAP amounts above for the three months ending June 30,
2018, reflect adjustments of approximately $245 - $260 million,
primarily representing estimated stock-based compensation expense and
related payroll taxes in the range of $225 - $235 million.
Please see "Non-GAAP Financial Measures" and "Non-GAAP Measures of
Financial Performance" for important additional information.
Quarterly conference call and webcast
PayPal Holdings, Inc. will host a conference call to discuss first
quarter 2018 results at 2:00 p.m. Pacific Time today. A live webcast of
the conference call, together with a slide presentation that includes
supplemental financial information and reconciliations of certain
non-GAAP measures to their most directly comparable GAAP measures, can
be accessed through the company's Investor Relations website at https://investor.paypal-corp.com.
In addition, an archive of the webcast will be accessible for 90 days
through the same link.
PayPal Holdings, Inc. uses its Investor Relations website (https://investor.paypal-corp.com),
its PayPal Stories Blog (https://www.paypal.com/stories/us),
Twitter handle (@PayPal), Twitter handle (@PayPalNews), LinkedIn page (https://www.linkedin.com/company/paypal),
Facebook page (https://www.facebook.com/PayPalUSA/),
YouTube channel (https://www.youtube.com/paypal),
Dan Schulman's LinkedIn profile (https://www.linkedin.com/in/dan-schulman/),
John Rainey's LinkedIn profile (www.linkedin.com/in/john-rainey-pypl)
and Dan Schulman's Facebook profile (https://www.facebook.com/DanSchulmanPayPal/)
as a means of disclosing information about the company and for complying
with its disclosure obligations under Regulation FD. The information we
post through these channels may be deemed material. Accordingly,
investors should monitor these channels in addition to PayPal's press
releases, SEC filings, public conference calls and webcasts.
About PayPal
Fueled by a fundamental belief that having access to financial services
creates opportunity, PayPal Holdings, Inc. (NASDAQ: PYPL) is committed
to democratizing financial services and empowering people and businesses
to join and thrive in the global economy. Our open digital payments
platform gives PayPal's 237 million active account holders the
confidence to connect and transact in new and powerful ways, whether
they are online, on a mobile device, in an app, or in person. Through a
combination of technological innovation and strategic partnerships,
PayPal creates better ways to manage and move money, and offers choice
and flexibility when sending payments, paying or getting paid. Available
in more than 200 markets around the world, the PayPal platform,
including Braintree, Venmo and Xoom, enables consumers and merchants to
receive money in more than 100 currencies, withdraw funds in 56
currencies and hold balances in their PayPal accounts in 25 currencies.
For more information on PayPal, visit https://www.paypal.com/about.
For PayPal Holdings, Inc. financial information, visit https://investor.paypal-corp.com.
Presentation
All growth rates represent year-over-year comparisons, except as
otherwise noted. FX-neutral results are calculated by translating the
current period local currency results by the prior period exchange rate.
FX-neutral growth rates are calculated by comparing the current period
FX-neutral results with the prior period results, excluding the impact
from hedging activities. All amounts in tables are presented in U.S.
dollars, rounded to the nearest millions, except as otherwise noted. As
a result, certain amounts and rates may not sum or recalculate using the
rounded dollar amounts provided.
As previously disclosed, we have updated our definitions of Active
Accounts and Total Payment Volume (TPV) to capture the diversification
of PayPal's products and services through strategic partnerships, new
products and acquisitions. Prior period metric results for Active
Accounts, TPV, Number of Payment Transactions, and Payment Transactions
Per Active Account have been revised to reflect the updated definitions
of the metrics. For additional details, please see PayPal's Current
Report on Form 8-K filed with the Securities and Exchange Commission on
April 10, 2018.
Non-GAAP financial measures
This press release includes the following financial measures defined as
"non-GAAP financial measures" by the Securities and Exchange Commission
(SEC): non-GAAP net income, non-GAAP earnings per diluted share,
non-GAAP operating income, non-GAAP operating margin, non-GAAP effective
tax rate and free cash flow. For an explanation of the foregoing
non-GAAP measures, please see "Non-GAAP Measures of Financial
Performance" included in this press release. These measures may be
different from non-GAAP financial measures used by other companies. The
presentation of this financial information, which is not prepared under
any comprehensive set of accounting rules or principles, is not intended
to be considered in isolation of, or as a substitute for, the financial
information prepared and presented in accordance with generally accepted
accounting principles (GAAP). For a reconciliation of these non-GAAP
financial measures to the most directly comparable GAAP measures, see
"Non-GAAP Measures of Financial Performance," "GAAP Operating Margin to
Non-GAAP Operating Margin," "Reconciliation of GAAP Net Income to
Non-GAAP Net Income, GAAP Diluted EPS to Non-GAAP Diluted EPS and GAAP
Effective Tax Rate to Non-GAAP Effective Tax Rate," and "Reconciliation
of Operating Cash Flow to Free Cash Flow and Adjusted Free Cash Flow."
Forward-looking statements
This press release contains forward-looking statements relating to,
among other things, the future results of operations, financial
condition, expectations and plans of PayPal Holdings, Inc. and its
consolidated subsidiaries that reflect PayPal's current projections and
forecasts. Forward-looking statements can be identified by words such as
"may," "will," "would," "should," "could," "expect," "anticipate,"
"believe," "estimate," "intend," "plan," "project," "forecast" and other
similar expressions. Forward-looking statements include, but are not
limited to, statements regarding projected financial results for the
second quarter and full year 2018, and projected future growth of
PayPal's businesses. Forward-looking statements are based upon various
estimates and assumptions, as well as information known to PayPal as of
the date of this press release, and are inherently subject to numerous
risks and uncertainties. Accordingly, actual results could differ
materially from those predicted or implied by forward-looking
statements. Factors that could cause or contribute to such differences
include, but are not limited to: changes in political, business,
economic, market and trade conditions, including any regional or general
economic downturn or crisis and any conditions that affect payments or
e-commerce growth; fluctuations in foreign currency exchange rates; the
competitive, regulatory, payment card association-related and other
risks specific to the PayPal, PayPal Credit, Braintree, Venmo, Xoom and
other products, especially as PayPal continues to expand geographically
and introduce new products and as new laws and regulations related to
payments and financial services come into effect; the impact of PayPal's
customer choice initiatives, including on its funding mix and
transaction expense; PayPal's ability to successfully compete in an
increasingly competitive environment for its businesses, products and
services, including competition for consumers and merchants and the
increasing importance of mobile payments and mobile commerce; the
outcome of legal and regulatory proceedings and PayPal's need and
ability to manage regulatory, tax and litigation risks as its products
and services are offered in more jurisdictions and applicable laws
become more restrictive; changes to PayPal's capital allocation or
management of operating cash; uncertainty surrounding the implementation
and impact of the United Kingdom's formal notification of its intent to
withdraw from the European Union; cyberattacks and security
vulnerabilities in PayPal products and services that could disrupt
business, reduce revenue, increase costs, harm us competitively, or lead
to liability; the effect of management changes and business initiatives;
any changes PayPal may make to its product offerings; the effect of any
natural disasters or other business interruptions on PayPal or PayPal's
customers; PayPal's ability to timely upgrade and develop its technology
systems, infrastructure and customer service capabilities at reasonable
cost; PayPal's ability to maintain the stability, security and
performance of its Payment Platform while adding new products and
features in a timely fashion; the risk that the planned transaction with
Synchrony Financial will not be completed or that we may not realize the
expected benefits of the transaction; risks that planned acquisitions
will not be completed on contemplated terms, or at all, and that any
businesses PayPal may acquire will not perform in accordance with its
expectations; and PayPal's ability to profitably integrate, manage and
grow businesses that have been acquired or may be acquired in the
future. The forward-looking statements in this release do not include
the potential impact of any acquisitions or divestitures that may be
announced and/or completed after the date hereof.
More information about factors that could adversely affect PayPal's
results of operations, financial condition and prospects or that could
cause actual results to differ from those expressed or implied in
forward-looking statements is included under the captions "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in PayPal's most recent annual report on Form
10-K and its subsequent quarterly reports on Form 10-Q, copies of which
may be obtained by visiting PayPal's Investor Relations website at https://investor.paypal-corp.com
or the SEC's website at www.sec.gov.
All information in this release is as of April 25, 2018. For the reasons
discussed above, you should not place undue reliance on the
forward-looking statements in this press release. PayPal assumes no
obligation to update such forward-looking statements.
Copyright © 1999-2018 PayPal. All rights reserved. Other company and
product names may be trademarks of their respective owners.
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Consolidated Balance Sheet
|
|
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
|
|
(In millions, except par value)
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,879
|
|
|
$
|
2,883
|
|
|
Short-term investments
|
|
3,427
|
|
|
2,812
|
|
|
Accounts receivable, net
|
|
258
|
|
|
283
|
|
|
Loans and interest receivable, net
|
|
1,579
|
|
|
1,314
|
|
|
Loans and interest receivable, held for sale
|
|
6,537
|
|
|
6,398
|
|
|
Funds receivable and customer accounts
|
|
19,162
|
|
|
18,242
|
|
|
Prepaid expenses and other current assets
|
|
900
|
|
|
713
|
|
|
Total current assets
|
|
34,742
|
|
|
32,645
|
|
|
Long-term investments
|
|
1,487
|
|
|
1,961
|
|
|
Property and equipment, net
|
|
1,523
|
|
|
1,528
|
|
|
Goodwill |
|
4,338
|
|
|
4,339
|
|
|
Intangible assets, net
|
|
138
|
|
|
168
|
|
|
Other assets
|
|
94
|
|
|
133
|
|
|
Total assets
|
|
$
|
42,322
|
|
|
$
|
40,774
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
187
|
|
|
$
|
257
|
|
|
Notes payable
|
|
3,000
|
|
|
1,000
|
|
|
Funds payable and amounts due to customers
|
|
20,662
|
|
|
19,742
|
|
|
Accrued expenses and other current liabilities
|
|
1,767
|
|
|
1,781
|
|
|
Income taxes payable
|
|
98
|
|
|
83
|
|
|
Total current liabilities
|
|
25,714
|
|
|
22,863
|
|
|
Deferred tax liability and other long-term liabilities
|
|
1,967
|
|
|
1,917
|
|
|
Total liabilities
|
|
27,681
|
|
|
24,780
|
|
|
Equity:
|
|
|
|
|
|
Common stock, $0.0001 par value; 4,000 shares authorized; 1,183 and
1,200 shares outstanding as of March 31, 2018 and December 31, 2017,
respectively
|
|
—
|
|
|
—
|
|
|
Treasury stock at cost, 71 and 47 shares as of March 31, 2018 and
December 31, 2017, respectively
|
|
(3,811
|
)
|
|
(2,001
|
)
|
|
Additional paid-in-capital
|
|
14,287
|
|
|
14,314
|
|
|
Retained earnings
|
|
4,334
|
|
|
3,823
|
|
|
Accumulated other comprehensive loss
|
|
(169
|
)
|
|
(142
|
)
|
|
Total equity
|
|
14,641
|
|
|
15,994
|
|
|
Total liabilities and equity
|
|
$
|
42,322
|
|
|
$
|
40,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
|
|
|
Unaudited Condensed Consolidated Statement of Income
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
3,685
|
|
|
$
|
2,975
|
|
Operating expenses:
|
|
|
|
|
|
|
Transaction expense
|
|
1,275
|
|
|
987
|
|
Transaction and loan losses
|
|
305
|
|
|
300
|
|
Customer support and operations(1) |
|
351
|
|
|
317
|
|
Sales and marketing (1) |
|
285
|
|
|
238
|
|
Product development (1) |
|
258
|
|
|
214
|
|
General and administrative (1) |
|
339
|
|
|
265
|
|
Depreciation and amortization (1) |
|
185
|
|
|
183
|
|
Restructuring and other charges
|
|
153
|
|
|
40
|
|
Total operating expenses
|
|
3,151
|
|
|
2,544
|
|
Operating income
|
|
534
|
|
|
431
|
|
Other income (expense), net
|
|
14
|
|
|
7
|
|
Income before income taxes
|
|
548
|
|
|
438
|
|
Income tax expense
|
|
37
|
|
|
54
|
|
Net income
|
|
$
|
511
|
|
|
$
|
384
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.43
|
|
|
$
|
0.32
|
|
Diluted
|
|
$
|
0.42
|
|
|
$
|
0.32
|
|
Weighted average shares:
|
|
|
|
|
|
|
Basic
|
|
1,192
|
|
|
1,203
|
|
Diluted
|
|
1,217
|
|
|
1,216
|
|
|
|
|
|
|
|
|
(1)Includes stock-based compensation as follows:
|
|
|
|
|
|
|
Customer support and operations
|
|
38
|
|
|
30
|
|
Sales and marketing
|
|
44
|
|
|
28
|
|
Product development
|
|
64
|
|
|
45
|
|
General and administrative
|
|
59
|
|
|
42
|
|
Depreciation and amortization
|
|
4
|
|
|
2
|
|
|
|
$
|
209
|
|
|
$
|
147
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Condensed Consolidated Statement of Cash Flows
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(In millions)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
511
|
|
|
$
|
384
|
|
|
Adjustments:
|
|
|
|
|
|
Transaction and loan losses
|
|
305
|
|
|
300
|
|
|
Depreciation and amortization
|
|
185
|
|
|
183
|
|
|
Stock-based compensation
|
|
205
|
|
|
145
|
|
|
Deferred income taxes
|
|
91
|
|
|
53
|
|
|
Gain on sale of principal loans receivable held for sale, net
|
|
(5
|
)
|
|
(6
|
)
|
|
Cost basis adjustments to loans and interest receivable held for sale
|
|
128
|
|
|
—
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
25
|
|
|
36
|
|
|
Changes in loans and interest receivable held for sale, net
|
|
(1,291
|
)
|
|
6
|
|
|
Accounts payable
|
|
(35
|
)
|
|
(1
|
)
|
|
Income taxes payable
|
|
—
|
|
|
17
|
|
|
Other assets and liabilities
|
|
(468
|
)
|
|
(366
|
)
|
|
Net cash (used in) provided by operating activities
|
|
(349
|
)
|
|
751
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
(178
|
)
|
|
(148
|
)
|
|
Changes in principal loans receivable, net
|
|
738
|
|
|
(136
|
)
|
|
Purchases of investments
|
|
(5,275
|
)
|
|
(7,109
|
)
|
|
Maturities and sales of investments
|
|
4,291
|
|
|
5,583
|
|
|
Funds receivable
|
|
429
|
|
|
567
|
|
|
Net cash provided by (used in) investing activities
|
|
5
|
|
|
(1,243
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
13
|
|
|
12
|
|
|
Purchases of treasury stock
|
|
(1,825
|
)
|
|
(517
|
)
|
|
Tax withholdings related to net share settlements of equity awards
|
|
(335
|
)
|
|
(101
|
)
|
|
Borrowings under financing arrangements, net of repayments
|
|
2,075
|
|
|
—
|
|
|
Funds payable and amounts due to customers
|
|
865
|
|
|
552
|
|
|
Net cash provided by (used in) financing activities
|
|
793
|
|
|
(54
|
)
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
|
|
(7
|
)
|
|
11
|
|
|
Net change in cash, cash equivalents and restricted cash
|
|
442
|
|
|
(535
|
)
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
8,285
|
|
|
6,119
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
8,727
|
|
|
$
|
5,584
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
8
|
|
|
$
|
1
|
|
|
Cash paid (refund received) for income taxes, net
|
|
$
|
(6
|
)
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Summary of Consolidated Net Revenues
|
|
|
|
We earn revenue from the following types of transactions:
|
|
|
|
•
|
|
Transaction revenues: Net transaction fees charged to
consumers and merchants on a transaction basis primarily based on
the volume of activity, or Total Payment Volume ("TPV"), processed
through our Payments Platform, including our PayPal, PayPal
Credit, Venmo, Braintree and Xoom products.
|
|
•
|
|
Other value added services: Net revenues derived
principally from interest and fees earned on our loans and
interest receivable, net and held for sale portfolio, subscription
fees, gateway fees, gains on sale of participation interests in
certain consumer loans receivable and working capital loans and
advances, revenue share we earn through partnerships, interest
earned on certain PayPal customer account balances, and fees
earned through other services that we provide to consumers and
merchants.
|
|
|
|
Net Revenues by Type
|
|
Three Months Ended
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
|
March 31,
2017
|
|
|
|
(In millions, except percentages)
|
|
Transaction revenues(1) |
|
$
|
3,197
|
|
|
$
|
3,244
|
|
|
$
|
2,858
|
|
|
$
|
2,775
|
|
|
$
|
2,624
|
|
|
Current quarter vs prior quarter
|
|
(1
|
)%
|
|
14
|
%
|
|
3
|
%
|
|
6
|
%
|
|
(1
|
)%
|
|
Current quarter vs prior year quarter
|
|
22
|
%
|
|
23
|
%
|
|
22
|
%
|
|
18
|
%
|
|
16
|
%
|
|
Percentage of total
|
|
87
|
%
|
|
87
|
%
|
|
88
|
%
|
|
88
|
%
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other value added services(1) |
|
488
|
|
|
500
|
|
|
381
|
|
|
361
|
|
|
351
|
|
|
Current quarter vs prior quarter
|
|
(2
|
)%
|
|
31
|
%
|
|
6
|
%
|
|
3
|
%
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
39
|
%
|
|
47
|
%
|
|
15
|
%
|
|
19
|
%
|
|
24
|
%
|
|
Percentage of total
|
|
13
|
%
|
|
13
|
%
|
|
12
|
%
|
|
12
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
3,685
|
|
|
$
|
3,744
|
|
|
$
|
3,239
|
|
|
$
|
3,136
|
|
|
$
|
2,975
|
|
|
Current quarter vs prior quarter
|
|
(2
|
)%
|
|
16
|
%
|
|
3
|
%
|
|
5
|
%
|
|
—
|
%
|
|
Current quarter vs prior year quarter
|
|
24
|
%
|
|
26
|
%
|
|
21
|
%
|
|
18
|
%
|
|
17
|
%
|
|
(1) Prior period amounts have been revised to conform to
current period presentation. For additional details, please see
PayPal's Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 10, 2018.
|
|
Net Revenues by Geography
|
|
Three Months Ended
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
|
March 31,
2017
|
|
|
|
(In millions, except percentages)
|
|
U.S. net revenues
|
|
$
|
2,023
|
|
|
$
|
2,045
|
|
|
$
|
1,743
|
|
|
$
|
1,690
|
|
|
$
|
1,606
|
|
|
Current quarter vs prior quarter
|
|
(1
|
)%
|
|
17
|
%
|
|
3
|
%
|
|
5
|
%
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
26
|
%
|
|
30
|
%
|
|
21
|
%
|
|
20
|
%
|
|
20
|
%
|
|
Percent of total
|
|
55
|
%
|
|
55
|
%
|
|
54
|
%
|
|
54
|
%
|
|
54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International net revenues
|
|
1,662
|
|
|
1,699
|
|
|
1,496
|
|
|
1,446
|
|
|
1,369
|
|
|
Current quarter vs prior quarter
|
|
(2
|
)%
|
|
14
|
%
|
|
3
|
%
|
|
6
|
%
|
|
(3
|
)%
|
|
Current quarter vs prior year quarter
|
|
21
|
%
|
|
21
|
%
|
|
22
|
%
|
|
16
|
%
|
|
14
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
18
|
%
|
|
21
|
%
|
|
22
|
%
|
|
20
|
%
|
|
18
|
%
|
|
Percent of total
|
|
45
|
%
|
|
45
|
%
|
|
46
|
%
|
|
46
|
%
|
|
46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
3,685
|
|
|
$
|
3,744
|
|
|
$
|
3,239
|
|
|
$
|
3,136
|
|
|
$
|
2,975
|
|
|
Current quarter vs prior quarter
|
|
(2
|
)%
|
|
16
|
%
|
|
3
|
%
|
|
5
|
%
|
|
—
|
%
|
|
Current quarter vs prior year quarter
|
|
24
|
%
|
|
26
|
%
|
|
21
|
%
|
|
18
|
%
|
|
17
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
22
|
%
|
|
26
|
%
|
|
22
|
%
|
|
20
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Unaudited Supplemental Operating Data
|
|
|
|
|
|
Three Months Ended,
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
September 30,
2017
|
|
June 30,
2017
|
|
March 31,
2017
|
|
|
|
(In millions, except percentages)
|
|
Active accounts(1),(2) |
|
237
|
|
|
229
|
|
|
220
|
|
|
212
|
|
|
205
|
|
|
Current quarter vs prior quarter
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
3
|
%
|
|
3
|
%
|
|
Current quarter vs prior year quarter
|
|
15
|
%
|
|
15
|
%
|
|
13
|
%
|
|
12
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of payment transactions(1),(3) |
|
2,214
|
|
|
2,240
|
|
|
1,941
|
|
|
1,817
|
|
|
1,771
|
|
|
Current quarter vs prior quarter
|
|
(1
|
)%
|
|
15
|
%
|
|
7
|
%
|
|
3
|
%
|
|
(1
|
)%
|
|
Current quarter vs prior year quarter
|
|
25
|
%
|
|
25
|
%
|
|
25
|
%
|
|
22
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment transactions per active account(1),(4) |
|
34.7
|
|
|
34.0
|
|
|
33.3
|
|
|
32.8
|
|
|
32.2
|
|
|
Current quarter vs prior quarter
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
Current quarter vs prior year quarter
|
|
8
|
%
|
|
8
|
%
|
|
8
|
%
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payment Volume(1),(5) |
|
$
|
132,364
|
|
|
$
|
132,515
|
|
|
$
|
115,224
|
|
|
$
|
107,800
|
|
|
$
|
100,639
|
|
|
Current quarter vs prior quarter
|
|
—
|
%
|
|
15
|
%
|
|
7
|
%
|
|
7
|
%
|
|
—
|
%
|
|
Current quarter vs prior year quarter
|
|
32
|
%
|
|
32
|
%
|
|
30
|
%
|
|
23
|
%
|
|
22
|
%
|
|
(FXN) Current quarter vs prior year quarter
|
|
27
|
%
|
|
29
|
%
|
|
28
|
%
|
|
25
|
%
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Expense Rate(1),(6) |
|
0.96
|
%
|
|
0.96
|
%
|
|
0.96
|
%
|
|
0.99
|
%
|
|
0.98
|
%
|
|
Transaction and Loan Loss Rate(1),(7) |
|
0.23
|
%
|
|
0.03
|
%
|
|
0.32
|
%
|
|
0.29
|
%
|
|
0.30
|
%
|
|
Transaction Margin(8) |
|
57.1
|
%
|
|
65.1
|
%
|
|
54.8
|
%
|
|
56.3
|
%
|
|
56.7
|
%
|
|
Amounts in the table are rounded to the nearest million, except as
otherwise noted. As a result, certain amounts may not recalculate
using the rounded amounts provided.
|
|
(1) Prior period results have been revised to reflect
updated definitions of the metrics presented in this table. For
additional details, please see PayPal's Current Report on Form 8-K
filed with the Securities and Exchange Commission on April 10, 2018.
|
|
(2) An active account is an account registered directly
with PayPal or a platform access partner that has completed a
transaction through our Payments Platform, not including
gateway-exclusive transactions, within the past 12 months.
|
|
(3) Payment transactions are the total number of
payments, net of payment reversals, successfully completed through
our Payments Platform, not including gateway-exclusive transactions.
|
|
(4) Number of payment transactions per active account
reflects the total number of payment transactions within the
previous 12 month period, divided by active accounts at the end of
the period.
|
|
(5) TPV is the value of payments, net of reversals,
successfully completed through our Payments Platform or enabled by
PayPal via a partner payment solution, not including
gateway-exclusive transactions.
|
|
(6) Transaction expense rate is calculated by dividing
transaction expense by TPV.
|
|
(7) Transaction and loan loss rate is calculated by
dividing transaction and loan loss by TPV.
|
|
(8) Transaction margin is total revenue less transaction
expense and transaction and loan loss, divided by total revenue.
|
|
|
|
|
PayPal Holdings, Inc.
Non-GAAP Measures of Financial
Performance
To supplement the company's condensed consolidated financial statements
presented in accordance with generally accepted accounting principles,
or GAAP, the company uses non-GAAP measures of certain components of
financial performance. These non-GAAP measures include non-GAAP net
income, non-GAAP net income per diluted share, non-GAAP operating
income, non-GAAP operating margin, non-GAAP effective tax rate and free
cash flow.
These non-GAAP measures are not in accordance with, or an alternative
to, measures prepared in accordance with GAAP and may be different from
non-GAAP measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules or
principles. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with the company's results of
operations as determined in accordance with GAAP. These measures should
only be used to evaluate the company's results of operations in
conjunction with the corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of all
non-GAAP measures included in this press release can be found in the
tables included in this press release.
These non-GAAP measures are provided to enhance investors' overall
understanding of the company's current financial performance and its
prospects for the future. Specifically, the company believes the
non-GAAP measures provide useful information to both management and
investors by excluding certain expenses, gains and losses, as the case
may be, that may not be indicative of its core operating results and
business outlook. In addition, because the company has historically
reported certain non-GAAP results to investors, the company believes
that the inclusion of non-GAAP measures provides consistency in the
company's financial reporting.
For its internal budgeting process, and as discussed further below, the
company's management uses financial measures that do not include
stock-based compensation expense, employer payroll taxes on stock-based
compensation, amortization or impairment of acquired intangible assets,
impairment of goodwill, restructuring-related charges, other certain
gains, losses, benefits or charges that are not indicative of the
company's core operating results and the income taxes associated with
the foregoing. In addition to the corresponding GAAP measures, the
company's management also uses the foregoing non-GAAP measures in
reviewing the financial results of the company.
The company excludes the following items from non-GAAP net income,
non-GAAP net income per diluted share, non-GAAP operating income,
non-GAAP operating margin and non-GAAP effective tax rate:
Stock-based compensation expense and related employer payroll taxes.
This consists of expenses for equity awards under our equity incentive
plans. We exclude stock-based compensation expense from our non-GAAP
measures primarily because they are non-cash expenses. The related
employer payroll taxes are dependent on our stock price and the timing
and size of exercises and vesting of equity awards, over which
management has limited to no control, and as such management does not
believe it correlates to the operation of our business.
Amortization or impairment of acquired intangible assets, impairment
of goodwill, and transaction expenses from the acquisition or disposal
of a business. We incur amortization or impairment of acquired
intangible assets and goodwill in connection with acquisitions and may
incur significant gains or losses or transactional expenses from the
acquisition or disposal of a business and therefore exclude these
amounts from our non-GAAP measures. We exclude these items because
management does not believe they are reflective of our ongoing operating
results.
Restructuring. These consist of expenses for employee severance
and other exit and disposal costs. The company excludes significant
restructuring charges primarily because management does not believe they
are reflective of ongoing operating results.
Certain other significant gains, losses, benefits, or charges that
are not indicative of the company's core operating results. These
are significant gains, losses, benefits, or charges during a period that
are the result of isolated events or transactions which have not
occurred frequently in the past and are not expected to occur regularly
in the future. The company excludes these amounts from its non-GAAP
results because management does not believe they are indicative of its
current or ongoing operating results.
Tax effect of non-GAAP adjustments. This adjustment is made to
present stock-based compensation and the other amounts described above
on an after-tax basis consistent with the presentation of non-GAAP net
income.
The company also uses free cash flow, a non-GAAP measure. Free cash flow
represents operating cash flows less purchases of property and
equipment. The company considers free cash flow to be a liquidity
measure that provides useful information to management and investors
about the amount of cash generated by the business after the purchases
of property, buildings, and equipment, which can then be used to, among
other things, invest in the company's business, make strategic
acquisitions, and repurchase stock. A limitation of the utility of free
cash flow as a measure of financial performance is that it does not
represent the total increase or decrease in the company's cash balance
for the period.
In addition to the non-GAAP measures discussed above, the company also
analyzes certain measures, including net revenues and operating
expenses, on an FX-neutral basis to better measure the comparability of
operating results between periods. The company believes that changes in
foreign currency exchange rates are not indicative of the company's
operations and evaluating growth in net revenues and operating expenses
on an FX-neutral basis provides an additional meaningful and comparable
assessment of these measures to both management and investors.
FX-neutral results are calculated by translating the current period's
local currency results with the prior period's exchange rate. FX-neutral
growth rates are calculated by comparing the current period's FX-neutral
results by the prior period's results, excluding the impact from hedging
activities.
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of GAAP Operating Margin to Non-GAAP Operating
Margin
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(In millions, except percentages)
|
|
|
|
(unaudited)
|
|
GAAP operating income
|
|
$
|
534
|
|
|
$
|
431
|
|
|
Stock-based compensation expense and related employer payroll taxes
|
|
241
|
|
|
149
|
|
|
Amortization of acquired intangible assets
|
|
29
|
|
|
23
|
|
|
Restructuring
|
|
25
|
|
|
40
|
|
|
Total non-GAAP operating income adjustments
|
|
295
|
|
|
212
|
|
|
Non-GAAP operating income
|
|
$
|
829
|
|
|
$
|
643
|
|
|
Non-GAAP operating margin
|
|
22
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP Net Income,
|
|
GAAP Diluted EPS to Non-GAAP Diluted EPS,
|
|
and GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(In millions, except per share data and percentages)
|
|
|
|
(unaudited)
|
|
GAAP income before income taxes
|
|
$
|
548
|
|
|
$
|
438
|
|
|
GAAP income tax expense
|
|
37
|
|
|
54
|
|
|
GAAP net income
|
|
511
|
|
|
384
|
|
|
Non-GAAP adjustments to net income:
|
|
|
|
|
|
Non-GAAP operating income adjustments (see table above)
|
|
295
|
|
|
212
|
|
|
Other(1) |
|
3
|
|
|
—
|
|
|
Tax effect of non-GAAP adjustments
|
|
(117
|
)
|
|
(62
|
)
|
|
Non-GAAP net income
|
|
$
|
692
|
|
|
$
|
534
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
GAAP
|
|
$
|
0.42
|
|
|
$
|
0.32
|
|
|
Non-GAAP
|
|
$
|
0.57
|
|
|
$
|
0.44
|
|
|
Shares used in GAAP diluted share calculation
|
|
1,217
|
|
|
1,216
|
|
|
Shares used in non-GAAP diluted share calculation
|
|
1,217
|
|
|
1,216
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
7
|
%
|
|
12
|
%
|
|
Tax effect of non-GAAP adjustments to net income
|
|
11
|
%
|
|
6
|
%
|
|
Non-GAAP effective tax rate
|
|
18
|
%
|
|
18
|
%
|
|
(1) Tax expense related to the Tax Cuts and Jobs Act.
|
|
|
|
|
|
PayPal Holdings, Inc.
|
|
Reconciliation of Operating Cash Flow to Free Cash Flow and
Adjusted Free Cash Flow
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
(In millions/unaudited)
|
|
Net cash provided by operating activities
|
|
$
|
(349
|
)
|
|
$
|
751
|
|
|
Less: Purchases of property and equipment
|
|
(178
|
)
|
|
(148
|
)
|
|
Free cash flow
|
|
$
|
(527
|
)
|
|
$
|
603
|
|
|
Impact of held for sale accounting presentation on cash flow from
operating activities
|
|
1,260
|
|
|
—
|
|
|
Adjusted free cash flow
|
|
$
|
733
|
|
|
$
|
603
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180425006571/en/
PayPal Holdings, Inc.
Investor Relations Contacts
Gabrielle
Rabinovitch
Vice President, Investor Relations
grabinovitch@paypal.com
or
Akila
Moorthy
Director, Investor Relations
amoorthy@paypal.com
or
Media
Relations Contacts
Martha Cass
Senior Director, Corporate
Communications
mcass@paypal.com
or
Amanda
Miller, 408-219-0563
Director, Corporate Communications
amandacmiller@paypal.com
Source: PayPal Holdings, Inc.
News Provided by Acquire Media