PayPal Holdings reported September-quarter earnings that topped consensus estimates while revenue edged by views. Earnings guidance for PYPL stock for the fourth quarter came in below expectations amid expected higher investments by a new chief executive.
Also, PayPal named a new chief financial officer: Jamie Miller, formerly CFO at consultancy EY. She earlier also had CFO positions at Cargill and General Electric.
Released after the market close on Wednesday, PayPal earnings for the third quarter rose 20% to $1.30 per share on an adjusted basis. Revenue climbed 8% to $7.4 billion.
Analysts expected PayPal earnings of $1.23 a share on revenue of $7.38 billion. A year earlier, PayPal earned $1.08 a share on sales of $6.85 billion.
PYPL Stock: Earnings Guidance Light
Total payment volume processed from merchant customers in the quarter climbed 15% to $387.7 billion. Analysts had projected total payment volume of $379.3 billion.
For the current quarter ending in December, PayPal predicted earnings of $1.36 a share at the midpoint of its outlook. Analysts had called for earnings of $1.40 a share.
New CEO Alex Chriss took the helm in late September.
"We were encouraged by new CEO Alex Chriss strongly emphasizing profitable growth as his top priority and a nod to further cost cuts — but we don't expect the narrative to change until more confidence in the medium-term gross profit growth algorithm emerges, which will take time," said Jefferies analyst Trevor Williams in a note.
At Baird, analyst Colin Sebastian said in a report that Chriss will target "faster product development, narrower focus on profitable growth, and operating cost reductions."
"With incoming CFO Jamie Miller joining next week, with a background in corporate restructuring, it would not surprise us to see further rationalization of the asset base," added Sebastian.
PayPal Stock: Apple Pay Competition
On the stock market today, PYPL stock rose 6.6% to close at 55.06. Heading into the PayPal earnings report, shares were down 26% in 2023.
San Jose, Calif.-based PayPal has evolved from an online checkout site to a mobile shopping and person-to-person payments site. Meanwhile, competition has heated up with Apple, Square-parent Block and others.
PYPL stock has retreated from an all-time high of 310.16, reached on July 26, 2021.
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