PayPal (PYPL) shares moved higher Friday after the online payments group posted better than expected fourth quarter earnings that were partly clouded by the retirement of CEO Daniel Schulman.
Schulman, who has lead the group since 2014, said he'll step down as CEO at the end of the year, saying in a statement that he wants to "devote more time to my passions outside the workplace". He will, however, continue to serve on the group's board of directors.
PayPal posted December quarter earnings figures that were largely ahead of Street forecasts, as revenues rose 9% to $7.4 billion, generating an adjusted bottom line of $1.24 per share, a tally that was 4 cents ahead of the consensus estimate.
Looking into the first three months of the year, however, PayPal said revenues would likely ease from the prior quarter to around $6.97 billion, with earnings in the region of $1.08 to $1.10 per share, but declined to provide a full-year revenue growth target.
"It's still difficult to accurately assess how the year ahead will play out in terms of e-commerce growth - If you ask 20 experts, you get 20 different opinions," Schulman told investors on a conference call late Thursday. "Our baseline assumption is that discretionary spend will remain under pressure, and global e-commerce growth will be slightly positive year over year."
"That said, we are seeing signs that inflation is beginning to cool, and it's logical to expect that discretionary spend versus nondiscretionary spend will begin to increase," he added. "Longer term, the secular tailwinds that have benefited our business have not changed."
PayPal shares were marked 3.7% higher in early Friday trading to change hands at $81.34 each, a move that would still leave the stock down more than 17.7% over the past six months.
PayPal's mixed report contrasts somewhat to the upbeat spending outlooks from American Express (AXP), Visa (V) and Mastercard (MA), all of which noted resilient consumer spending powered in part by the ongoing travel boom in their fourth quarter earnings reports.
Retailers, however, have been cautioned that a pullback in consumer spending into the first few weeks of the year is notable, while inflation remains elevated broader economic sentiment continues to wane.
"We are very cognizant of the macro pressures impacting consumer spending and global e-commerce growth that will likely continue to depress revenue trends near term, particularly in Europe," said JMP Securities analyst David Scharf, who carries an 'outperform' rating with a $100 price target on the stock.
"That said, we are constructive on PayPal given our sense that the company is meaningfully outperforming its Q1 revenue guidance and that the performance is broad-based across its branded and unbranded products," he added, noting that "the recent integration of Venmo into Amazon, including millions of linked accounts already, and the full ramping of the updated version of its unbranded Braintree offering in the first half of this year could represent significant expansion of the company’s total addressable market."
