August 12, 2022
PayPal (PYPL) Earnings Q2 2022

Dan Schulman, President and CEO of PayPal Holdings Inc. arrives for the morning session of the Allen & Company Media and Technology Conference on Wednesday, July 10, 2019 in Sun Valley, Idaho, US. The 36th annual event gathers many of America’s wealthiest and most powerful people in media, technology and sports.

Patrick T. Fallon | Bloomberg | Getty Images

PayPal’s shares rose 13% in extended trading Tuesday after the financial-services firm released stronger-than-expected second-quarter results. In its earnings material, PayPal said it has entered into an information-sharing agreement on value creation with Elliott Management.

“As one of PayPal’s largest investors, with approximately $2 billion in investments, Elliott believes strongly in PayPal’s value proposition. PayPal has an unrivaled and industry-leading footprint in its payments businesses and have the right to win in the near and long term. Elliott’s managing partner Jesse Cohn was quoted as saying in a PayPal earnings presentation, The news comes a day after Elliott became a top investor in social-network operator Pinterest.

Here’s how PayPal fared in the second quarter:

  • Earnings: According to Refinitiv, 93 cents per share, adjusted, versus 86 cents per share expected by analysts.
  • revenue: $6.81 billion, versus $6.79 billion expected by analysts, according to Refinitiv.

Revenue increased 9%, but the company reported a net loss of $341 million, compared to a profit of $1.18 billion in the year-ago quarter. PayPal had 429 million active accounts at the end of the quarter, up 6% year over year, but below the 432.8 million consensus among analysts surveyed by StreetAccount.

PayPal emphasized the progress made in capital efficiency. It expects to cut costs by $900 million this year, and said annual gains from cuts and other changes should save at least $1.3 billion in 2023. Four years after PayPal closed its $10 billion program, it announced a new $15 billion share buyback program. ,

And 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 options.” wall street journal informed of In July, Elliott assumed a position at PayPal.

PayPal said it has been seeking a replacement for its chief product officer, Mark Brito, for the past two years. Brito 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, providing a range of $3.81 to $3.93. in april, Analysts polled by Refinitiv were expecting $3.82 per share.

PayPal added nearly 400,000 net new active accounts during the second quarter, which the company calls NNAs. PayPal reported 2.4 million NNAs in the first quarter, up from a total of about 2.8 million in the first half of 2022. But PayPal still intends to add 10 million NNA for the full year.

“However, as with all of our forecasts, NNA growth could be impacted by macroeconomic factors, given that the channels driving organic customer acquisition could be negatively impacted by declining consumer sentiment and decreased demand for discretionary goods. are,” CEO Dan Schulman told analysts. on a conference call.

Despite the after-hours move, PayPal shares are down 52% so far this year.

This story is developing. Please check back for updates.

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