Thursday, Jul 30th 2020

PayPal Q2 Earnings: Record performance and accelerating demand


  • On Thursday after hours, PayPal rose 4% after reporting a record second quarter and issuing strong fiscal year guidance that blew past analyst estimates
  • Revenue and earnings exceeded analyst estimates by 5% and 23%, respectively, driven by strong payments volume and new customer account growth
  • Throughout Q2, PayPal consistently saw daily payments volume that historically would have only been be observed around the Black Friday shopping period
  • Net new customer additions also came in very strong for the quarter at 21 million (up 140% year-over-year) - a quarterly value that exceeded the PayPal's net new customer growth over all of 2016
  • Overall strength was driven by accelerating demand for contactless payments and e-commerce adoption, which the company first alluded to on its last quarterly earnings call. In the words of PayPal's CFO this quarter:

"[What at] first felt like a potentially short-lived phenomenon resulting from initial panic and pantry packing and even stimulus checks, has become a much more durable and profound behavioral shift.

We've seen the strongest and most encouraging new customer volume and engagement trends in our history. At the same time, given our exposure to travel and live events, we've watched demand in these verticals essentially grind to a halt.

*Our business has demonstrated its ability to withstand exogenous shocks. And the diversity and scale of our platform is allowing us to outperform even while absorbing meaningful pressures."*

As of this writing, PYPL was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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