Revenue of $2.3 billion and growth of 15%, foreign currency
neutral revenue growth of 19% on a non-GAAP pro forma basis
GAAP operating margin up 80 basis points to 15% and non-GAAP
operating margin up 200 basis points on a pro forma basis to
20%
28% GAAP EPS growth to $0.25 and 31% non-GAAP pro forma EPS
growth to $0.31
SAN JOSE, Calif.--(BUSINESS WIRE)-- Global technology platform
and payments leader PayPal Holdings, Inc. (Nasdaq:
PYPL) today announced results for the third
quarter ended September 30, 2015, demonstrating PayPal's strong
start as an independent, public company. For the quarter, PayPal
gained market share, expanded its customer base, deepened
engagement with merchants and consumers and delivered on its
financial commitments.
The company reported record revenue for the period of $2.3
billion, an increase of 15% on a non-GAAP pro forma basis and 19%
on a foreign currency (FX) neutral basis. GAAP net income for the
quarter was $301 million or $0.25 per diluted share, and non-GAAP
net income was $377 million or $0.31 per diluted share, driven
primarily by growing relevancy with its customer base.
"PayPal is entirely focused on digital payments and transforming
money for people around the world. This clear focus and our strong
value proposition allowed us to deliver strong financial results in
the third quarter," said Dan Schulman, President and CEO of PayPal.
"We are operating in a time when change is sweeping through the
financial services industry driven by the rise of mobile technology
and the acceleration of money becoming digital. These two massive
trends play directly to our strengths and we are leveraging this
transformation to extend and accelerate our lead."
Gaining Market Share
In the third quarter, PayPal gained market share and extended
its lead with total payment volume (TPV) growing substantially
faster than the rate of global e-commerce. Total PayPal TPV grew
27% on an FX neutral basis to $70 billion and merchant services TPV
advanced 34% on an FX neutral basis and represented 80% of TPV for
the quarter. The company also continued to accelerate its lead in
mobile payments, processing 345 million transactions, an increase
of 38%.
Expanding PayPal's Customer Base
In the quarter, consumers across the world, and merchants, large
and small signed up for PayPal in record numbers. The company grew
its customer base to 173 million active customers and continued to
add new partners to acquire customers like Macy's, Shell in the UK
and Latin America's largest mobile wireless provider America Movil.
PayPal's large global customer base and strong two sided platform
are tremendous assets and difficult to replicate.
Deepening PayPal's Engagement with Customers
PayPal's aim is not only to grow its customer base, but to
create deeper, more relevant relationships with each of its
customers. In the third quarter, the company processed 1.22 billion
payment transactions, which translates to 27 payment transactions
per active customer account. This is an increase from 24 payment
transactions per active customer account in the same period last
year. $2.1 billion of volume was processed through the Venmo
product, growing over 200%, making it one of the fastest growing
apps in the world by dollar volume.
"These metrics demonstrate the trust that our customers place in
PayPal, and they are increasingly finding more utility and value in
their PayPal accounts," said Schulman.
PayPal Credit
Credit is an important way PayPal deepens its relationships with
its customers, both merchants and consumers. The company is
committed to creating transparent and compelling credit products
that help its customers have better control over their money. The
PayPal Working Capital product achieved a milestone, having
facilitated more than $1 billion in credit to small and mid-sized
merchants since inception. Repeat usage for this product and high
customer satisfaction rates demonstrate that by designing offerings
to serve its customers' needs coupled with global ubiquity, PayPal
can create a virtuous cycle and sustainable platform.
Third Quarter 2015 Financial Highlights
Third Quarter
(presented in millions, except per share data and
percentages)
2015
2014
YoY Growth
FX-Neutral YoY
Growth
Total Payment Volume (TPV)
$69,738
$58,184
$11,554
20%
27%
GAAP
Net revenue
$2,258
$1,975
$283
14%
18%
Net income
$301
$234
$67
29%
N/A
Earnings per diluted share
$0.25
$0.19
$0.06
28%
N/A
Non-GAAP Pro Forma
Net revenue
$2,258
$1,971
$287
15%
19%
Net income
$377
$288
$89
31%
N/A
Earnings per diluted share
$0.31
$0.24
$0.07
31%
N/A
Other Selected Financial and Operational Results
Operating Margin - GAAP operating margin for the third quarter
of 2015 increased to 14.6%, compared to 13.8% for the same period
last year. Non-GAAP operating margin increased to 19.9%, compared
to non-GAAP pro forma operating margin of 17.9% for the same period
last year. Assuming the operating agreement and other commercial
agreements with eBay Inc. entered into in connection with the
spin-off had been in effect during the third quarter of 2014,
non-GAAP operating margin increased 200 basis points during the
third quarter of 2015 compared to the same period last year.
Other Value Added Services (OVAS) - OVAS revenue increased 25%
to $0.3 billion. OVAS benefited from the amendment and extension of
the Company's agreement with Synchrony Financial and the growth of
interest income and fees from its PayPal Credit products.
Taxes - The GAAP effective tax rate for the third quarter of
2015 was 14.0%, compared to 15.2% for the third quarter of 2014.
The non-GAAP effective tax rate was 17.7% compared to the non-GAAP
pro forma effective tax rate of 18.6% for the third quarter of
2014.
Cash flow - PayPal generated $652 million of operating cash flow
and $519 million of free cash flow during the third quarter of
2015.
Cash and cash equivalents and non-equity investments - PayPal's
cash and cash equivalents and non-equity investments totaled $6.7
billion at September 30, 2015.
Expected 2015 Financial Results for PayPal Holdings, Inc.
Full year 2015 - PayPal expects net revenues to grow 15% - 18%
on an FX neutral GAAP basis and 15% - 18% on an FX neutral non-GAAP
pro forma basis. PayPal expects GAAP earnings per diluted share in
the range of $0.94 - $0.98 and non-GAAP pro-forma earnings per
diluted share in the range of $1.23 - $1.27.
Quarterly Conference Call and Webcast
PayPal Holdings, Inc. will host a conference call to discuss
third quarter 2015 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 and non-GAAP pro-forma 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 at
https://investor.paypal-corp.com, its PayPal
Stories Blog
https://www.paypal.com/stories/us, Twitter
handle (@PayPal) and LinkedIn page
https://www.linkedin.com/company/paypalas 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
At PayPal (Nasdaq:
PYPL), we put people at the center of
everything we do. Founded in 1998, we continue to be at the
forefront of the digital payments revolution. Last year we
processed 4 billion payments, of which 1 billion were made on
mobile devices. PayPal gives people better ways to connect to their
money and to each other, helping them safely access and move their
money and offering a choice of how they would like to pay or be
paid. With our 173 million active customer accounts, we have
created an open and secure payments ecosystem that people and
businesses choose to securely transact with each other online, in
stores and on mobile devices. PayPal is a truly global payments
platform that is available to people in 203 markets, allowing
customers to get paid in more than 100 currencies, withdraw funds
to their bank accounts in 57 currencies and hold balances in their
PayPal accounts in 26 currencies. For more information on PayPal,
visit
https://about.paypal-corp.com. For PYPL
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's local currency results by 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 of hedging. All amounts in tables are
presented in U.S. dollars, rounded to the nearest millions, except
as otherwise noted. As a result, certain amounts may not sum or
recalculate using the rounded dollar amounts provided.
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 margin, non-GAAP effective
tax rate and free cash flow. In addition, the company has included
certain pro forma adjustments in its presentation of non-GAAP net
revenue, non-GAAP net income, non-GAAP earnings per diluted share,
and non-GAAP operating margin in this presentation (collectively
referred to as "non-GAAP pro forma measures"). These adjustments
reflect items that are factually supportable, directly attributable
to the separation of the company from eBay Inc. on July 17, 2015,
and expected to have a continuing impact on the company's results
of operations. The company has included these pro forma adjustments
because management believes that they help to facilitate
comparisons of the company's operating results between periods. In
discussing year-over-year comparisons, the company has chosen to
present non-GAAP pro forma measures because it believes that these
measures provide investors a consistent basis for reviewing the
company's performance across different periods. 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," "Reconciliation of
GAAP Operating Margin to Non-GAAP Operating Margin,"
"Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income,
GAAP Diluted EPS to Non-GAAP Diluted EPS and GAAP Effective Tax
Rate to Non-GAAP Effective Tax Rate," "Reconciliation of Operating
Cash Flow to Free Cash Flow," "Reconciliation of GAAP Operating
Margin to Non-GAAP Pro Forma Operating Margin, GAAP Net Income
(Loss) to Non-GAAP Pro Forma Net Income, and GAAP Diluted EPS to
Non-GAAP Pro Forma Diluted EPS," and "Reconciliation of GAAP Net
Revenues by Type to Non-GAAP Pro Forma Net Revenues by Type, and
GAAP Net Revenues by Geography to Non-GAAP Pro Forma Net Revenues
by Geography" included in this press release.
Forward-Looking Statements
This press release contains forward-looking statements relating
to, among other things, the future performance of PayPal Holdings,
Inc. and its consolidated subsidiaries that are based on the
company's current expectations, forecasts and assumptions and
involve risks and uncertainties. These statements include, but are
not limited to, statements regarding expected financial results for
full year 2015 and future growth in the company's businesses.
Actual results could differ materially from those predicted or
implied and reported results should not be considered as an
indication of future performance. Factors that could cause or
contribute to such differences include, but are not limited to:
changes in political, business and economic conditions, including
any regional general economic downturn or crisis and any conditions
that affect ecommerce growth; fluctuations in foreign currency
exchange rates; the company's ability to successfully react to the
increasing importance of mobile payments and mobile commerce; the
company's ability to deal with the increasingly competitive
environment for its businesses, including competition for consumer
and merchants; changes to the company's capital allocation or
management of operating cash; the company's need to manage an
increasingly large enterprise with a broad range of businesses of
varying degrees of maturity and in many different geographies; the
effect of management changes and business initiatives; the
company's need and ability to manage other regulatory, tax and
litigation risks as its services are offered in more jurisdictions
and applicable laws become more restrictive; any changes the
company may make to its product offerings; the competitive,
regulatory, payment card association-related and other risks
specific to the company's PayPal, PayPal Credit, Braintree and
Venmo 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 company's ability to timely upgrade and develop its
technology systems, infrastructure and customer service
capabilities at reasonable cost; the company's ability to maintain
stability and performance of its Payment Platform while adding new
products and features in a timely fashion; and the company'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 affect the company's
operating results is...
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