Financial technology firm PayPal Holdings Inc (PYPL) silenced critics who said the company wouldn’t be able to cut it in a more crowded digital payments space with first-quarter results that surpassed analysts’ expectations. PayPal stock surged higher in after-hours trading as investors bought on expectations of even more impressive results in the coming months.
Best Quarter Ever for PYPL
PayPal CEO Dan Schulman said this was his “best quarter ever,” and for good reason. The company posted earnings per share of 37 cents, beating expectations of 35 cents and far surpassing last year’s EPS of 29 cents.
Revenue also beat expectations at $2.54 billion, a 19% increase from a year earlier.
However, the most impressive metric was PayPal’s total payments volumes which, at $81 billion, represented a 29% increase from last year.
The figures suggest that PYPL is not only surviving as the fintech space becomes more crowded, but that the firm is thriving. As big-name firms like Visa Inc (V) and Apple Inc. (AAPL) expand their own online payment offerings, many worried that PayPal would get lost, but the firm’s aggressive acquisitions and expansion efforts appear to be paying off and paving the way for a smooth year.
Venmo Growth Story
One of the biggest catalysts for PayPal’s growth has been Venmo, a payments app that PYPL acquired back in 2013. While analysts have criticized PayPal management for overpaying for smaller payments companies, the Venmo app has proven to be a major asset.
Transaction volumes on Venmo rose 154% from last year, a sign that the service is gaining traction.
At the moment, Venmo doesn’t generate much revenue for PayPal, but Schulman says the company is in the early stages of turning a profit using the service. The app allows users to manage a digital wallet to make and share payments with their friends, and its exponential growth and positive user feedback have made the service an asset.
Now, PayPal is running a program under which merchants pay fees in order to incorporate Venmo into their payment options. So far, the pilot program has 550,000 users.
The Future for PayPal Stock
Looking ahead, PayPal stock could lift even higher as the company continues to expand. PYPL pointed to its One Touch product as a catalyst for growth, saying it has the potential to bring in even more merchant business.
One Touch focuses on converting shoppers into sales by making the buying process as simple as possible. The service allows users to make purchases across several websites and apps after signing in only once.
Wednesday’s earnings release put PayPal stock on many investors’ radars as it proved that the payments firm was able to stand on its own after splitting from eBay Inc (EBAY).
The company’s strategic acquisitions appear to be paying off, as the firm is well positioned to continue growing in the fintech space.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
