One of the best ways to get ahead of Wall Street is by looking for the next generation of companies, those that will lead the charge into the new world of technology, energy and so on. One of my favorite next-gen themes is millennials, and within that is the mobilization of payment. A company that finds itself at the forefront of that trend is PayPal Holdings Inc (NASDAQ:PYPL).
PYPL has made online payments the preferred method of person-to-person transactions, and its ownership of payment system Venmo is poised to be a big win.
In fact, the company reported its first-quarter earnings after the close on Wednesday and I was excited to see that Venmo is really starting to have an effect on the bottom line.
PYPL Stock Earnings Rundown
In the first quarter, PYPL stock brought in earnings of 44 cents per share, which beat the consensus estimate by three cents. Revenue was also better than expected at $2.98 billion, up 17.3% year-over-year and $40 million above consensus.
Digging deeper into those headline numbers, payment transactions were up 23% to 1.73 billion and active customer accounts rose to 203 million from 184 million. Total payment volume increased 23% to $99 billion, and within that figure Venmo processed $6.8 billion, more than double what it did last year.
Those numbers are impressive, but what has the stock moving is actually a combination of news of a $5 billion buyback program and increased 2017 guidance.
Bottom Line on PYPL Stock Earnings
Management is now anticipating full-year revenue of $12.52-$12.72 billion, representing 15%-17% annual growth. The current consensus is $12.6 billion. They also raised their non-GAAP 2017 EPS forecasts to $1.74-$1.79 versus the consensus estimate of $1.73.
The report was great overall and the initial reaction is clearly bullish, pushing PYPL to a new all-time closing high on Thursday.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt is currently in the midst of an exciting launch centered around his trademark three-prong investing approach that targets the mega-trends old Wall Street is missing out on. His next-gen investing strategy is delivering enormous profits in stocks and ETFs. Click here for more information on his latest venture.