PayPal profits jump 86% on pandemic spending shift

Digital payment service said it expects the trend to continue

E-commerce payments processor PayPal Holdings Inc beat Wall Street estimates on Wednesday with an 86 percent increase in quarterly profit, driven by the shift to online spending amid the coronavirus pandemic.

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The company said it expects the trends to continue and said that for the full year it now expects earnings per share to increase about 25 percent on 22 percent revenue growth.

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Three months ago the company had withdrawn full-year guidance because of uncertainty about the economic consequences of the pandemic.

TickerSecurityLastChangeChange %
PYPLPAYPAL HOLDINGS INC.193.32-5.31-2.67%

"Digital payments have become more important and essential than ever," CEO Dan Schulman said.

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The company processed $222 billion in payments over the period, up 30% from a year earlier, adjusted for foreign exchange. The rate of payment growth compares with a year-earlier increase of 26 percent that had slowed to 19 percent in the first quarter when the pandemic broke and retail spending collapsed broadly.

The company added 21.3 million accounts during the quarter, up 137 percent from a year earlier.

Revenue increased 25 percent to $5.26 billion, topping the average analyst estimate of $5.0 billion.

Net income increased to $1.53 billion, or $1.29 per share, in the quarter ended June 30, from $823 million, or 69 cents per share, a year earlier.

The results reflected an unrealized investment gain worth 58 cents a share and included additional loan loss reserves amounting to 7 cents a share, down from the 17-cent reserve addition in the first quarter.

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On an adjusted basis, the company said net income rose to nt $1.26 billion, or $1.07 per share, from $848 million, or 71 cents per share, a year earlier.

Shares of the company were more than 5 percent higher after the bell.

Since last reporting results on May 6, PayPal shares had surged more than 40 percent as an investment play on e-commerce.

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