Paypal Holdings, Inc. · NASDAQ:PYPL

Paypal — Q4 2023 Earnings Presentation

24 slides from Paypal's earnings presentation, Feb 7, 2024

  1. Slide 1: Q4'23 Investor Update

    Q4'23 Investor Update February 7, 2024 © 2024 PayPal Holdings, Inc.

  2. Slide 2: Non-GAAP Financial Measures; Forward-Looking Statements

    Non-GAAP Financial Measures; Forward-Looking Statements This presentation contains non-GAAP measures relating to our performance. These measures may exclude certain expenses, gains and losses that may not be indicative of our core operating results and business outlook, and, in each case, may be dif

  3. Slide 3: Summary

    Summary CEO observations Taking action PayPal has a powerful position to build upon: New, world-class team: • Strong franchise, brand trust, and employee culture. • Hired new CFO, President of Global Markets, heads of • Engaged, global two-sided network at scale. SMB & Consumer, and Chief People Off

  4. Slide 4: Principles for value creation

    Principles for value creation 1 Start with the customer 2 Focus on profitable growth 3 Drive operating leverage over time 4 Set measurable goals and communicate consistently 5 Maintain a strong balance sheet and return excess cash ©2024 PayPal Holdings, Inc. Q4'23 Investor Update • 4

  5. Slide 5: Q4 & FY 2023 snapshot

    Q4 & FY 2023 snapshot (in millions, except % and per share data) Q4'23 FY'23 Q4'23 Total payment volume $409,832 $1,528,579 • Revenue +9% on a spot and FX-neutral (FXN) basis Y/Y growth 15% 13% ◦ Transaction revenue driven by Braintree and PayPal Revenue $8,026 $29,771 branded checkout; OVAS driven

  6. Slide 6: Focused on driving profitable growth

    Y/Y growth FXN Y/Y growth Focused on driving profitable growth Non-GAAP operating margin REVENUE ($M) TRANSACTION MARGIN $ ($M) +9% driven by Braintree, PayPal branded checkout, and interest income Focused on driving transaction margin $ improvement $8,026 $7,383 $7,287 $7,418 $3,671 $3,672 $7,040 $

  7. Slide 7: Account and activity metrics

    Account and activity metrics1 (in millions, except % and TPA) Q4'23 FY'23 Active accounts2 426 426 • Active accounts2 -0.6% (2.5M) sequentially, reflecting churn of unengaged accounts Y/Y growth (2%) (2%) • MAAs3 increased slightly, +1%. More than half of total active Monthly active accounts (MAA) 3

  8. Slide 8: Total payment volume (TPV) & revenue

    Total payment volume (TPV) & revenue (in millions, except %) Q4'23 FY'23 Total payment volume $409,832 $1,528,579 • TPV +15% and +13% FXN, driven by PSP1 +29% FXN, PayPal branded checkout2 +5% FXN, and Venmo +8% Y/Y growth 15% 13% • Transaction revenue +9%, accelerated 2pts sequentially, FXN Y/Y gro

  9. Slide 9: TPV mix across PayPal's payments platform

    TPV mix across PayPal’s payments platform FY'22 FY'23 1 FXN GROWTH 5% 6% PayPal branded checkout 1. PayPal branded checkout does not include % OF TOTAL 30% 29% volume associated with eBay or PayPal P2P (peer to peer). PSP (unbranded card FXN GROWTH 39% 30% 2. PSP (unbranded card processing) primaril

  10. Slide 10: Transaction margin and non-GAAP operating margin

    Transaction margin and non-GAAP operating margin (in millions, except %) Q4'23 FY'23 Transaction margin $ $3,672 $13,704 • Transaction margin $ improved 3.5pts sequentially, driven by minimal headwind from merchant contractual compensation Y/Y growth —% (1%) vs. Q3’23, Braintree, and PayPal branded

  11. Slide 11: Free cash flow (FCF) and capital allocation

    Free cash flow (FCF) and capital allocation (in millions, except %) Q4'23 FY'23 Free cash flow $2,469 $4,220 • Free cash flow of $2.5B, which includes a $1.7B net positive impact of originating European buy now, pay later (BNPL) Y/Y growth 72% (17%) receivables as held for sale (HFS) and the subsequ

  12. Slide 12: Guidance

    Guidance Q1'24 guidance FY'24 guidance 1 Mid-single digit growth 2 In line with prior year Non-GAAP EPS Non-GAAP EPS (Q1’23 non-GAAP EPS of $1.17) (FY’23 non-GAAP EPS of $5.10) Non-GAAP effective tax rate Approximately 19%-20% Non-GAAP effective tax rate Approximately 19%-20% Approximately 6.5% spot

  13. Slide 13: Supplemental Information

    Supplemental Information ©2024 PayPal Holdings, Inc.

  14. Slide 14: Account and activity metrics detail

    1 Account and activity metrics detail (in millions, except % and TPA) Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Active accounts 392 403 416 426 429 429 432 435 433 431 428 426 Y/Y growth 21% 16% 15% 13% 9% 6% 4% 2% 1% —% (1%) (2%) Monthly active accounts (MAA) 206 211 2

  15. Slide 15: TPV, revenue, & take rate detail

    TPV, revenue, & take rate detail (in millions, except %) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Total payment volume $336,973 $357,378 $354,508 $376,538 $387,701 $409,832 • International TPV +17% FXN, driven by Y/Y growth 9% 5% 10% 11% 15% 15% strength in Europe and improvement in Asia FXN Y/Y growth 1

  16. Slide 16: Transaction margin (TM) detail

    Transaction margin (TM) detail (in millions, except %) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Transaction expense (TE) $2,988 $3,324 $3,283 $3,541 $3,603 $3,958 • TE rate +4bps; Braintree volume growth partly TE rate 0.89% 0.93% 0.93% 0.94% 0.93% 0.97% offset by favorable PayPal geographic mix Transact

  17. Slide 17: Non-GAAP operating margin detail

    Non-GAAP operating margin detail (in millions, except %) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Customer support and operations $453 $468 $412 $415 $395 $387 Y/Y growth 1% (1%) (9%) (12%) (13%) (17%) Sales and marketing $463 $432 $348 $378 $356 $378 Y/Y growth (1%) (25%) (29%) (24%) (23%) (13%) Technol

  18. Slide 18: Hedging impacts and credit reserve builds and releases

    Hedging impacts and credit reserve builds and releases (in millions, except %) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 (1) Hedging Impacts Favorable (unfavorable) impact to net revenues (exclusive of hedging impact) $ (307) $ (277) $ (139) $ 6 $ 141 $ 120 Hedging impact 156 152 76 34 7 (6) Favorable (un

  19. Slide 19: Reconciliation of GAAP operating expenses to non-GAAP operating expenses

    Reconciliation of GAAP operating expenses to non-GAAP operating expenses Three Months Ended Year Ended December 31, (In Millions/Unaudited) Note December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, 2023 2022 2021 2023 2023 2023 2023 2

  20. Slide 20: Reconciliation of GAAP operating income to non-GAAP operating income

    Reconciliation of GAAP operating income to non-GAAP operating income, and GAAP operating margin to non-GAAP operating margin Three Months Ended Year Ended December 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, 2023 2022 202

  21. Slide 21: Reconciliation of GAAP net income to non-GAAP net income

    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 Three Months Ended Year Ended December 31, (In Millions, Except Percentages and Per Share December 31, September 30, June 30, March 31

  22. Slide 22: Reconciliation of operating cash flow to free cash flow and adjusted free cash flow

    Reconciliation of operating cash flow to free cash flow and adjusted free cash flow Three Months Ended Year Ended December 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, (In Millions/Unaudited) 2023 2022 2021 2023 2023 2023

  23. Slide 23: Definitions

    Definitions Our key metrics are calculated using internal company data based on the activity we measure on our payments platform and compiled from multiple systems, including systems that are internally developed or acquired through business combinations. While the measurement of our key metrics is

  24. Slide 24: PayPal

    > PayPal

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