Paypal Holdings, Inc. · NASDAQ:PYPL
Paypal — Q1 2024 Earnings Presentation
25 slides from Paypal's earnings presentation, Apr 30, 2024
Slide 1: Q1'24 Investor Update
Q1'24 Investor Update April 30, 2024 © 2024 PayPal Holdings, Inc.
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
Slide 3: Positioning PayPal for long-term success
Positioning PayPal for long-term success Driving early progress in Q1'24 • Delivered Q1 results ahead of guidance • Reinvesting in innovation and existing product • Accelerating speed of execution • Now including stock-based compensation in non-GAAP results • Aligning employee incentive plan metrics
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. Q1'24 Investor Update • 4
Slide 5: Q1'24 snapshot
Q1'24 snapshot (in millions, except % and per share data) Q1'24 Total payment volume (TPV) $403,860 • Revenue +9% on a spot basis and +10% on a currency-neutral 2 basis (FXN) vs. guidance of +6.5% spot and +7% FXN Y/Y growth 14% • TM $ +4%, driven by interest on customer balances, PayPal Revenue $7,
Slide 6: Focused on driving profitable growth
Y/Y growth FXN Y/Y growth Focused on driving profitable growth Non-GAAP operating margin REVENUE ($M) TRANSACTION MARGIN $ ($M) +9% driven by Braintree and PayPal branded checkout Focused on driving sustainable transaction margin $ growth $8,026 $7,418 $7,699 $3,672 $7,040 $7,287 $3,348 $3,369 $3,46
Slide 7: Account and activity metrics
Account and activity metrics1 (in millions, except % and TPA) Q1'24 Active accounts2 427 • Active accounts2 +0.4% (+2M) sequentially, driven by lower churn vs. FY'23 and includes growth in PayPal merchant and consumer Y/Y growth (1%) accounts Monthly active accounts (MAA) 3 220 • MAA3 +2%, driven by
Slide 8: TPV & revenue
TPV & revenue (in millions, except %) Q1'24 TPV $403,860 • TPV +14% on a spot and FXN basis, driven by PSP1 +26% FXN, PayPal branded checkout2 +7% FXN, and Venmo +8% Y/Y growth 14% ◦ PayPal branded checkout TPV includes ~1pt benefit from leap FXN Y/Y growth 14% day, and ongoing benefit from global m
Slide 9: TPV mix across PayPal's payments platform
TPV mix across PayPal’s payments platform Q1'23 Q4'23 Q1'24 Prior year period Prior quarter Current quarter 1 FXN GROWTH 6% 5% 7% 1. PayPal branded checkout PayPal branded checkout does not include volume % OF TOTAL 29% 30% 27% associated with eBay or PayPal P2P (peer to peer). PSP (unbranded card F
Slide 10: Transaction margin and non-GAAP operating margin
1,2 Transaction margin and non-GAAP operating margin (in millions, except %) Q1'24 Transaction margin $ $3,461 • Transaction margin $ +4%, driven by interest on customer balances, PayPal branded checkout growth, lower losses, and Y/Y growth 4% Venmo • Non-transaction opex -2%, driven by lower headco
Slide 11: Free cash flow (FCF) and capital allocation
Free cash flow (FCF) and capital allocation (in millions, except %) Q1'24 Free cash flow $1,763 • Free cash flow of $1.8B, which includes a $0.1B net negative timing impact between originating European buy now, pay later (BNPL) Y/Y growth 76% receivables as held for sale (HFS) and the subsequent sal
Slide 12: Guidance
Guidance Q2'24 guidance FY'24 guidance 1,2 Low double-digit growth 1,3 Mid to high single-digit growth Non-GAAP EPS 1 Non-GAAP EPS 1 (Q2'23 non-GAAP EPS of $0.87 ) (FY'23 non-GAAP EPS of $3.83 ) Non-GAAP effective tax rate Approximately 20% Non-GAAP effective tax rate Approximately 22% Approximately
Slide 13: Enhancing accountability and transparency
Enhancing accountability and transparency Modifying non-GAAP results to include impact of stock-based compensation (SBC) expense and related employer payroll taxes As announced on February 7, 2024 and disclosed in our Form 8-K filed with the SEC on April 30, 2024, non-GAAP results now include the im
Slide 14: Supplemental Information
Supplemental Information ©2024 PayPal Holdings, Inc.
Slide 15: Account and activity metrics detail
1 Account and activity metrics detail (in millions, except % and TPA) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Active accounts 403 416 426 429 429 432 435 433 431 428 426 427 Y/Y growth 16% 15% 13% 9% 6% 4% 2% 1% —% (1%) (2%) (1%) Monthly active accounts (MAA) 211 213
Slide 16: TPV, revenue, & take rate detail
TPV, revenue, & take rate detail (in millions, except %) Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Total payment volume $357,378 $354,508 $376,538 $387,701 $409,832 $403,860 • International TPV +17% FXN, driven by Y/Y growth 5% 10% 11% 15% 15% 14% continued strength in Europe and FXN Y/Y growth 9% 12% 11%
Slide 17: Transaction margin (TM) detail
Transaction margin (TM) detail (in millions, except %) Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Transaction expense (TE) $3,324 $3,283 $3,541 $3,603 $3,958 $3,917 • TE rate +4bps, driven by Braintree volume TE rate 0.93% 0.93% 0.94% 0.93% 0.97% 0.97% growth Transaction loss (TL) $214 $300 $286 $329 $277
Slide 18: Non-GAAP operating margin detail
1 Non-GAAP operating margin detail (in millions, except %) Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Customer support and operations $541 $488 $492 $474 $465 $454 Y/Y growth 2% (9%) (8%) (7%) (14%) (7%) Sales and marketing $469 $395 $423 $400 $425 $379 Y/Y growth (24%) (27%) (22%) (18%) (9%) (4%) Technolo
Slide 19: Hedging impacts and credit reserve builds and releases
Hedging impacts and credit reserve builds and releases (in millions, except %) Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 (1) Hedging Impacts Favorable (unfavorable) impact to net revenues (exclusive of hedging impact) $ (277) $ (139) $ 6 $ 141 $ 120 $ 32 Hedging impact 152 76 34 7 (6) — Favorable (unfavor
Slide 20: 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 March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2023 20
Slide 21: 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, (In Millions, Except Percentages/ March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March
Slide 22: 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 March 31, December 31, September 30, June 30, Marc
Slide 23: Reconciliation of operating cash flow to free cash flow
Reconciliation of operating cash flow to free cash flow and adjusted free cash flow Three Months Ended Year Ended December 31, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, (In Millions/Unaudited) 2023 2022 2021 2024 2023 2023 2023
Slide 24: 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
Slide 25: PayPal
> PayPal