Paypal Holdings, Inc. · NASDAQ:PYPL
Paypal — Q3 2024 Earnings Presentation
28 slides from Paypal's earnings presentation, Oct 29, 2024
Slide 1: PayPal Third Quarter 2024 Performance
PayPal Third Quarter 2024 Performance Financial results & company highlights October 29, 2024
Slide 2: Non-GAAP Financial Measures, Growth Rates, Forward-Looking Statements
Non-GAAP Financial Measures 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 different from the non-GAAP fin
Slide 3: PayPal: 3Q Key Messages
DESIGN PENDING PayPal: 3Q Key Messages Continuing to launch innovations in market and focus on execution • Building foundation for durable, profitable growth: strong 3Q and YTD results • Continued quality TM$ growth (+8%, +6% ex-interest on customer balances) benefiting from interest income, branded
Slide 4: Driving end-to-end conversion with upgraded branded checkout
Driving end-to- Express Checkout Vaulting Recurring Payments end conversion Physical & digital goods, one-time purchases High frequency, native app checkout Subscriptions and autopay with upgraded branded checkout Rolling out simple, fast, and personalized mobile checkout across top three branded ex
Slide 5: Forging new partnerships that unlock growth and enable seamless commerce experiences
Forging new partnerships that unlock growth and enable seamless commerce experiences Expanding reach of Fastlane Enabling Fastlane on transactions processed by Fiserv, Adyen, and Global Payments to give consumers a consistent and superior guest checkout experience across all merchants1 Improving the
Slide 6: Making it easier than ever to pay with PayPal everywhere and use Venmo in new ways
Making it easier than ever to Reimagining PayPal’s consumer value proposition, anchored by cash back rewards pay with PayPal everywhere with the PayPal debit card, merchant offers, and refreshed app experience to drive daily and use Venmo in new ways omnichannel spend Showcasing Venmo’s expansion be
Slide 7: 3Q'24 snapshot
3Q'24 snapshot (in millions, except % and per share data) Results Y/Y growth Total payment volume (TPV) $422,641 9%; 9% FXN Revenue $7,847 6%; 6% FXN Transaction margin $ (TM$) $3,654 8% TM$ ex. interest on customer balances1 $3,315 6% Non-GAAP EPS2 $1.20 22% Free cash flow2,3 $1,445 31% All growth
Slide 8: Account and activity metrics
1 Account and activity metrics (in millions, except % and TPA) 3Q'24 • Active accounts2 +0.6% (+3M) sequentially, and includes growth Active accounts2 432 in PayPal merchant and consumer accounts Y/Y growth 1% • MAA3 +2%, driven by PayPal and Venmo consumer accounts Monthly active accounts (MAA)3 22
Slide 9: TPV mix across PayPal's payments platform
TPV mix across PayPal’s payments platform 3Q'23 2Q'24 3Q'24 Prior year period Prior quarter Current quarter • Branded checkout TPV +6%, with FXN GROWTH 6% 6% 6% continued strength across large Branded checkout enterprise platforms, marketplaces, % OF TOTAL 27% 27% 27% and international PSP (unbrande
Slide 10: 3Q'24 key financial results
3Q'24 key financial results (in millions, except % and per share data) 3Q'24 Total revenue $7,847 • Transaction revenue +6%, primarily driven by Braintree, branded checkout, and Venmo Y/Y growth 6% • Other value-added services (OVAS) revenue +2%, with higher FXN Y/Y growth 6% interest on customer ba
Slide 11: Guidance
Guidance 4Q'24 FY'24 Low single-digit growth Mid-single-digit growth Revenue Transaction margin $ Reflects impact from price-to-value strategy Prior: Low to mid-single-digit growth and prioritization of profitable growth Non-GAAP non-transaction Low single-digit growth Non-GAAP effective tax rate Ap
Slide 12: Demonstrating the strength of PayPal's global commerce platform
Demonstrating the strength of PayPal’s global commerce platform • Another strong quarter building upon our foundation for durable growth • TM$ excluding interest income +6% driven by strength in branded checkout, Venmo, and Braintree • Improving checkout with faster and simpler branded and guest exp
Slide 13: Q&A
Q&A ©2024 PayPal Holdings, Inc. 13
Slide 14: Supplemental information
Supplemental information ©2024 PayPal Holdings, Inc. 14
Slide 15: Account and activity metrics detail
1 Account and activity metrics detail (in millions, except % and TPA) 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 Active accounts 426 429 429 432 435 433 431 428 426 427 429 432 Y/Y growth 13% 9% 6% 4% 2% 1% —% (1%) (2%) (1%) —% 1% Monthly active accounts (MAA) 219 214 21
Slide 16: TPV, revenue, & take rate detail
TPV, revenue, & take rate detail (in millions, except %) 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 • International TPV +8% FXN, driven by Total payment volume $376,538 $387,701 $409,832 $403,860 $416,814 $422,641 Y/Y growth 11% 15% 15% 14% 11% 9% continued strength in Europe FXN Y/Y growth 11% 13% 13% 14%
Slide 17: Transaction margin (TM) detail
Transaction margin (TM) detail (in millions, except %) 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 Transaction expense (TE) $3,541 $3,603 $3,958 $3,917 $3,942 $3,841 TE rate 0.94% 0.93% 0.97% 0.97% 0.95% 0.91% • TE rate -2bps, driven by favorable product and Transaction loss (TL) $286 $329 $277 $260 $259 $2
Slide 18: Non-GAAP operating margin detail
1 Non-GAAP operating margin detail (in millions, except %) 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 Customer support and operations $492 $474 $465 $454 $436 $427 Y/Y growth (8%) (7%) (14%) (7%) (11%) (10%) Sales and marketing $423 $400 $425 $379 $406 $468 Y/Y growth (22%) (18%) (9%) (4%) (4%) 17% Technol
Slide 19: Free cash flow (FCF) and capital allocation detail
Free cash flow (FCF) and capital allocation detail (in millions, except %) 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 • Free cash flow of $1.4B, which includes a $0.1B Free cash flow ($350) $1,101 $2,469 $1,763 $1,368 $1,445 net negative timing impact between Y/Y growth (133%) (30%) 72% 76% ** 31% Adjusted
Slide 20: Hedging impacts and credit reserve builds and releases
Hedging impacts and credit reserve builds and releases (in millions, except %) 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 (1) Hedging Impacts Favorable (unfavorable) impact to net revenues (exclusive of hedging impact) $ 6 $ 141 $ 120 $ 32 $ (33) $ 12 Hedging impact 34 7 (6) — 22 (12) Favorable (unfavorabl
Slide 21: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations ©2024 PayPal Holdings, Inc. 21
Slide 22: 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, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, (In Millions/Unaudited) Note 2023 2022 2021 2024 2024 2024 2023 2023
Slide 23: 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, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, 2023 2022 2021 (I
Slide 24: Reconciliation of GAAP net income to non-GAAP net income and EPS
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 September 30, June 30, March 31, December 31
Slide 25: 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, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, (In Millions/Unaudited) 2023 2022 2021 2024 2024 2024 2023
Slide 26: Definitions (page 1 of 2)
Definitions (page 1 of 2) 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 k
Slide 27: Definitions (page 2 of 2)
Definitions (page 2 of 2) Total Payment Volume or “TPV” is the value of payments, net of payment reversals, successfully completed on our payments platform, or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions. Branded checkout TPV comprises PayPal brande
Slide 28: Upcoming calendar
Upcoming calendar Fourth Quarter 2024 Earnings February 4, 2025 Investor Day (NYC) February 25, 2025 ©2024 PayPal Holdings, Inc. 28