Slide 1: PayPal: The World's Open Technology Payments Platform
PayPal The World’s Open Technology Payments Platform June 8, 2015 Dan Schulman, CEO Patrick Dupuis, CFO
Slide 2: Non-GAAP Financial Measures and Forward-Looking Statements
Non-GAAP Financial Measures This presentation includes the following financial measure defined as a “non-GAAP financial measure” by the Securities and Exchange Commission, or SEC: free cash flow. This measure may be different from non-GAAP financial measures used by other companies. The presentation
Slide 3: Our Story
Our Story The Payments landscape is dramatically changing Mobile bridges online, in-app, and in-store experiences...and PayPal is a leader PayPal has market leading and sustainable assets Shaping the future of the industry Strong financial model and team PayPal 3
Slide 4: The Payment Landscape is Dramatically Changing
The Payment Landscape is Dramatically Changing ... and the World is Looking for a Trusted Solution Industry Trends Mass Adoption of Mobile Devices Digitization of Money Fragmentation of Payment Types, Technology and Channels Emergence of Alternative Financial Service Offerings Rise of Fraud and Cybe
Slide 5: The Explosion of Mobile Expands our Addressable Market
The Explosion of Mobile Expands our Addressable Market and Our Leadership Unlocks the Opportunity $2.5T* Online and Mobile Payments $25Tn* Online In-App In-store New Opportunities P2P Payments P2P Lending Money Transfer SMB Lending *Sources: 2015 market size by E-marketer & Morgan Stanley PayPal 5
Slide 6: As the Leader in Digital Payments, PayPal is Shaping the Future
As the Leader in Digital Payments....PayPal is Shaping the Future of the Industry At Scale* 165 Million Active Customer Accounts $235 Billion TPV 4 Billion Transactions 1 Billion Mobile Transactions With Momentum +19 Million Gained in 2014 +25% y/y TPV Growth** +22% y/y Transaction Growth** +41% y/y
Slide 7: PayPal has Unique and Defensible Assets
PayPal has Unique and Defensible Assets Scalable Two-Sided Network and Platform Brand: #1 Trusted Digital Wallet Risk Management Data and Analytics Global Regulatory Compliance 24x7 Customer Support PayPal 7
Slide 8: An End-to-End Solution for 10M Merchants
An End-to-End Solution for 10M Merchants • Drive Growth: Increase Conversion, Data Insights • Low Cost of Ownership: Scalable, Upgradable, Flexible, Preferred Developer App • Make Technology Simple (Rewiring the Commerce Experience): Low Friction Integration, at Any Scale, PayPal as a Service (SaaS)
Slide 9: Rewiring the Merchant Payment Experience
Rewiring the Merchant Payment Experience PayPal Online Web to Mobile • Digital Wallet • Proprietary • Beyond eBay PayPal CREDIT Funding Choice • Tech-Enabled • Accelerates Flywheel Braintree In-App • Tech Agnostic • Full Stack (100% Processing) Paydiant In-Store • Large Retail • White Label • Reward
Slide 10: Expanding Value to 155M Consumers
Expanding Value to 155M Consumers • Easy To Use: One Touch, Payment Choice • Protection: Financial Information Not Shared, Buyer Protection • Use Anywhere: Online/In-app/In-store, on Any Device, With Any OS, 10M+ Merchants • Shop Globally: 203 Markets, in Major Currencies Around the World 25 Transac
Slide 11: Driving Scale and Engagement in Our Consumer Base
Driving Scale and Engagement in Our Consumer Base Merchant Loyalty and Offers OneTouch P2P/Venmo/Social Tech Enabled Lending Cross Border Ubiquity Adding Capabilities & Growing Engagement Long-Term Goal: Monthly to Daily Customer Usage Transforming the Management & Movement of Money Through Mobile P
Slide 12: Our Global Open Digital Payments Platform Drives Powerful Network Effects
Our Global Open Digital Payments Platform Drives Powerful Network Effects 165M Active Customer Accounts Consumers 1B Transactions per Quarter More Data 10M+ Merchants and Developers Merchants / Developers Increasing Transactions per Customer Consumer Engagement PayPal 12
Slide 13: Financial Overview
Financial Overview PayPal 13
Slide 14: Producing Growth and Returns at Scale
Producing Growth and Returns at Scale TPV (Billions)* CAGR: 25% $150 $186 $235 2012 2013 2014 Revenue (Billions) CAGR: 19% $5.7 $6.7 $8.0 2012 2013 2014 Free Cash Flow (Billions)** CAGR: 28% $1.1 $1.6 $1.7 2012 2013 2014 * TPV is the value of payments, net of payment reversals, successfully complete
Slide 15: Our Model: Leverage from Scale and Reinvest for Growth
Our Model: Leverage from Scale and Reinvest for Growth Operating Expenses Product & Tech, Sales/ Marketing 24x7 Support, Operations, G&A, D&A Trx Expense, Losses Growth Run the Business Volume Based Economies of Scale Differentiated Services, Awareness and Trust Variable Expenses Choice for Consumer
Slide 16: Well Capitalized to Maintain Leadership
Well Capitalized to Maintain Leadership Capital Sources Strong Cash Flow Starting Cash of ~$6B Alternative Sources of Capital to Fund Credit Growth No Debt Capital Allocation CapEx 8-10% of Revenue In 2015* Credit Receivables Optionality: Our Balance Sheet or Other Peoples’ Money to Drive Growth M&A
Slide 17: Guidance
Guidance 2015 Medium Term FXN TPV Growth Mid -20% Mid – 20% FXN Revenue Growth 15 – 18% ~15% Non-GAAP Op. Margin Up 0 – 1% 20 – 21% Stable to Growing Free Cash Flow Growth $1.6 – 1.8B* In-line with Revenue Growth CapEx 8-10% of Revenue Lower All growth rates are year over year * FCF reduced by ~ $10
Slide 18: A Strong Team
A Strong Team Industry Thought Leaders Customer-First Mindset Proven Ability to Scale Global in Nature Talent Magnets PayPal 18
Slide 19: PayPal: The World's Open Technology Payments Platform
PayPal The World’s Open Technology Payments Platform 19 PayPal
Slide 20: Appendix
Appendix PayPal 20
Slide 21: The World's Open Digital Payments Platform
The World’s Open Digital Payments Platform Consumer Ubiquity, Safety, Awareness, Service… Transforming the Management & Movement of Money PayPal $235B TPV $8B Revenue 4B transactions 30 currencies 203 markets Open Merchant Value Added Services, Flexible, Scalable, Upgradeable, Innovative, 100% share
Slide 22: Separation Optimizes Opportunity
Separation Optimizes Opportunity Enhanced Standalone Positioning New Markets Enhanced Focus New Operating Structure Strategic Flexibility Continued Benefits Through Operating Agreement Largely Consistent PayPal Pricing for eBay Merchants Structure in Place to Maintain PayPal Usage by eBay eBay Suppo
Slide 23: Calculation of Free Cash Flow
Calculation of Free Cash Flow Year Ended December 31 2014 2013 2012 (In millions) Net cash provided by operating activities $2,220 $1,993 $1,565 Less: Purchases of property and equipment (492) (391) (511) Free cash flow $1,728 $1,602 $1,054 PayPal 23