PayPal Posts Record Sales on E-Commerce Boom

PayPal delivered record-setting results for a second consecutive quarter as the payment processor continued to benefit from the e-commerce boom during the coronavirus pandemic.

For the third quarter, PayPal’s revenue rose 25% year-to-year to a record $5.46 billion while net income increased to $1.02 billion, or 86 cents a share, up from $462 million, or 39 cents a share. Adjusted earnings came in at $1.07 per share.

Analysts had expected earnings of 94 cents per share on revenue of $5.43 billion.

PayPal also processed a record-setting $247 billion in total payment volume and it gained 15.2 million net new active accounts, including 1.5 million merchants, the second-strongest quarterly growth in its history. It has added more new accounts over the past two quarters than in all of 2019.

“PayPal’s third quarter was one of the strongest in our history,” CEO Dan Schulman said in a news release. “Our growth reinforces the essential role we play in our customers’ daily lives during this pandemic.”

The company’s shares fell 7.5% to $177 in after-hours trading Monday as it also forecast earnings would grow 17% to 18% in the fourth quarter to 97 cents to 98 cents per share. Analysts were estimating $1.07 per share.

CFO John Rainey said the guidance reflects the timing of investment spending in the back half of 2020. “Incremental investment is more heavily weighted to Q4,” he explained on an earnings call.

During the third quarter, PayPal expanded its ‘Buy Now Pay Later’ product suite, adding short-term installment products in the U.S. and U.K., and launched a new service that allows customers to buy, hold and sell cryptocurrency directly from their PayPal accounts.

PayPal’s social payments platform Venmo also had its best quarter ever as total payment volume rose 61% to more than $44 billion.

“Going forward, we are investing to create the most compelling and expansive digital wallet that embraces all forms of digital currencies and payments, and operates seamlessly in both the physical and online worlds,” Schulman said.