Financial technology giant PayPal Holdings, Inc. (NASDAQ: PYPL) posted better-than-expected results in the second quarter ended June 30, 2022. Both revenue and profit exceeded expectations. Following the strong results, the company’s stock surged 11.3% to close at $99.75.
Rising Website Traffic Predicts Strong Results
Using data from SEMrush Holdings (SEMR), the world’s largest website usage monitoring service, TipRanks’ website traffic tool provides insight into PayPal’s performance this quarter.
According to this tool, the PayPal website registered a 57.70% monthly increase in worldwide traffic in June compared to the same period last year. Additionally, year-to-date PayPal website traffic increased 52.86% year-over-year.
PayPal’s increased website traffic served as a timely precursor to strong performance. The company’s growing online activity reflects the strength of its digital platform.
See how website traffic can help you research your favorite stocks.
Second Quarter Earnings Snapshot
PayPal’s quarterly net revenues were $6.8 billion, representing 10% growth year over year. Moreover, the figure exceeded the consensus estimate of $6.79 billion.
However, the company’s earnings per share (EPS) for the quarter was $0.93, down 19% from the year-ago quarter. Still, it managed to beat the consensus EPS forecast of $0.87.
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PayPal recorded 9% year-over-year growth, bringing total payments to $339.8 billion. Notably, the company’s number of active accounts and payment transactions increased by 6.5% and 16.4% year-on-year, respectively.
However, trading margin fell to 48.7% from 56.8% a year earlier. Also, the operating margin fell to 19.1% for him from 26.5% for the previous year.
Free cash flow balance improved to $1.3 billion from $1.1 billion a year ago. In terms of buybacks in the quarter, the company bought back approximately 8 million shares for approximately $750 million.
Q3 and 2022 forecasts
In terms of revenue, the company expects net revenue of $6.8 billion in the third quarter and $27.85 billion in fiscal 2022.
The company expects third quarter EPS to be in the range of $0.94 to $0.96. For fiscal 2022, PayPal plans to report EPS of $3.87 to $3.97.
Meanwhile, management is confident in its strategic move and is looking to streamline its cost structure to improve profitability.
PayPal CEO Dan Schulman said: We continue to gain share while executing on key strategic initiatives and driving operational efficiencies across our business. ”
Blake Jorgensen appointed CFO
Recently, PayPal replaced the former Electronic Arts (EAs) executive Blake Jorgensen has joined as Chief Financial Officer.
Jorgensen will replace John Rainey, with his appointment effective Wednesday. Jorgensen previously served as his CFO and COO at Electronic Arts, a lifestyle brand where he owns Levi Strauss (Levi).
According to regulatory filings, Jorgensen will receive a base salary of $750,000 along with an annual bonus targeted at 125% of annual salary. In addition, he will receive his $2 million worth of stock awards. This will consist of restricted stock and performance shares, and he will also receive an additional restricted stock award worth $8 million.
important point
PayPal’s strong quarterly performance and growth in several key operational metrics further establishes PayPal as a major player in the digital payments space. In addition, aggressive share buyback activity also supported the company’s shares and benefited investors.
However, declining profitability and margins continue to plague the company.
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