PayPal ramps up mobile payments business

PayPal reported third quarter earnings after the bell on Thursday. The global payments company reported an 18% increase in revenue at $2.67 billion, when analysts were expecting $2.65 billion. Adjusted earnings per share stood at 35 cents, in line with Wall Street expectations.

However, some investors were disappointed to see that PayPal missed on total payment volume, a metric of total transactions on its platforms. The company brought in $87 billion in TPV, below the expected $88.3 billion.

PayPal revealed that it expects full year revenue to be somewhere between $10.78 billion and $10.85 billion.  Shares first dipped and then traded up about 3% in early after-hours trading, following the earnings release.

“We are further expanding the ubiquity and value of the PayPal brand and moving deliberately towards achieving our vision of becoming an everyday, essential financial service for people around the world,” said CEO Dan Schulman, in a statement.

With 192 million active accounts, PayPal has long been a leader in online payments. The company has greatly benefitted from the rise in e-commerce.

And since spinning off from eBay last year, the company has doubled down on its mobile business, focusing on its Braintree and Venmo brands.

Braintree powers the payment transactions for Uber, Airbnb, Pinterest and more. This means that every time someone takes an Uber, PayPal makes money.

Venmo is the peer-to-peer mobile payments app, that is particularly popular with young people. It digitizes the “IOU” and makes splitting bills easy. The transactions are free for consumers, but Venmo has recently begun working with businesses, in an effort to monetize the service.

Earlier this year, PayPal announced a change to the way it does business with Visa and MasterCard. Instead of directing consumers to use the standard ACH bank account payments, PayPal now makes it clear that credit cards are compatible with its service.

This came after mounting pressure from credit card companies, who were concerned about losing business to online bank transfers. More credit card fees will raise PayPal’s costs, but the team is hoping that the easier accessibility will result in more transactions.

What investors are looking for on any clarity on the implications into the associated costs from these deals and the realization of higher payment volumes,” said James Cakmak, analyst at Monness Crespi & Hardt.

PayPal, which acquired Xoom transfer payments last year, announced today that it is integrating PayPal with Xoom. Customers can now make international transfers through their PayPal account.

PayPal shares closed at $40.09. Shares are up nearly 17%  in the past year in the company has a market cap of about $48.9 billion.

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