PayPal stock slips after Q3 revenue misses, operating expenses exceed consensus

PayPal Holdings (NASDAQ:PYPL) stock dipped 2.1% in Tuesday premarket trading after the payment app company posted Q3 revenue that missed the average analyst estimate and operating expenses that exceeded consensus.

“We are making solid progress in our transformation as we bring new innovations to market, forge important partnerships with leading commerce players, and drive awareness and engagement through new marketing campaigns,” said President and CEO Alex Chriss.

It expects Q4 non-GAAP EPS to decrease in low- to mid-single digits, compared with its prior guidance of a mid-single-digit decrease. GAAP EPS is expected to be $1.03-$1.07, compared with its previous implied guidance of ~$1.05.

Q3 non-GAAP EPS of $1.20, beating the $1.07 consensus, increased from $1.19 in Q2 and $0.98 in last year’s Q3.

Q3 revenue of $7.85B, trailing the average analyst estimate of $7.89B, fell from $7.89B in Q2 and rose from $7.42B in last year’s Q3.

Total active accounts at 432M at Sept. 30 climbed from 429M at June 30 and topped the Visible Alpha estimate of 429.3M.

Q3 total payment volume (“TPV”) of $422.6B, beating the Visible Alpha consensus of $421.4B, increased from $416.8B in the previous quarter and $387.7B a year ago.

“Overall, PayPal’s latest update shows they’re growing well, especially in getting more people to use their platform and boosting profits by making mobile checkout smoother,” said Seeking Alpha analyst Grassroots Trading. “Venmo now syncs easily with Apple and Google, which is a big win for drawing in younger users, especially with the new ‘teen accounts’ option. Still, PayPal’s (NASDAQ:PYPL) management is staying realistic, reminding investors that it’ll take a steady, quarter-by-quarter effort to fully hit their profitability and engagement targets.”

PayPal’s (NASDAQ:PYPL) transaction margin dollars increased 8% Y/Y to $3.66B, compared with Q2 growth of 8% Y/Y.

Total operating expenses of $6.46B, vs. the Visible Alpha consensus of $6.21B, fell from $6.56B in Q2 and increased from $6.25B in Q3 2023.

Net cash provided by operating activities was $1.61B climbed from $1.53B in the prior quarter and $1.26B a year ago; adjusted free cash flow of $1.54B compared with $1.14B in Q2 and $1.91B in Q3 2023.

Conference call at 8:00 AM ET.

Earlier, PayPal non-GAAP EPS of $1.20 beats by $0.13, revenue of $7.8B misses by $90M