In previous quarters, analysts have expressed concern about PayPal’s underwhelming margins. The company’s low-margin business goods have risen rapidly, but branded product growth has stalled owing to rising competition from competitors like as Apple.
PayPal Holdings shares plummeted 7% in extended trading on Wednesday, as investors were disappointed by the payments company’s quarterly operating margin, despite executives’ assurances that the margin will rise by the end of the year.
In previous quarters, analysts have expressed concern about PayPal’s underwhelming margins. The company’s low-margin business goods have risen rapidly, but branded product growth has stalled owing to rising competition from competitors like as Apple.
“When we consider the second half, we’ll still see some pressure on transaction margin performance in Q3.” “We expect to see an improvement in Q4,” interim CFO Gabrielle Rabinovitch said on a conference call with analysts.
PayPal’s adjusted operating margin for the quarter was 21.4%, below the company’s target of 22%.
PayPal CEO Dan Schulman stated that when inflation falls, the business expects discretionary spending to resume and boost e-commerce growth.
“One of the headwinds we faced was a slowing in e-commerce growth.” “It’s now picking up speed again,” he continued.
PayPal’s overall payment volume increased 11% to $376.5 billion in the second quarter, owing to strong consumer purchasing patterns.
“TPV growth above consensus affirms the ongoing theme of resilient consumer spending in the face of broader macroeconomic uncertainty,” said Kevin Kennedy, an analyst at research company Third Bridge.
According to Refinitiv statistics, PayPal forecasts third-quarter revenue of around $7.4 billion, which is higher than analysts’ projections of $7.32 billion.
PayPal expects adjusted profit per share for the upcoming quarter to be between $1.22 and $1.24, which is higher than experts’ expectations of $1.22.
PayPal’s revenue in the second quarter was $7.3 billion, up from $6.8 billion the previous year. On an adjusted basis, it earned $1.16 per share, in line with Wall Street projections.
Schulman also stated that the corporation was nearing the end of the process of picking his replacement. PayPal announced his retirement in February.