PayPal Holdings Inc. (PYPL, Financial) reported solid third-quarter 2017 earnings, which proved beyond a doubt it remains a leader among mobile payment companies. In line with its double-digit growth performance over the past several quarters, third-quarter revenue grew 21% to hit $3.239 billion as the non-GAAP operating margin expanded 157 basis points.
PayPal beat Wall Street's expectations on both the top and bottom lines, reporting earnings per share of 46 cents against the expected 43 cents and revenue of $3.24 billion beat estimates of $3.18 billion.
The solid quarterly results allowed the company to revise its guidance upward. PayPal now expects EPS in the $1.86 to $1.88 range. Revenue is projected to be between $12.92 billion and $12.98 billion.
President and CEO Dan Schulman commented on the company's performance for the quarter:
"PayPal delivered one of its strongest quarters since becoming an independent company. Putting our customers first in everything we do, enhancing our suite of products and services, and partnering with some of the world's most popular brands are delivering tangible results. In addition to our solid financial performance, we also reported record customer growth with the addition of 8.2 million net new actives. As the world rapidly accelerates to digital payments, we have a tremendous opportunity in front of us."
PayPal already calls itself the digital payments leader, and there is enough momentum to suggest that PayPal remains unaffected by tech companies overcrowding the digital payments space. During the third quarter of 2017, payments via mobile devices accounted for approximately 35% of total payment volume.
Mobile payment volume has now grown by 51%, 50% and 54% in the first three quarters of the current fiscal. Venmo, PayPal’s social payments platform, processed $30 billion in payments over the last twelve months, which is more than double the payments the platform processed over the same period last year.
As mobile payments and social payments continued to surge, PayPal has kept its vice-like grip on the market and merchant services on a steady growth path. The company recorded 15 million active merchant accounts at the end of third quarter of 2016. It added 2 million more over the next four quarters. Active customer accounts grew from 192 million to 218 million over the same period.
While the market has been used to stellar growth numbers from PayPal, the surging mobile payment volume is bound to have a positive effect on the stock price over the short term. The stock has gained nearly 70% over the last 12 months and may well continue to edge upward as the company increases its payment volume and reduces the gap with electronic payments market leader Visa (V).
Disclosure: I have no positions in the stock mentioned above and have no intention of initiating a position in the next 72 hours.
