After the closing bell on Wednesday, PayPal Holdings, Inc. (PYPL, Financial) issued its third-quarter results. Following this, the stock price took a big step upwards during after-hours trading to place at $104.31 per share, a 7.9% increase from $96.64 at the closing of the regular market.
The market was happy with PayPal for beating GAAP earnings forecasts by 1 cent, having posted earnings of 39 cents per share. Paypal also posted an increse in revenue of $30 million as the top line came in at $4.38 billion.
Year over year, GAAP earnings per share increased 7% and revenue grew 19%. Moreover, the adjusted free cash flow improved by 19.6% to $923 million.
President and Chief Executive Officer Dan Schulman commented: “We had an excellent quarter financially and operationally, reporting 19% revenue growth, more than 200 basis points of operating margin expansion, accelerating TPV growth and nearly 10 million net new active accounts.”
The US international online payments system company recorded a 25% growth in TPV (total payment volume) to $179 billion, and thanks to third-quarter additions, a 16% rise in active PayPal accounts to make a total number of 295 million accounts.
Dan Schulman added: “This quarter we also announced that we will be the first foreign payments platform to be licensed to provide online payment services in China, a very significant development that has the potential to meaningfully expand our addressable market,”.
For full 2019, PayPal targeted lower revenues of $17.7 billion to $17.76 billion compared to a previous range of $17.85 billion to $18.1 billion, due to the sale of a portfolio of U.S. receivables to Synchrony Financial (SYF). Analysts project PayPal’s revenue to reach $17.72 billion in full-year 2019.
Also, PayPal expects GAAP earnings per share to fall in the range of $2.03 to $2.06 and pro forma earnings per share to range between $3.06 and $3.08 versus consensus estimates of $2.97.
The share price closed at $96.6 on Wednesday for a market capitalization of about $113.71 billion. The share price has risen 15% so far this year, but it is still below the 120-, 70- and 30-day simple moving average lines.
The 52-week range is $75.47 to $121.48.
PayPal is not paying dividends yet despite the availability of approximately $10.5 billion in cash on hand and short-term securities and a total financial exposure of only $5 billion in long-term debt as of Sept. 30.
Wall Street issued an overweight recommendation rating and established an average target price of $126.85.
Disclosure: I have no positions in any securities mentioned.
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