PayPal beats estimates with 86% profit jump on pandemic spending shift

(Reuters) – E-commerce payments processor PayPal Holdings Inc (PYPL.O) beat Wall Street estimates on Wednesday with an 86% increase in quarterly profit, driven by the shift to online spending amid the coronavirus pandemic.

FILE PHOTO: The German headquarters of the electronic payments division PayPal is pictured at Europarc Dreilinden business park south of Berlin in Kleinmachnow, Germany, August 6, 2019. REUTERS/Fabrizio Bensch

The company said it expects the trends to continue and said that for the full year it now expects earnings per share to increase about 25% on 22% revenue growth.

Three months ago the company had withdrawn full-year guidance because of uncertainty about the economic consequences of the pandemic.

“Digital payments have become more important and essential than ever,” CEO Dan Schulman said.

The company processed $222 billion in payments over the period, up 30% from a year earlier, adjusted for foreign exchange. The rate of payment growth compares with a year-earlier increase of 26% that had slowed to 19% in the first quarter when the pandemic broke and retail spending collapsed broadly.

The company added 21.3 million accounts during the quarter, up 137% from a year earlier.

Revenue increased 25% to $5.26 billion, topping the average analyst estimate of $5.0 billion.

Net income increased to $1.53 billion, or $1.29 per share, in the quarter ended June 30, from $823 million, or 69 cents per share, a year earlier. []

The results reflected an unrealized investment gain worth 58 cents a share and included additional loan loss reserves amounting to 7 cents a share, down from the 17-cent reserve addition in the first quarter.

On an adjusted basis, the company said net income rose to $1.26 billion, or $1.07 per share, from $848 million, or 71 cents per share, a year earlier.

Shares of the company were as much as 2.8% higher after the bell.

Since last reporting results on May 6, PayPal shares had surged more than 40% as an investment play on e-commerce.

Reporting by David Henry in New York. Additional reporting by C Nivedita; editing by Marguerita Choy and Richard Pullin

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