PayPal earnings outlook disappoints as CEO says he’s looking to rebuild trust

PayPal Holdings Inc. topped expectations with its latest quarterly results Wednesday afternoon, but the company underwhelmed with an outlook that its chief executive said could be seen as conservative.

Shares of PayPal

fell 8% after the latest report.

The payment-technology company is in the midst of a transition under its new leadership team as it faces stiff competition in the market for online payments and navigates shifts in its business mix that have been weighing on margins.

That journey is expected to continue through 2024, according to newly installed CEO Alex Chriss.

“We characterize 2024 really as a year that we need to focus on execution, and a year of transition while we start to have conversations about profitability with our partners and conversations about getting our go-to-market muscle really accelerated,” he told MarketWatch.

While the company didn’t offer a full-year revenue outlook, it trailed the FactSet consensus view with its projection that adjusted earnings per share will be roughly in line with the $5.10 that it posted during 2023. Analysts had been looking for $5.51 a share.

PayPal recently held an innovation event at which it unveiled new planned features including faster guest checkout and more personalized receipts. Chriss said most of those new functions aren’t factored into the company’s forecasts yet.

“What we’re guiding is what we see, and you could consider it conservative in terms of the innovation that we have, but that’s intentional,” he said. “We want to make sure that we actually put points on the board and earn back and build that trust with the investor community.”

But the outlook struck Mizuho analyst Dan Dolev as “disappointing,” according to his latest research note.

Read: PayPal’s latest layoffs could prove fodder for the stock’s bulls and bears alike

For the current quarter, PayPal anticipates a mid-single-digit increase in adjusted EPS relative to the $1.17 that the company posted a year prior. Analysts were modeling $1.27, up 8.5%.

PayPal generated $8 billion in fourth-quarter revenue, up from $7.4 billion a year before and ahead of the $7.9 billion that analysts were modeling.

Mizuho’s Dolev said that revenue for the latest quarter looked “surprisingly solid,” although he flagged decelerating growth in branded checkout volumes and unbranded checkout volumes.

The company logged net income of $1.4 billion, or $1.29 a share, up from $921 million, or 81 cents a share, in the year-prior period. On an adjusted basis, PayPal earned $1.48 a share, ahead of the FactSet consensus, which was for $1.36 a share.

The company saw $3.67 billion in transaction-margin dollars, flat with the year-earlier total.

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