PYPL - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good evening. My name is Savannah, and I will be your conference operator for today. At this time, I would like to welcome everyone to PayPal Holdings' Earnings Conference Call for the Second Quarter 2022. [Operator Instructions]. Thank you. like Ms. you now for your would call, today's I to to introduce host And Senior President, Rabinovitch, Gabrielle Vice Investor Relations. Corporate Finance and go Please ahead.

Gabrielle Rabinovitch

us. of XXXX. Good you conference Thank and for Welcome joining call quarter Savannah. earnings to second you, the PayPal's afternoon, for thank

providing on This We're our conference both also webcast, slide me call and non-GAAP today Schulman, the President accompany In discussing we website. measures. performance, to and call Relations on call is Investor the Joining presentation are presentation Dan to is our company's CEO. a commentary. available refer and our being our will some

statements You third assumptions directly are statements current our reconciliation comparable of and margin and accompanying for based the can anticipated in expectations, cost measures risks non-GAAP forward-looking our the presentation savings, find guidance activity. Management comments measures to and that most quarter repurchase involve GAAP full and call. related this uncertainties. on to and the conference operating include these forecasts These make share year and XXXX the will

these actual differ may materially statements. results from Our

find results can recent on our information You Form on report other uncertainties with quarterly Investor SEC XX-Q our annual website. and Form report in on XX-K most Relations affect could filed about factors that available and the more our risks, and

to disclaim obligation is to Dan. this You over today's should any not me place this date, We undue turn forward-looking that, statement. as let of presentation expressly call X, reliance information in information. on All the any August With XXXX. update

Daniel Schulman

that non-GAAP quarter, row quarter met marking in everyone, of announced the a for joining second second or Thanks, hitting in I'm we expectations us. to thanks, our Gabrielle, share April, pleased guidance. and exceeded in our the

in transformation supported We a regain momentum. our X our transformation This to by major is deep are of initiatives. business underway well

models. opportunity our share The seize of their and reorient business to as first competitors retrench market many grow is to the our

we network. where to the the our effects X-sided We scale and are network in have inherent our due tremendous our focusing areas investments advantage by driven

on our Braintree platform. PayPal We we, Venmo again, effect doubling having our QX. as digital down once and in are Checkout, took These are anticipated share their efforts wallets and

corporate I'm I am to enter team good thank as finance CFO He will our Levi's my are Partners. world-class the was taking also model, will I'll to progress Officer, he Operating with this months, chapter we as our CFO us product, to President words And Investment week. meaningfully for me exit enough Electronic in driving looking shareholder grow to Chief and and structure. in been reducing pleased excellence mind, the forward co-Founder XXXX. leverage at she talent her that be engineering relations have to detail, would continue in we Yahoo! of remarks, all extensive year I and have margin organizational over to cost taken will Jorgensen to operating I With the Bank, later in interim Financial additional Thomas Blake Blake the say about and the Treasurer of well role as has can't support and value. this where Officer we past from our but new pleased in in our next PayPal's CFO. she reinvigorated expand and our discuss has are the responsibilities. that X these PayPal's with PayPal we that operating on on that recruiting and third, we Gabrielle and in Arts, Chief will Secondly, and also to joining role areas. technology done I journey. investor like be us was operational And announce functions. very announce Blake joins her as Weisel starting as performance, working I'm and action

to now Let turn results. me our

the in revenues second $X.XX up at in came Our and billion, quarter X% XX% spot. FXN

third and we basis in X% on guidance. QX. quarter we our drag by $X.XX was a in slowed growth quarter. and payment have to nontransaction-related year FXN, full anticipate the we growth preliminary to trends EPS north Non-GAAP inconsequential reflect that drop to was as revenue in points accelerated in June revenue May July anticipated intermediation dynamics basis XX%. the in rate will And the XXX revenue results April X% the quarter the our Importantly, and shape points our $X.XX quarter, actions and fourth XX% growth to approximately expenses was of taken our guidance further be eBay of was in XX%. exceeded of the year-over-year XXX

discussed we all working we last have during across As drive to our improvements been call, functions. productivity

and, our customer strategy network accounts for efficiency assets. from engagement Our focus shift to of importantly, led portfolio world-class in investments and opportunity deeper unparalleled on our greater of to significant consumer merchant

greater our We have with narrowed productivity profitable driven increased our share market and growth. gains focus,

to We in the out coming drive are pandemic our unit base. enhanced costs reductions leveraging across meaningful of scale our supplier

XXXX, next which result reset in target expansion will reduction As least to benefit transaction $XXX margin in savings continue guidance OpEx savings cost million in These our our will will XXXX not structure in run we of last cost anticipate which on contemplated year. our operating the quarter. a and was of cost this result approximately company a in expenses, across We at nature billion in onetime in basis. result, realize will rate and savings $X.X of are our

geographies. Braintree additional our sharpening as servicing, as opportunities We and estate well investments I gains These highest our efficiency improvements as allow identify us functions hiring which, to to lower-cost wallets. conviction our real to productivity include our increase and footprint rationalize our our our to growth shift digital are Checkout, and mentioned, still engineering opportunities, marketing also will areas across pencils in of

and to as we we this and of fourth from Consequently, continuing are nontransaction-related XXXX. exercise result year this be a operating we flat disciplined in team, expect beginning operating our Importantly, XXXX. the in roughly leadership quarter exit margin expansion as expenses of targeting

last quarter, NNAs As represent will for watermark our low the year. we QX said for

reiterating our million guidance of are NNAs. full approximately We year XX

its our to TPA, all organic in However, here, QX that billion users That that is core the report about across our our is per as to given the acquisition forecasts, reduced share X-year channels I'm accounts, transactions may primary goods. account, grew Directors by why per be of is And sentiment be our confidence customer active of on demand driven drive factors, our by growth impacted XX.Xx authorized NNA $XX XX% falling economic affected up could year. over a Board driving XXXX, our and which PayPal volume for XX% repurchase And focus XX% of business, broader XX% plan. engagement discretionary XX%. with consumer our an has active said, are active daily almost pleased of negatively our of or base. our additional CAGR Signaling from by

expect our to there's currently share to remain as capital the opportunity pace shareholders. our and We repurchases a attractive aggressive of return unique to we believe

Investor brands $X and is flexibility the in platform in built the than scale. to And the will we unparalleled in return contrast which strategic we is evaluating global shareholders. an of fintech opportunity Day PayPal Board others industry, both billion model, of world, the financial believe free flow We have with to strengthen year, has for early sectors to and us allocation, financial our In recent the more to in generate at created position. cash committed our and a share turmoil a this and update, strong expect the unparalleled for XXXX. trusted capital e-commerce provides including PayPal. competitive an consumer to invest diversified one capital our options all Our most in

are gains. continue the to clearly seeing We to expect market we quality to and flight share drive a market in

and with we share Branded gains X the leading Checkout remains where QX Our grew the years. over retailers, we share last strong in retaining drove are of

to accounts Braintree. vaulted more XX our leverage and across financial in strengths base billions active of instruments our include which inherent We merchant PayPal with checkout, of than million continue

the among other relevant to We price, consumer and checkout funding by serve we value innovations are experience attributes. nearly are based proposition user conversion most new instrument our surfacing more million on merchant these our We purchase software category convenient. enables and our accounts, checkout, will testing and faster increased in-line believe for currently like kit, our better differentiate experiences removing XXX SDK, enhancing also And make past merchants. development which behavior, our to purchase friction mobile native our drive to payment continue

in great and making strides branded are our We of marks. global distribution presentment the

Payments Shopify, expanded We have are and France. with we now in relationship powering Shopify our

world, including, assets intend take share the Zappos, have with challenging win environment. processing Carrefour. to In in deals leading full-stack and with portfolio merchants we to the and large this to addition, significant across payment macro in of continue our We BetMGM press advantages scale additional we Shein,

Buy In products to volume, times Pay up XXX% Now, year-over-year billion Buy Later million we themselves launch. our second distinguish since consumers services using from over Now, competitors. in million with our the Our continue Later processed Pay $X.X over quarter, XX XXX

deep scale loss for and Buy which customers. We time. rates long-standing approval recently through rates lending types payments the grow and from with to expertise of our the and we lowest to the of longer spread our us who we that with gives among our displaying result, merchants expanded of consumers periods a the relationships Pay XXX,XXX are Our product presentment our are key U.S. experience industry. Now, all is credit benefit Later upstream advantage environments. know competitive as Monthly, lending in on and our over launch continues have pages. with their both We high We A offerings ability Pay to, over

Venmo have engagement wallets commerce twice Digital platform. are tools. formidable assets And to increase invest Our opportunity users ARPA both across to likely continuing and digital choose and checkout. at as in an PayPal wallet PayPal our are that engagement by commerce we drive payments and to

our further. and such their the Honey Honey rewards shopping serves helping of factors consumers PayPal inflation wallet are through at checkout. make And hub Through browser the shopping digital the go journey. macroeconomic impact targeted our services beginning customers, like extension, our PayPal at coupons As up as money

increasingly our these after this Already working we've money. are save valuable. million. sought inflationary and hard over an $XXX In environment, consumers products to are help save customers year, We helped

our more $XXX revenue for with the XX%, growth exceeding and alone. our in programs. rewards last than revenues business savings Venmo key PayPal at accounts, this half of by Honey the driving even year, more fact, focused hub conversion the our in and redesigning browser are checkout on increased customers we selection shopping And extension by remains In XX%. nearly active with XX month our second wallet a unifying the million growth for digital of driving driver QX million and

transactions than We continue launching commerce XXX%. volumes QX, DICK'S commerce with Sporting Venmo we In leading including Draft And course, forward signed Washington to see booking.com growing increased look Pay more Venmo Venmo on Kings, Goods, and Post. Amazon. to merchants, the with with on launched with Pay of we or

scale that the charities to on establish plan We initiatives new hard accounts. including at giving their will September, ahead to Venmo holiday Venmo create in on to increase launch teens a encourage are the profile of more own also the we to app work both engagement, for allowing season. And and ability

accountability our are simplify rapidly last products drive organizational bring end-to-end make shared innovative to I As it quarter, to our easier for structure teams decision-making, streamlining meaningfully market. we to and

customers. our Our new around operating oriented model is

and our of expertise Operating overseeing Officer. Our deep consumer been he a the And where global is joined acquisition expansion including introduction and was the leading of our Chief he products, services. economic PayPal rapid range has in products, business Bland, Doug Financial, Now, of Buy He Later by navigating credit through led challenging Swift has of Doug Pay wide credit environments. our

years, in enterprise primary been ensure separation will focus: I'm while the our and capacities led partner from before changes make will various X highest-quality and our and Dan Product at and retire trade-offs with have we to business counsel But necessary Frank and his product the to leadership, replace near accelerate and led period by external expect for of channels Mark's for the PayPal products and for business a decisions leadership. extensive tremendous operational I'd he global announce These replacement to opportunity has Officer merchant leaders leadership since Dan been sector, platform for grateful this with of medium-sized market the economy is and merchant Chief shareholders, their and into strong of organized very to closing, PayPal for businesses year. Leberman. friendship our like the Mark for have the of bench metrics. acknowledge Mark market cultivated. again PayPal the like delivery the and several underway, by the Keller and we Our during is models expertise. talent that it past feel our PayPal end is small- at areas future. for for market search in a Frank growth of well Britto, large. our An operating Both and to driving In unique time has volatile high-quality a increase we strong

We are our key laser-focused on on initiatives. delivering

We continue to take share.

we back, proposition. value others are investing While our improve to pull

us over our setting a and our for in setting payments. senior I we've year, up other our are thank stimulus leadership finally dedication to each pandemic commitment. strong We each the the team I'm significant revenue several and joining reflect month day. and lapping QX with this, meaningful beyond each eBay in to PayPal up these our intermediated payouts productivity successive expenses, of cost actions and of you moving call both margins turn for as organizational improvement operating rate growth the with and every increased on leaders changes us team. to And model continued I'll support increasing July OpEx driving and the positive half to that, talented our we and our We're expect their grateful and the in made additional result we outstanding Gabrielle. exit for to And deliver transaction expectations. want second see XXXX. And our provide and customers

Gabrielle Rabinovitch

sequential surpassing like solid PayPal quarter, operating I'd in and by non-GAAP priorities. their commitment customers start or for Thanks, the PayPal growth team delivered Dan. nontransaction-related the targets on second meeting revenue our and to shared our commitment acceleration April. serve with to on expense thanking entire We of in quarter financial delivered our continued our another you slowed our growth. we execute

strength, Our our global results the of platform. of are X-sided and breadth diversification indicative payments

importantly, accelerating we team future. for remains building we're committed And our what on focused more and PayPal Our can control. core strengths the to

our by possible for are customers on and our for value the We stakeholders. focus our experiences relentless creating best guided

stronger Over unbranded momentum, the past our to even opportunities quarters, X add our checkout position and to processing advance we strategies. our wallet, have and payments with seen in leadership digital

to as closely to we're demand backdrop consumer are impact drive our of The structure Of cost global the PayPal's unique forward. to high pandemic. rigor Today, the our continue we're complex, on well macroeconomic inflation increasing appropriately long-term and believe same growth, to time, broader competitive in we growth taking as than course, and strategic before we were advantages unlike initiatives. positioned us be managing continues indicators. everyone, better the prioritizing monitoring economic we sustainable At an our managing higher-return and sentiment we're approach prudent business. deliver

margin operating our improving while on key focused are profile priorities. in investing We our

emerged stronger challenges serious Over and has PayPal every macro business experienced time. years, and has the

in As in environment we like stronger. and apparent which strategy growth platforms strong an is our believe we today. been are get look than and has never more long-term our enduring operating ahead, outlook. we're We it That in ours confident

Before discussing the year, to second quarter our the of for highlight I'd remainder outlook like performance. our

we point provided Dan the $X.X X% was than guidance, strength. As the difference X.X dollar of XX an our during quarter, to our growth billion. which on point spot an revenue doubled time spot essentially more and mentioned, basis, and approximately at given increased guidance At XX% ahead there rates, FX-neutral basis FX-neutral between

This credit increased revenue while growth In Venmo. X% Other half continue to back services $XXX from U.S. Braintree to value-added performance XXXX. to through a move primarily we resulted revenue million. billion, by grew the We to $X.X X%. balances. as of products headwind stored income as our expect well and driven as XX% revenue customer solid grew interest revenue grew be declined of international on quarter, XX% FX Transaction the second

In increased international excluding sequentially. revenue X addition, On a both spot and X%. on currency-neutral X% a international currency-neutral revenue and, basis, growth accelerated eBay, basis, points

represented revenue. less our revenue of Additionally, to eBay total and X.X% than million $XXX declined Marketplaces' XX%

funding PXP Our take from essentially basis of revenue, grew is TPV X%, take take spot. driven year points rate year. a excluding last and was largely The last flat rate to predominantly was by eBay the of total result X.XX% international as year. lower declined increase also relative debit Venmo volumes contribution transaction and to last was was both blended of XX% volume. as XX on relative QX to by and Transaction normalized rate X.XX% last transaction QX recorded in X expenses basis of payment from a on year. result a resulting to this at rate was rate overall expense rate basis To extent, volumes. to This QX offset currency in increase lesser XXXX. year. eBay, X.XX% Braintree, higher from basis Transaction contributed approximately points an mix hedges rate TPV as our point X card-funded, points the to as to XX in came take basis as of a mix revenue, in This more versus Transaction at of XX points non-eBay a in volumes, which card gains loss foreign usage

volume-based products points largest the of quarter, and reserves, in XXX resulted Pay of $X.X receivables billion the portfolio of from X.X% XXXX, declining credit growth operating and period of million growth first end with receivables, our growth performance The dollars. transaction Overall, of receivables resulted in than losses in ended gross of In originations. in second our loan in Later of a global in ratio originations XXX we last loan This points. our at to addition, we the with year margin expenses million shorter-duration the X grew transaction Pay was driver reflecting QX in X% was revenue The from performance sequential and strong X%. XX.X%. basis the X% by In of the and conjunction mix margin reserve represents prior originations were increased margin decline a credit XX%, TPV. basis benefited of $XXX points $XX released coverage which In rate which Later or margin basis of the X.X% our transaction quarter quarter. lower

transaction rate, primarily back ecosystem. the Excluding year, was benefits by as we of Starting release our transaction basis from which mix. across network to to or the driven TPV in a seeing scale last benefit points reserve begin XXX X% dollars year, margin this half declined the expense leveraging our from expect

XX technology than we XX% focus sales of quarter, nontransaction-related second expense operating and was the overall, for XX% addition, XXXX. growth year. expenses directed expenses and marketing growth an income increase in rationalizing Nontransaction-related customer Notably, and a in have last XXXX. basis points X% In On sales declined year-over-year, to second on were development support operations, $X.X following In of our meaningfully from of these The in of expenses XX.X% year-over-year a X% last approximately rates second of marketing lower spend basis, quarter and billion. second grew year. the growth. and revenue, the non-GAAP QX the represented improvement quarter, quarter relative

Our quarter. operating outlook better nearly the XX.X%, into our which margin X was than going is point

share from In headwind than quarter, $X.XX release EPS stronger quarter, approximate $X.XX was the per second credit the our reserves of last $X.XX, the faced we For expectations. an year. non-GAAP

cash cash lower with which $X and expenses satisfy of ended equivalents to of estimate was outperformance billion, rate. tax operating needed investments includes regulatory effective $XX.X is predominantly we Our operational and requirements. nontransaction-related driven a We cash, the and billion quarter approximately lower by

June $X inclusive in is half position this debt the used issued in cash Approximately of upcoming May. we coming from of proceeds and due proceeds maturities refinance XXXX offering in were from Our billion to September XXXX.

approximately transaction, coupon bond our Importantly, years this able points. average by extend weighted average our X while to XX were increasing by we through basis only maturity

quarter, in billion this year-to-date $X.X billion, generated In share billion. in so year-to-date cash completed of generated year. we flow repurchase $X.XX $X.X quarter, far activity free bringing the cash XXXX to an flow the additional repurchases, we second representing million to XX% also bringing $XXX free approximately flow, free During cash

over approach taken aggressive have several a to capital We more return past our quarters. the program

Dan $XX brings believe to that our outstanding share remains $X.X We with share of the a aggregate Board on this And billion capital our continue repurchase new our recently mentioned, remaining authorization. our excellent $XX repurchase use to repurchase an billion. approved shareholders. XXXX authorization billion Combined nearly as for authorization,

the to XX% Overall, plan this the pace continue share to Given capital of our to we XX% form in and will of share our and in we the our free desire be we have return cash to shareholders return confidence business, opportunistic year, to repurchases. repurchases. to with quantum flow shareholders of

look In focus optimize capital renewing addition, our and credit allocation as flexibility, we increase on we are our to opportunities. our externalization

event externalization XXXX, July to portfolio the credit has Synchrony. significant occurred when last sheet of changed Since our in portfolio on-balance of credit Our we credit revolving sale our consumer meaningfully. composition U.S. the that closed time,

While credit X% Synchrony credit XX% time represent assets require of overall of receivables the flow. at our funding the products amount to free versus increasing transaction, an about cash continues of our today,

value products of lifetime credit driver are an important and Our customer engagement.

back be that When would the year. provided guidance remain the quarter, the the remainder there credit to capital That strategic progress we outlook we of compete. half our the for key we we would represent use contemplated through they a macro products our like efficient, discuss move and as balance environment in assessing XXXX. of the each now additional challenging the for our update I And last year. of you of believe of balance on in said, which opportunities we sheet categories best-in-class addition, externalization. credit for we're In optimize we'll maximally to

you to of a lower currency-neutral We seen I end that a given range last highly revenue on remain and basis. XX% growth, everyone range across to conditions has the it's macro conservative. XX% guided important of be think point environment, to As dynamic. would today's to the quarter Accordingly, market, we

the I and focused April want across our with to also through the now strong that is May team revenue achieving we remains to have uncertain, accelerating momentum June the year. underscore and While on targets business the to growth for macro from July,

expect a on It that is quarter. in will approximately to of and to to accelerate X basis year. a with quarter quarter note exit PPP that year in third currency-neutral XX% We XX% fourth revenue points growth the we basis growth the to revenue program related the last the [indiscernible] we headwind we important XXX in third point recognized the quarter from revenue third lending

Excluding to this fourth The third half revenue in impact, of compares tougher XX%, our behind in line top to finally the growth which third having we eBay expect us. the quarter consistent expected XXXX in growth relatively vast the from results reach performance quarters. the of nearly first relates both acceleration and our majority

new we we XXXX. exit than stronger diversification contribution our with how platform our position pipeline a and allow expect in merchant the initiatives and business entered to addition, from the In of our the us to year

non-GAAP in raising and range We EPS $X.XX are deliver to now EPS guidance of to our the non-GAAP also expect $X.XX.

cost our in prioritization improved with to Our us enabling this earnings performance. drive efficiency and initiatives, conjunction are discipline

expect deliver and into will that the expansion fourth operating also us progress XXXX. this We to quarter non-GAAP in allow margin

across to as business flexibility of progress high with cash on of allocate advancing closing, our billion with competitive track this addition, us continues the pleased our a we advantage fronts. give degree power at generate In capital making we're flow the and, priorities structure. more in same we We're year. cash discipline. our generating a strategic time, $X than strategic remain In is sustainably free many to flow improving and cost The we're

strengthening are economic We headwinds, focus, our platform as to payments world's are the value digital our And on and focused position advantages. while long immune customers. term we our will deepen competitive we to the creating leading our for strengthen for and our for continue not shareholders invest

organization like supporting to Blake meeting look finance be I PayPal. Dan. forward over to to I'll Finally, that turn With he'll it thrilled I'm and that, absolutely to him. welcome back our I'd

Daniel Schulman

Gab. Thanks,

take I'd like some start to Investment the the had provide to we section, before on the So with Management. discussions Q&A Elliott color we've opportunity

have and built collaborative, appreciate discussions the and we've Cohn the team. we his all, of constructive First both Jesse been with partnership and

shareholder we to We are mutual goal completely in value, and substantially objectives. maximize achieving of our for aligned on the aligned our focus areas are

strategic to approximately capital focused cost updates. initiatives return $X.X capital on at a short- share such savings with new invigorated operational across an savings and expenses, capital we allocation, Jesse's authorization, allocation our of collaboration and they in as input capital share XXXX we operating of transaction our through program consistent improved XXXX including of discussions and full capital of and working of $XXX the on investments million appreciate We've billion revenue-generating evaluation least potential topics. we're to early and important and long-term a return year and Our been operational, following: with Investor billion alternatives and are on return fiscal discussed, repurchase And profitability as improvements, 'XX, plans. announce an number and and objectives $XX are upcoming pleased these Day in

and long-term vote in for engage our they our and a is ability team investment our to his their We strategy, confidence and to value generate Jesse with continue at communicated that Elliott, in of team management shareholders. have

it like to open to for much, now it information agreement to on continued your That's and the other extent We Thanks up sharing our our operator, also And to questions collaboration I'd let's questions. mentioned comments look initiatives, turn in partnership. hear into previously over our entered maintain have areas and our position across very of business. on Elliott's the an forward the PayPal. of operator we to

Operator

[Operator Instructions]. And our JPMorgan. Tien-Tsin first with question from Huang will come

Tien-Tsin Huang

the of Gabs, role elevated and Lots on to Treasurer. congrats digest here,

to executing hear with got Q&A, think going key wanted the it you've filling I with just roles, Dan here, I the right, for lots you're mentioned on strategy Elliott. to off, kick some you prioritizing how

allocation plan, you you've capital As just cost-cutting got consideration. mentioned,

and do priority? of we've down about part others. think long moves also in the what short but the I in-store question I you things heard didn't So key strategy, right, in of it, hear the nonnegotiable, the like as what was That as had, and term.

you mind would So on commenting that?

Daniel Schulman

a it's question. Yes, great

that gaining and to -- executing whatsoever. no make of we on knew our game growth Does strengthening in beginning going we to business. the and we laying of focus is one, we we narrow invest an growing lot ability it because at our had bread in opportunities we It value year. business butter to we knew there's #X a that plan and the of priority. is make we're is And Checkout we know things high the out conviction impact. on started That of So there, our proposition, We mistake, the done. to, had no the X in which are need their had the And that that really around our forward debate get share.

advantages lot a have there. We of

We our some gain coming are of can both of Digital incremental the churn I'm who bit encouraging lot about about where is talked seeing some a talk of but those we of our We've and places sure. really that a payments we share, But future, quite competitive in wallets. position. and questions, wallets combination -- probably are more a commerce quite come there a green of of some is very in. for we shoots. and, value it financial services proposition I'll digital continue some together. and improve some and And future make bit pretty improvements reduction the adoption, future. those. in cases, improvements to seeing Venmo are are in Number X radical to PayPal, Both

They to So hat Braintree. continue that to this have there. My off done goes And invest finally, tasks year. some Herculean Braintree team. we'll

in have tremendous in the processing momentum our full We stack marketplace.

a is to As quality there market. I in the mentioned, flight

to things going invest a and that. to on in, just and platform, are We multi-PSP we're And continue the side both like the side environment. payout orchestration clearly pay-in that on seeing

so And to are X those that double the and areas are we nonnegotiable. going down they're on

by We the you're like mentioned your you're by you are, pulling focus to back back. pulling areas there if because on way, definition, other places where are narrow going

to this like going instance, of we that that. going were For stock invest on to We're kind thing. and not focus do year, trading

expensive footprint don't we as focus that headcount. reduce might store, checkout. into the thought We have of That tied more also and It being exclusively go into a we is moving to for headcount fully reallocated in have. really into impactful the QR. where fully now. app regulatory we a have on the opposed integrated is those way. In market off-line we're less into right able card kind us been is We've much same as card to We much

lot so we're time domestically going to come going got they've go effort those just cost and those high do got takes a into to and long-tail that because certain on And to lot, that. not you've beta a it cross-border and international We're of and go things. things just have

And our the see results. in show on think expansion. with I to things focused we impact pleased impact. are that, up the think, in accelerate those to things the are a start do and operating mentioned, that consistently efficient we and we already. I'm this really our of get we quite fourth So see We're ability productive. are to quarter will we'll as make time And mentioned share. by of while bit. and the Gab margin they quite saw progress that quarter, beginning I and started largest We We the that all take I think making to good being

Operator

Our with next line Research. the will Wolfe come of Darrin question Peller from

Darrin Peller

cost expense we of it is Look, the we growth last lines had just expected definitely anticipated. the about couple the over some of years. you're talking sense, and makes magnitude But more saves, than given

the of wallet the if expect through and saves. what operating would into the just really reinvested of how and this if into leverage on any, Checkout should of investment in terms kind be versus about expense areas the we sources Maybe, pass you we be to bottom and can levels So can to. line, touch think will

Daniel Schulman

then and Gabs start I'll Yes, maybe will in. jump

all in on increased we applied focus And And have amount are a doing we this year we're and tremendous around the TPV I've key all, can things, There of those We're It's and first for value pandemic. to business. need We're -- this things. we to things year. and I other two, proposition, is the that extremely our take Braintree So like to But we doing now out? wallets -- those of of and our we focused. question. continue trillion are while checkout have how improve of as to XXX investments we in to somewhere really but need we're focus, do a are areas X costs we obviously, being invest Number some digital that being where One growth areas. were are or to around those platform. well. us coming And out quite mentioned aggressive not our and those we're we to just mentioned. doing start invest scale do X going We're last focused doing $X.X things that. to

the XX% Our up are ex up billion quarter, at in $X.X XX%, transactions eBay.

savings across amount unit We've in has of business transaction of giving drive our always renegotiated so has and is our costs course, now the of volume, suppliers. in contracts the on are. you put and number have and many And of headcount. a We our more can been OpEx The and that as then, our we us more unit well. your across both suppliers, cost quite expenses savings leveraged more better all of volume And transaction the productivity.

a our Gabs XX%. ago, As grew OpEx year by mentioned

can be of have more productive. plenty We We heads.

lower In fact, our taking others. full-time in when we contingent from places, we the away resources, But doing our some both our headcount and investing in workforce. are started reallocating is by year, workforce that than

And do that experience spend. things and low-cost need hiring in good geos less focus. all of servicing. so to we're better of the we rationalizing ways people. at cutting we our consulting a like into Those course, have product driving incremental are looking calls achieving And less productivity. are we're looking our We back coming Therefore, as footprint, at of we

that feel out the in the efficient. But cost be time, we tremendous continue same business. investments the so with a really we're to able invest really that to at be of we comfortable important quite take And amount putting It's to in.

Gabrielle Rabinovitch

expenses. in we really scale of the that have $X.X benefiting as the transaction-related of would mentioned, terms the Maybe really of next and comes billion ecosystem. and million $XXX nearly year, add, from just Dan I sort the Yes. identified And from XX% of savings this year

I to platform we that more cuts we the do the as that we wouldn't business, large way So about scale really the benefiting think that have have. from and

even of with impact strong those our savings, to we grow transaction year. I'd to In next addition, expense growth just that expect from Braintree would say And mix. the that's really continues

expect so And down. for we to TD come don't year-on-year

mentioned, relate of I as do we our headcount. recalibrated some is not The on be to would other really plans insignificant And an growth really point savings are plans year. headcount amount, really Dan with the to mention our balanced the

top The expectations line in. the thought has way some come adjusted. around about So really growing [indiscernible] have of we our

And savings an well. of so the that's important as driver

Daniel Schulman

checkout. has to share it from happen in and to the of don't piece live cost think site that seeing in the and from implementing we've of A I cutting Yes. needs to between our growth. for Well, mean, I eBay north part XX% incremental of revenue July is just the been taking pipeline be improvements revenue balance and we'd a to a has April investment. that gone That X% But be Braintree, incremental sales lapping slow-but-sure growth. of sure. in

Operator

Ellis come will question of next line from with MoffettNathanson. the Our Lisa

Lisa Ellis

expense of Darrin's Terrific. A margin the side on and follow-up to related question things.

well, mixing a Just business. implication margin being a in given lower the about you've view, investors think maybe of should Braintree the as how PayPal, taking got that trajectory it's but longer-term margin gross growing so

this conceptually gross for looking how more out margin of think just billion, do sort operating about you mix-related long million, then $XXX and but of navigating term, kind the structurally that business? or kind of beyond the potential immediate pressure So margin over $X.X

Gabrielle Rabinovitch

Yes, Lisa. absolutely. Thanks,

And grow we record the side, extent the to point, that really, extent profitable sort Braintree So And that yes, long the dynamic sure, I profitability limited to But certainly, to attractive to think as side the continue to continue track that, space. Braintree quite LE the would there do a it growth. of At is on of And I continue grow Braintree. a it of is Europe, same the of starting SMB time, mentioned, Braintree. in business. different mention important. to that, I mix are really and the to is will our a franchise we to profitability we have support characteristics in in the addition

the efficiencies little start But begin And year. so have in the expansion year, If importantly, to both doing I over we operating sustainably a think And margin at mentioned, provide realizing that points we're quarter. full operating Dan expect as the of and targeting to right margin fourth that allow expansion. margin will initiatives now basis the sort improve right we're that on do to has showing we early and mentioned of us next Dan the time. we're to about now, and profitably least guidance XX profile work grow

Operator

with Our next Kupferberg Bank America. question will come from of Jason

Jason Kupferberg

I there Venmo. I bit wanted volume grew about ask X%. little to overall a saw the

I easier think against slowed an a comparison. it bit

was Venmo it for track this on your revenue in should how happening expect to XX% year. Maybe curious assuming take for expectations. robust like what still But the It we the curious with what's second the just your revenue Venmo half came versus just growth. you're growth So growth for get volume sounds there? again, in so I'm on

Daniel Schulman

question. Jason, thanks the for

It's to down active And this now. be a that year. something little to you right excited XX So lot do going accounts. Venmo to at clearly, begin look, about TPV $X.XX million slow on scale, bit. kind It's like trillion when have in of things there's a closing of

I mentioned, in in initiatives, in revenue But still we're second. tough grew a on months million I'll the last mean, As that's touch side is pretty revenue still doing had of of easing TPV first TPV comps. comps. It's a QX now. specifically, say tough it's I comps. you I the We mean, year. up wouldn't And on half. -- we $XXX XX% host XX%

contacts, and on app. et working ending PXP that, you where really But complete refresh a will improvements, are on the matter syncing you're obviously, a improve the team of, there. app, the to around we And are in macroeconomic can top things send search focus on cetera. conditions, of of persistent receive is do So no buttons around which you up got and like, the there with around stimulus, increasing proposition lot value TPV reopening, that

up million are accounts, teen from are to with help debit addressable services between it's profiles, market strength on to So full use factor, year-over-year. of that. Venmo be mentioned, still XX ease and form a and volumes, do, the we opens as which can million Venmo, which and strength. now improve rewards but metal Pay integration, up there These working goods in are It's business kind the like of and guys will right integration, think, opens which XX that things going XXX% really commerce app anywhere I up I of accessibility PXP card reboot, with TAM the

which to come encourage holiday season You start will giving -- profiles, their on have the the to charities before there.

interoperability, link like So to PXP the I'm at opportunity. and big pleased as Venmo, big the doing. is PayPal, a pretty things start are opportunity with a I very Networks, what PayPal which ability they think think, are, interoperability, also and the is bigger more Venmo looking We're to PXP they're well. valuable to I they

lot Pay So a with lot Venmo obviously, to on Amazon. think to look a including forward to, about,

ton right come things of now. more So they're but a working to on

Operator

will Togut Evercore David with question come from next ISI. Our

David Togut

Congratulations, accelerating XX% Gabrielle. your per transaction QX, highest actually in account which in the is at least see quarters. the X growth in Good to last

on guidance? ARPA this that enough key customer So what engagement points to new revenue this is are do rate year your you track to in support And XXXX sustainable? higher proof see you as growth the increase

Daniel Schulman

Yes. in talked our thing of last about of the revenue year. Well, mean, about we guide the guide, on first QX sale Gab remarks, did all, PPP removed her XX% if normalized you I onetime the is think for as I

that came into So just July flat the basically and the we to hit fourth -- this guidance XX%. put then quarter and in there, quarter, jump-off north going to is of out we're

and we're as good we're think an feeling good But is you happen. the that can revenue be really we gave. feeling anything can I about in environment unpredictable So as that guidance

XX% view the engagement got not about best that is higher better. look by the the now the year to next TPA, if digital digital of are, and proof you more of increase in have wallet me XX% to gotten it continue as they the people of some I over the our quarter now of those And see Xx was hold quarter. do slightly But who XX% checkout. And at our transactions active churn you to wallet. TPA in in the -- Xx aren't unfolds. is do digital going in thought wallet. the base our wallet. terms In They've can so in we think that you're are points They is those now XX%. Churn than We last ARPA reduced that's for per who

to digital can TPA wallet, And so move we more we'll and more one, growth and the have. people the engagement enhance the

we The other a have to just actually PayPal. is thing room usage lot in improve of terms of

does XX% in those over transactions. capture out it's those at do About XXX. only We little those. look year? so of about came a online, consumer Fed financial with many you about of typical are a And of online XXX XX% transactions the how a are If

the savings X.XX% the grow. to to as of all more and as the do can rate. through And can can digital the that. we at we'll about there's year. more compelling more look the digital as the opportunity on more just the you'll putting We it There's services we see a we interest And and see XXx forward. do as our average. we launched rest TPA national lot we can high-yield a those of go see And ARPA people the be, think as that. I more thousands with people moves huge put wallet, That's so a wallet online, and they day on We're expand on

Operator

question the with line of from come Our next Rayna UBS. Kumar will

Rayna Kumar

Gabrielle. Congratulations,

You Later, so that. into in have Buy I a dig very want to just Now, unique strategy Pay

as your to in secondly, Pay get it you X discuss can were how downturn. placement X of and And to you been If BNPL strategy? the better a and global progress result if able may of evolve in have enter a we Pay

Daniel Schulman

unique fees. Gabs, Rayna, as do in. you to I guess jump a we approach Pay We merchant mentioned. can have don't maybe I'll Obviously, start. any charge you Later, Buy Now,

of Buy when Now, halo late We which money is about Later our no halo but have the consumers. not off XX% make Pay uses a We impact Now, the Later. somebody fees impact, Pay Buy to

those on we different inherent in in take cycles. credit Pay to Buy where look Later, the tremendous And so pool us We And rates. in as Now, not is Pay dependent tighten easily aren't that. can Later a That but we on Now, up streams. Buy advantage revenue we within and us for profit our quite need Checkout at gives

for We history. know know also is Later. a of for Buy XX% how they've us. the people Pay We that advantage We apply tremendous their That paid. Now, know,

lowest Pay the and highest at have Buy in well. we Now, amongst, if So as the if rates amongst, Later, time, loss not, rates approval the the same not,

we And and business so we've in credit been also We've business. in this the or so gone cycles. -- for XX -- years through

understand people this We inside who out. have and

think I so we of advantages. And have a huge amount

where, cases, And is done is product gain Now, pages. We are up checkout continue our just XXX,XXX in Clearly, tremendous are The we have, now to the gain Later? now merchants, That gets right placement leverage Buy it even Checkout have question it. when with incremental we we to done your product. page. we last share where the on seeing us for and right. never It's Pay page. many off share is

a proposition, flight as to and us again, in kind quality place we their continue see market and there's we And and that to of checkout. so more as robust the we such merchants as value continue well, to upstream more have a in grow

Gabrielle Rabinovitch

because see the continuing continuing grow to upstream add, of to also we're how we're I'd presentment better just in characteristics. part product

So more to consumers allow payments with spend. ways more to longer monthly duration, options their merchants introducing gives

upstream also great that so And been drive product presentment. us. really a for helps that It's

well. performance, very continue very loss as low see to We rates strong

Daniel Schulman

that And in XX that see XXX you the times it. million million over value shows used by saw consumers. consumers That

Gabrielle Rabinovitch

contraction we the about where just new we is think we in to environment economy, can consumer-friendly. the dynamic what an potentially as late add also I'd see some do fee exceptionally

late fees. in X, fees So transaction we no charge fees, for X, interest consumers Pay Pay no in don't on

incredibly our it's customers. for product overall, so attractive And an

Rayna Kumar

Very helpful.

Operator

Ng for of will come And from Mike and Goldman with have last we the one that line Sachs. question, time

Michael Ng

encouraging how was core now within if industry growth about the right little you to about share It a that. bit just and that Checkout. potential e-commerce to explore bit more could see branded you I hear gains could performing improvements talk and Branded was to is was that wondering PayPal And PayPal is that a teased I about relative talk just radical you some checkout and you Dan, core if share. initiatives pursuing maintain wondering the Checkout. improve little where at or

Daniel Schulman

Yes, sure.

tricky people on and have opinions First growth of It's e-commerce all on it. rates. different

we relatively best in flat. the second quarter, tell, was can growth e-commerce As

at obviously on July, share bit more If ex of in to little out actually of growing than on you probably of that. slightly And as of negative also is actually this bit Branded you Branded likely obviously as it bit, again, from We positive into which and that, to look margin and travel had out take remove gained if turn little if want we been share, Checkout, our to down, at is beginning as that it. a which quarter look Venmo, not PXP that. helpful sort that you is travel have continue we we're Checkout eBay, really we come of kind we a better and dynamics might well. And a thing if see do growth in

of of full kind into about year. X% as X% number out the a estimates the of year, is BofA people the were for is has at at dropped on. hearing down But That at the For the JPM year. full where about look XX% year. we're kind for early there. talking X% for It's we

continue to significantly of and bump-up XX%. way. to them we see expect to basics experience. half, hazy, I modernize Checkout merchant But and this last forward, unbranded see grow But There's expect the There but to not rates in And both continue checkout the We of a going by everybody e-commerce just traditional the They're to outside the had well. Reliability during the we'll rate rates we back is of and still seen payments than it's quickly of that clearly accelerating a by X of the faster side what on will matters, like. that the because are on business. like, crucial little hard that way historic instance, Mike, look honestly, for as But is we'll All pandemic. of penetration a conversion how XX% our years for Scale along on really understand are want branded trust the e-commerce normalizes. that. I'd the normalized did the of merchant. on kind PayPal the certain average like of the a lifeblood are and that Conversion call. this. merchant are mentioned rate between matters. e-commerce this ways crucial

and XX% between it's XX%. PayPal, For

also big them. can of we've got Latency one So are advantages do things lot better. is there we but of a

of X to of to really our is huge out X matters. alone, get goal every when latency. already We've seconds Our this second That's seconds cut, latency. year

It clicks and especially then a window. really app. we're merchant scrolls. clicked thing out other the a Right and of pop-up PayPal, too The and is into in context takes go often, mobile you into you that on removing focused on now, back

on of We experience factors native are app. a to user and beta control that offers SDK a their consistent and merchant across form rolling out gives full mobile just a a API new

out, for redirects. bouncing are are speed there and using no no So friction, it, eliminating who simple, fast, consumers increasing it's

It's card stay And it's up, the a integration. into for into beta, use conversion businesses. lightweight, change out putting and rewards, it app, sign We're rewards into sort abandonment. and inside log of get the all a merchant and minimal can in, obviously, all our You merchants, that vaulted, market just improves, small native.

that that this that offers take simple do We to now. through pleased the that as deliver checkout out got team I'm lot checkout speak It consumers, -- powerful. can sort making but with year. there be to into of it larger to easy are legacy X-click account later like for really will and our with extremely we there, that for is to putting working and are no-password But integrate out network businesses what lightweight market. beginning of something we a time And on right a roll across base, out we've the the

Michael Ng

Great. That was very helpful.

Daniel Schulman

all that's we you the I call. Thanks look obviously soon. to Mike. glad, the to to end everybody do time, for again speaking bye. and Well, I'm Okay. want thank great going forward Bye, your of be to again. operator, for questions, of the

Operator

conference today's concludes this And call.

You now disconnect. may

PayPal (PYPL) 3 Aug 222022 Q2 Earnings call transcript