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PayPal tops estimates amid surge in online shopping but outlook disappoints
San Jose, California
PAYPAL Holdings Inc beat Wall Street estimates for quarterly revenue and profit on Monday, boosted by a surge in digital payments as Covid-19 lockdowns worldwide drove more businesses online, but it forecast current-quarter profit below expectations.
Shares of the digital payments processor fell more than 6 per cent in extended trade.
For the fourth quarter, PayPal expects adjusted profit to grow in a range of 17-18 per cent, below analysts' estimated growth of about 24 per cent, according to IBES data from Refinitiv.
PayPal chief executive Dan Schulman said in a call with analysts that the company was giving a more prudent estimate for the fourth quarter in part because of uncertainty due to the pandemic and its impact on the global economy, as well as Tuesday's US presidential election and concerns about social unrest.
Like other companies in the digital payments sector, PayPal has been profiting from a boom in online transactions this year, heavily driven by pandemic restrictions that have pushed more business into the virtual realm.
The San Jose, California-based company processed a total of US$247 billion in payments in the third quarter, up 36 per cent from the year-earlier period, and added 15.2 million net new active customers.
The company said it was on track to process just shy of US$1 trillion in payments this year.
While pandemic lockdowns eased in many regions during the third quarter, PayPal said momentum for digital payments continued, and it recorded its all-time highest daily payments volume level in October.
"The world continues to accelerate towards a digital first economy," Schulman said in an interview. "That drove an incredibly strong quarter for us."
Revenue rose about 25 per cent to US$5.46 billion, compared with analysts' average estimate of US$5.43 billion.
Venmo, the company's service which allows individuals in the United States to send each other money through an app, processed US$44 billion in payments in the third quarter, up 61 per cent.
The company forecasts revenue for Venmo to approach US$900 million in 2021, Mr Schulman said.
PayPal has been focusing on expanding the breadth of services available to customers of its online wallets.
In October PayPal announced it would allow customers to hold bitcoin and other virtual coins in its online wallet and shop using cryptocurrencies at the 26 million merchants on its network. REUTERS