PayPal Revenue: What to Expect

With its share price more than halving on the year, PayPal Holdings Inc. will look to change the narrative on Thursday afternoon when it reports third quarter results.

The company, once an investor darling, fell out of favor on Wall Street in 2022 amid a series of guidance cuts that rolled back overly optimistic projections. But analysts generally agree that PayPal PYPL,
-4.40%
faces more achievable goals at this point, and they will be looking to see if the business crosses the bar.

Here’s what to expect in the next report.

What to expect

Earnings: Analysts tracked by FactSet expect PayPal to post 96 cents per share of adjusted earnings for the third quarter, up from $1.11 per share in the prior quarter. On Estimize, which collects projections from hedge funds, academics and others, the average estimate is 98 cents per share.

Revenue: The FactSet consensus predicts $6.81 billion in revenue, up from $6.18 billion a year ago. Those who contribute to Estimize are looking for an average of $6.84 billion.

Movement of stock: Shares of PayPal rose after each of the company’s last two earnings reports, although they fell after each of the previous three. They have lost 58% so far in 2022 as the S&P 500 SPX,
-2.50%
decreased by 21%.

Of the 50 analysts tracked by FactSet who cover PayPal shares, 38 have buy ratings and 12 have hold ratings, with an average price target of $119.21.

What else to watch out for

PayPal outlined a variety of revenue and cost targets in its latest earnings call, and Barclays analyst Ramsey El-Assal will be looking for signs of the company’s ability to meet those targets.

“For example, investors are likely to be fairly focused on constant-currency revenue growth and whether July’s surprisingly healthy 14% has proven sustainable in light of macro/e-industry headwinds. trade,” he wrote. “Similarly, we think investors are fairly optimistic about PayPal’s ability to deliver expense savings (potentially above forecast), so progress against the $900 million operating savings target PayPal’s dollars for 2022 (and a potential reading up to the broader 2023 annualized target) will be the focus on the upcoming Q3 call.

He added that “PayPal’s share price performance will evolve alongside progress on these key metrics.”

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RBC Capital Markets analyst Daniel Perlin will be watching to see how PayPal’s more streamlined focus manifests in the company’s results, though that’s something that will be tracked beyond the quarter.

PayPal “set in motion a strategic transformation of: 1) reducing its product orientation and 2) optimizing its operating costs, which we believe has paved the way for a potential rise in customer expectations. FY23 which were held back by macro uncertainty,” he wrote. .

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Investors could get an idea Thursday of what to expect next year, as SMBC Nikko Securities America analyst Andrew Bauch pointed out that the company traditionally offers a “first look” at projections for the next exercise when calling the third trimester.

“Given recent challenges in managing Street’s expectations, we expect management to err on the side of conservatism and view a ‘double-digit’ revenue growth guide as the most likely approach,” he wrote. “That said, if macroeconomic conditions come out better than expected, we believe that mid-adolescence is achievable in the context of a [comparisons].”

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