PayPal (PYPL) earnings for the second quarter of 2022

Dan Shulman, President and CEO of PayPal Holdings Inc., arrives for the morning session of Allen & Co. Media & Technology Conference in Sun Valley, Idaho, USA, Wednesday, July 10, 2019 The 36th annual event brings together many of America’s richest and most influential people in media, technology and sports.

Patrick T. Fallon | Bloomberg | Getty Images

PayPal shares rose 13% in extended trading on Tuesday after the financial services company posted stronger-than-expected second-quarter results. During the earnings presentation, PayPal said it had entered into a value creation information exchange agreement with Elliott Management.

“As one of PayPal’s largest investors, with an investment of approximately $2 billion, Elliott is a firm believer in PayPal’s value proposition,” Elliott’s managing partner, Jesse Cohn, was quoted as saying. presentation. “PayPal has an unrivaled and industry-leading presence in its payments business and is right to win in the near and long term.”

The news comes the day after Elliot said he became the largest investor in the social network operator pinterest.

Here’s how PayPal fared in the second quarter:

  • Income: 93 cents per share, adjusted against According to Refinitiv, 86 cents per share, as expected by analysts.
  • Income: $6.81 billion compared to $6.79 billion, according to Refinitiv, as expected by analysts.

Revenue rose 9% year-on-year, but the company posted a net loss of $341 million compared to a profit of $1.18 billion a year earlier. At the end of the quarter, PayPal had 429 million active accounts, up 6% year-over-year, but below the analysts’ consensus polled by StreetAccount of 432.8 million.

The company highlighted the progress it has made in improving its capital efficiency. The company expects to cut $900 million this year and said the annual benefit from cuts and other changes should save at least $1.3 billion in 2023.

“We have a lot of goals. We can be more productive,” CEO Dan Schulman told analysts on a conference call.

PayPal has announced a new $15 billion share buyback program, four years after the $10 billion program was launched.

The company is retreating in some areas, including stock trading, according to Shulman, and has said it will focus on in-store cards rather than solely on QR codes. The company is exploring interoperability between PayPal and the Venmo payment app, he said.

And the company said it is “committed to working with Elliott Investment Management LP on a comprehensive assessment of capital return alternatives.” Wall Street Magazine informed in July, Elliot took a position at PayPal.

“Our discussions are focused on operational improvements, income-generating investments and capital allocation, and they are in line with our short and long-term goals and plans,” Shulman said.

PayPal has said it is looking for a successor for Mark Britto, chief product officer for the past two years. Britto will retire at the end of this year.

For the full year, PayPal said it expects $3.87 to $3.97 in adjusted earnings per share, compared to the $3.81 to $3.93 range it provided. in April. Analysts polled by Refinitiv were expecting $3.82 a share.

In the second quarter, thanks largely to the growth of Venmo, PayPal added about 400,000 new active accounts, or NNAs. In the first quarter, PayPal reported 2.4 million NNAs, for a total of about 2.8 million in the first half of 2022. He stated that he still intends to add 10 million NNA for the entire year.

“However, as with all of our forecasts, broader economic factors could impact NNA growth, given that channels that drive organic customer acquisition could be adversely affected by lower consumer sentiment and lower demand for discretionary goods,” Shulman said.

PayPal shares have fallen more than 52% since the start of the year.

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