In the early morning of July 30, Beijing time, payment service provider PayPal today announced financial results for the second quarter of FY2020. According to the report, PayPal's net revenue for the second quarter was US$5.261 billion, up 22% from US$4.305 billion in the same period last year. Excluding the impact of exchange rate changes, the year-on-year increase was 25%; net profit was US$1,530 billion, up 86% from US$823 million in the same period last year. PayPal's second-quarter revenue and adjusted earnings per share both exceeded Wall Street analysts' expectations, driving its post-market share price up sharply by nearly 4%.
Main performance:
In the fiscal quarter ending June 30, PayPal's net profit was $1,530 million, up 86% from $823 million in the same period last year; earnings per share were $1.29, up 86% from $0.69 in the same period last year. Excluding certain one-time items (not in accordance with US GAAP), PayPal's adjusted net profit for the second quarter was $1,263 million, up 49% from $848 million in the same period last year; adjusted earnings per share were $1.07, up 49% from $0.71 in the same period last year, exceeding analysts' previous expectations. According to data provided by Yahoo Finance Channel, the average of 38 analysts expected PayPal's earnings per share to reach $0.88 in the second quarter.
PayPal's net revenue for the fourth quarter was US$5.261 billion, up 22% from US$4.305 billion in the same period last year. Excluding the impact of exchange rate changes, the year-on-year increase was 25%. This performance also exceeded analysts' previous expectations. According to data provided by Yahoo Finance Channel, 34 analysts on average expect PayPal's second-quarter revenue to reach 4.99 billion US dollars.
PayPal's total payment volume (TPV) for the second quarter was US$221,731 billion, up 29% from US$172,359 billion in the same period last year. Excluding the impact of exchange rate changes, the year-on-year increase was 30%.
PayPal's total operating expenses for the second quarter were US$4.310 billion, up from US$3.60 billion in the same period last year. Among them, transaction expenses were US$1,843 million, up from US$1,627 million in the same period last year; transaction and loan losses were US$440 million, up from US$318 million in the same period last year; customer support and operating expenses were US$423 million, up from US$399 million in the same period last year; sales and marketing expenses were US$414 million, up from US$356 million in the same period last year; technology and development expenses were US$631 million, up from US$483 million in the same period last year; Restructuring and other expenses were $47 million, compared to $2 million for the same period last year.
PayPal's operating profit for the second quarter was US$951 million, up from US$705 million in the same period last year; operating profit margin was 18.1%, up 170 basis points from 16.4% in the same period last year. Not in accordance with US GAAP, PayPal's operating margin for the second quarter was 28.2%, up 504 basis points from 23.2% in the same period last year.
Other financial information and performance indicators:
PayPal's operating cash flow for the second quarter was $2.4 billion, a sharp increase of 103% compared to the same period last year; free cash flow was $2.2 billion, a sharp increase of 112% compared to the same period last year. As of December 31, 2020, the total amount of cash and cash equivalents and non-equity investments held by PayPal was US$16.2 billion. PayPal entered the public bond market in May 2020 and raised $4 billion by issuing fixed-interest priority bonds at a weighted average real interest rate of 2.26%. As of June 30, 2020, PayPal's total debt was $9 billion. In the second quarter, PayPal repurchased approximately 1.4 million shares of common stock and returned $2.20 in cash to shareholders.
PayPal added 21.3 million active user accounts in the second quarter, an increase of 21% over the previous year, and the total number of accounts reached 346 million. In the second quarter, PayPal processed 3.7 billion transactions, up 29% year over year. Over the past 12 months, PayPal processed 39.2 transactions per active account, which is roughly the same as the same period last year. Excluding the impact of the acquisition of Honey in January 2020, PayPal processed 40.7 transactions per active account over the past 12 months, an increase of 4% over the previous year.
Performance outlook:
PayPal expects the company's total payments to increase 30% year over year in the third quarter of fiscal year 2020; net revenue will increase 23% year over year; net revenue will also increase 25% year over year without the impact of exchange rate changes; earnings per share will increase 45% year over year; and earnings per share after adjustments that do not comply with US GAAP will increase 25% year over year, reflecting adjustments of about US$530 million, mainly representing estimated equity incentive expenses of about US$370 million and related employer remuneration taxes. According to data provided by Yahoo Finance Channel, the average of 33 analysts expected PayPal's third-quarter revenue to reach 5.06 billion US dollars, and the average of 38 analysts expected PayPal's adjusted earnings per share for the third quarter to reach 0.86 US dollars.
PayPal also expects that the company's total payments for fiscal year 2020 will increase by 20% to 29% year over year; net revenue will increase 20% year over year, excluding the effects of exchange rate changes, will increase 22% year over year; earnings per share will increase 25% year over year; and earnings per share after adjustments not in accordance with US GAAP will increase 25% year over year, reflecting adjustments of approximately $2.11 billion, mainly representing an estimated $1.47 billion in equity incentive expenses and related employer compensation taxes. According to data provided by Yahoo Finance Channel, the average of 42 analysts expected PayPal's annual revenue to reach 20.35 billion US dollars, and the average of 41 analysts expected PayPal's adjusted earnings per share for the whole year to reach 3.38 US dollars.
Stock price changes:
On the same day, PayPal's stock priceNASDAQThe market rose $8.33 in regular trading to close at $184.60, or 4.73%. In after-hours trading ending at 5:10 p.m. EST on the 28th (5:10 a.m. Beijing time on the 30th), PayPal's stock price rose again by $6.70 to $191.30, or 3.63%. Over the past 52 weeks, PayPal's highest price was $185.44 and the lowest price was $82.07. (Tang Feng)