PayPal (NASDAQ:PYPL) share price falls on profit decline

Here’s how PayPal fared following its latest quarterly results…

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The Paypal Holdings Inc (NASDAQ: PYPL) share price has seen better days after the company released its second-quarter results.

Shares in the online payments company are moving to the downside following the result. At the time of writing, the PayPal share price is down 5.3% to US$286.00 in after-hours trade.

Not a good surprise for the PayPal share price

There were two sides to PayPal’s second-quarter results this morning. Unfortunately, it appears the general market consensus is to focus on the negative one.

On the positive side of the coin, PayPal beat analyst estimates with adjusted earnings per share of US$1.15, versus US$1.12 expected. The company onboarded an additional 11.4 million net new active accounts, taking total active accounts to 403 million.

More accounts helped PayPal achieve a 17% year-over-year (YoY) increase in revenue to US$6.24 billion. Additionally, the company lifted its total payment volume by 40% to $311 billion.

Commenting on this performance, president and CEO Dan Schulman said:

On the heels of a record year, we continued to drive strong results in the second quarter, reflecting some of the best performance in our history. Our platform now supports 403 million active accounts, with an annualised TPV run rate of approximately US$1.25 trillion. Clearly PayPal has evolved as an essential service in the emerging digital economy.

On the flip side, revenue came in softer than analysts were anticipating. Another negative for the PayPal share price was earnings per share (EPS) declining by 23% YoY to US$1.00. This was followed up with disappointing guidance for the next quarter.

PayPal expects diluted EPS for Q3 to come in at US$0.68, compared to US$0.86 in the prior year.

Continued push into BNPL

In regards to strategic initiatives, PayPal expanded its buy now, pay later (BNPL) offerings across international markets, including Australia.

The company’s Pay in 4 offering launched on Aussie shores during the quarter, putting a dent in the share prices of local competitors such as Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). However, the US payments giant revealed this month that it would not be charging late payment fees.

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Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, PayPal Holdings, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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