PayPal Strikes Partnership With Visa
July 21 2016 - 5:40PM
Dow Jones News
PayPal Holdings Inc., which has worked to extend its reach since
splitting with eBay Inc. last year, said Thursday it had forged a
new partnership with credit-card issuer Visa Inc.
The money-moving service also posted a 15% rise in quarterly
revenue and an increase in profit, with payment transactions
climbing during the three-month period.
Shares of the company, up 27% over the past six months, rose 2%
to $41 in after-hours trading.
PayPal has one of the largest market values of any
financial-technology company. At the end of its first quarter,
PayPal's customers had more than $13 billion in accounts at the
online-commerce company.
And since breaking off from its former parent company, PayPal
has worked to build its reach. In addition to linking to a credit
or debit card or bank account, there are some 66,000 partner stores
in which consumers add cash into their PayPal accounts. PayPal
accounts allows customers to buy things on the web or transfer
money.
With the Visa deal, PayPal will join Visa's commercial framework
for mobile payments. "This will enhance transaction security and
expand acceptance for PayPal's digital wallet to all physical
retail locations where Visa contactless transactions are enabled,"
the companies said in a statement.
Consumers will be able to move money from their PayPal and Venmo
accounts to their bank accounts via their Visa debit card. The pact
also installs economic incentives, including Visa incentives for
increased volume, among other facets.
"We want to democratize financial services and become an
everyday, essential service for underserved consumers," said Dan
Schulman, chief executive of PayPal, in a statement.
PayPal also raised its annual revenue guidance to between $10.75
billion and $10.85 billion, from $10.5 billion to $10.7 billion
previously. The company now expects adjusted earnings on a
per-share basis between $1.47 and $1.50, up from $1.45 to $1.50
previously.
For the third quarter, PayPal expects adjusted earnings between
33 cents and 35 cents, compared with analysts' expectations of 33
cents.
In the June quarter, the company processed 1.4 billion payment
transactions, which translates to 29 payment transactions per
active account, an increase from 26 transactions per active account
a year earlier.
For the quarter, PayPal's earnings rose to $323 million, or 27
cents a share, from $305 million, or 25 cents a share, a year
earlier. Excluding certain items, the company posted per-share
earnings of 36 cents, up from 33 cents a year earlier, on a pro
forma basis, in line with the average analyst estimate of 36 cents,
according to Thomson Reuters. The company had forecast adjusted
earnings between 34 cents and 36 cents.
The San Jose, Calif., company said revenue rose 15% to $2.65
billion, above the average analyst estimate of $2.6 billion. The
company had projected quarterly revenue of $2.57 billion to $2.62
billion.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
July 21, 2016 17:25 ET (21:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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