PayPal Profit Rises 59% -- Update
January 31 2018 - 6:42PM
Dow Jones News
By Peter Rudegeair
PayPal Holdings Inc. said Wednesday that fourth-quarter profit
rose 59% despite booking a big charge related to the U.S. tax
overhaul.
The San Jose, Calif.-based payments company reported a quarterly
profit of $620 million, or 50 cents a share. That compares with a
profit of $390 million, or 32 cents a share, in the same period of
2016. On an adjusted basis, PayPal's per-share earnings rose to 55
cents, above the estimate of analysts polled by Thomson
Reuters.
PayPal incurred a tax expense of $180 million because of the
"impact of the recently enacted Tax Cuts and Jobs Act of 2017,"
which brought its effective tax rate to 28.2%. In the fourth
quarter of 2016, PayPal's effective tax rate was 16.8%.
Shares fell over 3% in aftermarket trading. PayPal's stock has
been highly sought after by investors, rising 114% over the past
year.
Payment volume totaled $131.45 billion, up nearly one-third from
the same period a year ago. Venmo, PayPal's mobile person-to-person
payments service, handled $10.4 billion in volume during the fourth
quarter. That was 86% more than the volume it handled in the fourth
quarter of 2016.
Net revenue rose 26% to $3.74 billion, more than analysts were
expecting. Revenue from PayPal's lending activities and its other
services rose 43% to $523 million.
Expenses rose 15% to $2.9 billion thanks in part to a one-third
increase in transaction costs.
PayPal also announced that it has reached a deal with eBay Inc.,
its former parent company, that would keep its digital wallet as a
payment option on the auction website through 2023. A previous
operating agreement that covered PayPal's role on eBay was set to
expire in 2020.
Despite being separate companies since 2015, eBay is still a
large, though declining, contributor to PayPal's business. Around
22% of PayPal's 2016 revenue came from customers on eBay's
platform, down from 26% in 2015 and 29% in 2014.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com
(END) Dow Jones Newswires
January 31, 2018 18:27 ET (23:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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