PayPal holdings (PYPL) early Tuesday reported a 27% year-over-year rise in first-quarter profit using a new accounting method, while revenue and total payment volume for PayPal shares beat expectations. PYPL stock rose on this news, suggesting it has moved past the buy point.
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The digital payments company reported earnings before the market opened, rather than after the close as usual.
The new accounting takes into account the impact of stock-based compensation expense and associated employer payroll taxes. PayPal said it has restated adjusted financial results for 2023, 2022 and 2021 to reflect the accounting change.
PayPal’s March quarter profit rose 27% on an adjusted basis to $1.08 per share. Sales rose 9% to $7.7 billion.
Analysts polled by FactSet expected PayPal to earn $1.22 per share on revenue of $7.515 billion. A year earlier, PayPal earned $1.17 per share on revenue of $7.04 billion.
Payment volume exceeds
Total payment volume processed by merchant customers increased 14% to $403.9 billion in the quarter. Analysts had forecast total payment volume of $393.64 billion.
At the end of September, new CEO Alex Chriss took over the helm. PayPal also appointed a new chief financial officer: Jamie Miller, former CFO of consulting firm EY.
San Jose, California-based PayPal has evolved from an online checkout site to a mobile shopping and person-to-person payment site. The competition has now intensified Apple (AAPL), square parent block (SQ) and others.
PayPal Stock Guide 2024
On the stock market today, PayPal shares rose 8.2% to 72.50 in early trading. This is likely to reach a buy point of 68.21 from a consolidation three months ago.
PayPal has also updated its 2024 guidance. Based on the new reporting methodology, the company forecast adjusted EPS growth in the “mid-to-high single digits” compared to $3.83 last year. The 2024 guidance includes restructuring costs of $175 million for the first quarter and an estimated $70 million to $90 million for the second quarter.
In PayPal’s earnings report, shares rose 9% in 2024 but fell 12% last year.
SQ stock rose slightly and approached its 50-day line. Square-Parent Block is expected to report on Thursday.
PayPal said it announced plans to change its accounting methods on February 7
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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