PayPal beat The Street when it reported fourth-quarter earnings after the bell on Wednesday. The global payments giant surpassed analyst expectations for both sales and profit.
The company reported $3.71 billion in revenue on a foreign-exchange neutral basis, or 24% growth from the same period last year. Analysts were expecting $3.63 billion in revenue for the quarter.
Adjusted earnings per share were 55 cents, compared to the 52 cents that Wall Street forecast.
But shares later ticked down as much as 14% in after-hours trading, after eBay announced that it is making competitor Adyen its primary checkout partner. PayPal will remain a checkout option, however, with the two companies agreeing to extend their partnership through July 2023.
“eBay has signed an agreement with Adyen, a leading global payments processor, to become its primary payments processing partner. PayPal, a long-time eBay partner, will be a payments option at checkout for eBay buyers,” read the eBay press release.
The stock also slipped due to a guidance forecast that just missed the mark. PayPal is expecting its overall revenue for the year to be between $15 billion and $15.25 billion. The midpoint was beneath what analysts surveyed by Yahoo Finance had been forecasting, with $15.16 billion. Other estimates had been as high as $15.26 billion.
PayPal said its adjusted earnings per share was expected to fall between $2.24 and $2.30. Yahoo Finance analysts had been expecting $2.25.
In a conversation with TechCrunch, CEO Dan Schulman voiced optimism about the upcoming year. The “world is moving towards digital payments,” he said. “Cash is being digitized” and “mobile phones are exploding.” There’s “a lot of very healthy signs in the business that bode well for a strong 2018.”
It may not have been enough to send the stock soaring, but the company is seeing record total payments volume, because “customers are using it more than ever before,” said Schulman, averaging over 33 transactions per year. Paypal processed $131 billion in TPV for the fourth quarter, showcasing 32% growth.
PayPal has grown to 227 million active customer accounts, after adding 8.7 million for the quarter.
The company also announced an agreement with Synchrony Financial. Synchrony is acquiring PayPal’s consumer credit receivable portfolio, worth $6.4 billion. The transaction is expected to close in the third quarter of the year.
PayPal separated from eBay in 2015 and is currently the larger of the two companies, with a market cap of $103 billion. eBay is valued at $42 billion.
PayPal is also the owner of Venmo, the popular peer-to-peer payments platform. The app processed $10.4 billion in payments in just the fourth quarter alone.
Venmo’s overall growth for the year was 97%, processing $35 billion in payments in 2017.
It’s a “beloved application for the millennial generation,” said Schulman. He said that users are opening the app 4-5 times per week and that Venmo will “continue to add more and more services and functionality” to the platform.