PayPal Posts Solid Earnings Beat

PayPal Holdings Inc. (NASDAQ: PYPL) reported fourth-quarter financial results after the markets closed on Thursday. The company had $0.36 in earnings per share (EPS) on $2.6 billion in revenue, compared to consensus estimates from Thomson Reuters that called for $0.35 in EPS on $2.51 billion in revenue.

During the quarter the company announced that its board of directors has authorized a new share repurchase program, under which the company may repurchase up to $2 billion in outstanding common stock.

In the fourth quarter, PayPal processed $82 billion in total payment volume (TPV), representing FX-neutral growth of 29%, which was faster than the growth rate of e-commerce. Merchant services TPV growth accelerated to 36%, and represented 81% of overall TPV for the quarter. Finally, PayPal processed $20 billion in mobile payment volume, up 45%, representing 25% of TPV for the quarter.

In terms of guidance, the company expects to have EPS in the range of $0.34 to $0.36 and revenues to be in the range of $2.47 billion to $2.52 billion in the first quarter. There are consensus estimates that call for $0.35 in EPS on $2.48 billion in revenue.
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Dan Schulman, president and CEO of PayPal, commented:

We exited 2015 with great momentum. Our strong results reflect PayPal’s progress in delivering on our strategy to drive the digital payments revolution. In the face of a slow global economy and foreign exchange headwinds, PayPal exceeded its full year revenue, earnings, and free cash flow commitments to shareholders. As money becomes digital and the world goes mobile, we see tremendous opportunity ahead to expand our leadership, transform the way people move and manage their money and deliver increased value to shareholders.

On the books the company has cash, equivalents, and non-equity investments totaling $5.7 billion at the end of the fourth quarter. PayPal also generated $728 million of operating cash flow and $564 million of free cash flow during the fourth quarter of 2015.

Shares of PayPal closed Wednesday at $31.59, with a consensus analyst price target of $41.19 and a 52-week trading range of $30.00 to $42.55. Following the release of the earnings report, the stock was up 4.9% at $33.15 in the after-hours trading session.