PayPal Holdings Inc. edged above expectations with its quarterly revenue and earnings outlook Wednesday, though the company fell short of a margin metric and disappointed Wall Street with its take rate.
“There’s no other items that really contributed to that miss,” Acting Chief Financial Officer Gabrielle Rabinovitch said on the earnings call, noting that PayPal specifically saw pressure related to business loans.Analysts also flagged concerns about PayPal’s transaction take rate, which came in at 1.74%, while consensus expectations were for about 1.9%.
Rabinovitch said on the earnings call that PayPal expects continued pressure on transaction-margin performance in the third quarter before conditions improve in the fourth quarter. Over the long haul, she anticipates that PayPal’s transaction margins “will certainly be benefited” by factors such as accelerations in branded checkout and e-commerce growth, improved cross-border trends, and new value-added services.
Chief Executive Dan Schulman told MarketWatch that PayPal was seeing encouraging spending trends throughout the business and in the industry, as e-commerce growth picks up, discretionary purchasing improves and consumers start to rebalance their preferences once again after dramatically weighting their dollars more toward travel and services when the economy initially reopened.