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PayPal revenue increases 27% under new reporting method. PayPal stock is about to breakout.

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PayPal revenue increases 27% under new reporting method.  PayPal stock is about to breakout.

PayPal shares (PYPL) early Tuesday reported first-quarter earnings that rose 27% from a year earlier with a new accounting approach, while revenue and total payment volume for PayPal stock led the way. Management raised its 2024 earnings outlook for PYPL stock.




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The digital payments company reported profits before the market opened, and not after the close as usual.

The new accounting includes the impact of stock-based compensation costs and associated employer payroll taxes. PayPal said it restated its adjusted financial results for 2023, 2022 and 2021 to reflect the accounting change.

Under the new reporting method, PayPal earnings for the March quarter rose 27% to $1.08 per share, on an adjusted basis. Sales rose 9% to $7.7 billion.

Analysts polled by FactSet expected PayPal earnings of $1.22 per share on revenue of $7.515 billion.

“Without the operating expense adjustments for SBC, adjusted earnings per share would have been $1.40, 15% higher than consensus estimates of $1.22,” Evercore ISI analyst David Togut said in a report.

PayPal Stock 2024 Guidelines

PayPal also updated its 2024 guidelines. The company forecast adjusted earnings per share growth of “mid-to-high single-digit percentage” of $3.83 last year based on the new reporting methodology.

Under its previous reporting methodology, PayPal had forecast flat earnings per share growth through 2024.

“The first quarter of 2024 is off to a good start,” Susquehanna analyst James Friedman said in a report. “We continue to notice the increased intensity and cohesive strategy coming from PayPal’s new management.”

New CEO Alex Chriss took over at the end of September. He has made big changes.

“We also see a substantial need for continued retooling of the business, how we work with our customers and how we execute,” Chriss said during the earnings call with analysts.

He added: “We are encouraged by the progress to date, but remain realistic that we still have a lot of work to do and there are many opportunities to deliver profitable growth. This is a transition year as we focus on execution and making critical choices that will position the company for long-term success. We have a plan that gets this company back to where it needs to be and stays focused on the execution to get there.

Restructuring costs

The 2024 guidance includes restructuring charges of $175 million for the first quarter and an estimated $70 million to $90 million in the second quarter.

In the first quarter, total payment volume processed by business customers in the quarter increased 14% to $403.9 billion. Analysts had forecast a total payment volume of $393.64 billion.

Meanwhile, PayPal bought back $1.5 billion of its own shares in the first quarter. It plans at least $5 billion in total buybacks by 2024.

PayPal has also appointed a new Chief Financial Officer: Jamie Miller, previously CFO at consultancy EY.

San Jose, California-based PayPal has evolved from an online payment site to a mobile shopping and personal payments site. Meanwhile, competition has increased Apple (AAPL), Square-parent Block (SQ) and others.

PayPal stock entry point

In today’s stock market, PayPal stock rose 1.4% to 67.95 in morning trading.

Additionally, PayPal stock has a starting point of 68.21 in its first quarter earnings report.

Looking at PayPal’s earnings report, shares are up 9% in 2024, but down 12% over the past year.

SQ shares rose slightly and approached the 50-day mark. Square-parent Block will report on Thursday.

PayPal said it announced plans on Feb. 7 to change its accounting practices

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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