PayPal Active Account Growth Slows, But Transactions Increase
Like many payments companies, PayPal is lagging. Despite macro uncertainty, active users are transacting more.
Dan Schulman, exiting CEO, noted that digital wallets, notably PayPal, have been increasing share. They gained over 100 basis points during the epidemic, yet they still took share from manual card entry.
BNPL Momentum
The company is seeing particular success with BNPL, which Schulman said “is driving significant lifts in checkout and incremental TPV [total payments volume].” Since its debut three years ago, BNPL has loaned 200 million dollars to over 30 million customers and 300,000 businesses. The company’s TPV BNPL total is $20 billion, up 160% year over year, and the transaction count is up 200%.
In the latest quarter, foreign exchange-neutral TPV rose 9% to $357 billion, according to results documents.
P2P volume—including PayPal, Venmo, and Xoom—dropped 2% to $91 billion. Venmo TPV rose 3% to $62.5 billion.
On an FX-neutral basis, cross-border commerce was $45 billion and 13% of TPV, down from 14% last year.
Transactions per active account grew 13% to 51.4.
“We are putting significant resources behind the modernization of our checkout experience in order to defend and grow our market share in our branded checkout business,” he said. The CEO emphasized passwordless, one-click native in-app experiences. According to the call, the new checkout integrations are increasing conversions by 3–10%.
PayPal Complete Payments “will dramatically extend our unbranded total addressable market by as much as $750 billion,” he added.
Discretionary Spending Pressured—for Now
Forward, Schulman said, “our baseline assumption is that discretionary spend will remain under pressure and global eCommerce growth will be slightly positive year over year. That said, we are seeing signs that inflation is beginning to cool and it’s logical to expect that discretionary spend versus nondiscretionary spend will begin to increase.”
On the call, interim CFO Gabrielle Rabinovitch stated Braintree and Venmo drove 5% transaction revenue growth to $6.7 billion. Currency-neutral U.S. revenue climbed 10% and overseas revenue 2%. Loss performance improved from the fourth quarter last year, she observed. TPV lost 0.05%.
And with a nod to the fact that the installed base is firmly entrenched within the PayPal ecosystem, looking ahead through 2023, the CFO said that “we do not expect total active accounts to grow in 2023. That said, we have confidence that our monthly active, unique user base will be stable to growing.”
Reflecting on current trends, Schulman said “We’re seeing widespread acceleration both in January and February. We’re seeing it in branded checkout, which has stepped up quite nicely from Q4. We’re seeing it in our Braintree services as well. Buy now, pay later, continues to accelerate.”
As he told the analysts: “What’s really happening is our MAUs [monthly active users] are incredibly consistent, staying with us, are highly satisfied, are active quite a bit and growing.”
