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PYPL PayPal

Participants
Gabrielle Rabinovitch Head of Investor Relations
Dan Schulman President and Chief Executive Officer
John Rainey Chief Financial Officer
Bill Ready Chief Operating Officer
Tien-tsin Huang JP Morgan
Bryan Keane Deutsche Bank
George Mihalos Cowen
Jeff Cantwell Guggenheim Security
Heath Terry Goldman Sachs
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to PayPal's First 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's call may be recorded. I would now like to introduce your host for today's conference, Ms. Investor of Head Rabinovitch, Relations. Gabrielle Please go ahead.

Gabrielle Rabinovitch

Sherrie. us. Welcome you, the quarter Good conference afternoon joining for first you thank XXXX. to for and call Thank PayPal earnings Holdings'

on Chief Financial and our today Joining Ready, Dan and Customer Officer call Operating our John our CEO; EVP EVP Schulman, Chief me Rainey, President the Operations; and Bill Global are Officer. the to and Investor conference call are being webcast both We're website. presentation This available section providing is Relations commentary. through a of our accompany our slide call the presentation and also

performance. in We some non-GAAP will discuss talking measures about our company's

year products products You non-GAAP Earlier acquisitions. and capture results volume or directly presentation call to most and can definitions definitions month, reconciliation these and the find metrics in on this total material. payment diversification accompanying a of updated to do the of historical accounts this The updated impacts measures rates prior to the active for partnerships, to through revised measures GAAP this strategic these growth discussed TPV we not consider related periods be the PayPal's call. of services reflect the conference comparability. announced comparable We new of from of

current and full year statements XXXX. forward-looking are addition, will the and quarter statements for management second uncertainties. In make include assumptions, risks These based expectations, on and that involve our forecasts and our guidance

Our these may results actual differ from materially statements.

website. the Form and and SEC risks, with the factors most our about can could Form uncertainties annual in other of Relations recent section on on available XX-Q quarterly find XX-K, information more our Investor on You our results and that reports filed report affect

as information. this date, forward-looking information that, in Dan. of XX, the let We update turn any obligation on statements. You XXXX. over With should call to presentation rely disclaim any expressly today's me the not to April All is

Dan Schulman

spot strong X.XX of point results at thanks great the I'm that to growing XXX off had and XX% basis income, call. QX, of a XX% and by We in pleased joining XX% we operating us start everyone driven PayPal for billion Gabrielle, million margin, generated in XX operating quarter. another was non-GAAP revenue you, say to currency year-over-year, quarter are and Thank our XX.X% for that's neutral for basis on today's We increase on up on delivered in a which basis. non-GAAP the a year.

As we a $X.XX result, XX% of EPS, year-over-year. non-GAAP delivered up

strong the reduction launching of roll produce XXX total net driven Choice up customer We countries X.X and PayPal into China nine in Choice also by million. year-over-year engagement. Venmo Spain. to customer additional the million users growth continues and actives, expanding to growth We and Europe strong of of strong active Choice new activations accounts performance This had in and churn further expanded launching our core out and Germany, initiative. our bringing Customer year-over-year, and our another global added continued Italy Southeast was quarter We across France, and XX% Asia by by rate. and expanding overall in further

pleased the of as the net be XX And this for actives continued new our platform experienced merchants up new net our We addition our we're record will of a acquisition. signing see expands, line accelerating. in that additions year. the consumer confident XXXX, Following customer is million in also to year remain in last growth we with to actives strength record base

transactions again quarter our with in up product totals active now powerful and the base with per experiences technology by ended improvements engagement. PayPal account, to effect our enhancements merchant platform network to This once continues continued accounts. Our drive million first XX XX.X along X%. increasing

We're footprint transforming and and to up benefiting ecosystem XX% explosion our we're a and as quarter, clearly from consumers payments benefit FX-neutral the so a eBay to button basis an our the in and TPV. to these led and products the are volume and services forms finding of of On neutral digital impact There's with no strong manner. our TPV market from introduction billion processed currency of that more in partners, our grew focused our and the the partnerships, global a commerce XXX much places the a our to a all efforts new open PayPal growth. intended retailers an of of basis landmark maximize with merchant in redefine continued Our digitization by doing doubt times basis. and plan strategic XX% at on spot expansive rate five up we market mobile on the cards of against on of extend trends currency. services TPV leadership. platform. We're And redefining payments relationship executing expansion

card we experiences. grow partnerships, these our to of issuing continue well to as networks We introduction with platforms companies Through our across technology are as as banks. relationships as and the payment addressable innovative increase market and globe the well with accelerate able

partners customers ecommerce announced provides to We CaixaBank's two beneficiaries customers one Bankia, wallet corporate cards the continues And as now Chase make of Bankia debit and instance, PayPal agreements We on tokenization a their from of announcing now credit funded X% online account allow PayPal payments soon card fully increasing their more a allowing and open as to use market. to freedom be in enables with that PayPal accounts their in Bank banks freedom US back by websites. holders earn the including a the is XXXX. making PayPal PayPal their online enable credit their way another world like to streamlined [ph], Spain. banks new can link away mobile on a integrated largest strategic strengthen and cash UK of easily of PayPal wallet. customers US PayPal Barclays' able For use pay announced to Bank link disperse to instant with will enables UK America to their behalf customers two will roll UK. and their corporate with leading We're Chase a from OCT their and offer for their experiences pleased their a PayPal in that PayPal its out way Spain's rolling as PayPal to rewards new a of that reward to then their to their to service purchases seamlessly Visa as CaixaBank one accounts a way points funding and America, of customers Visa the working to Spanish Bankia, and out. of JP in up on partnership added their in our to partnership channels. card. Helping its channels. be be and accounts initiatives, payments with with will with introduced to all cards Europe to engaging Bankia's experiences. business their new the category clients to SMB's compelling HSBC participate this throughout us the for out the to partnership members, around seamlessly multiple relationship growing source when Barclays our wallet. cash services their Bank, Morgan And across collaborate link as more we

our our now to joint and of to new for driving with It's their accounts are and introducing as technology platform partners well to of some first grow financial be relationships institution of them to PayPal digital expand actively benefits in to experiences like everyday exciting in In continue efforts. engagement as quarter. link the to millions Facebook, available Apple, experiencing, customers These to mutual enrich more lives see the customers. partners largest proposition. hand, our value their the in brand PayPal the Microsoft, our world's the and Our encouraging of Google the present order PayPal potential customers to customers, allows experiences

pad, and For announced the enabling agreement weeks, US. we Samsung Samsung share in to expanded will PayPal pleased into at with mutual that our their to instance, be to millions the few in able retailers next last users pay phone I'm of load customers year with an

core to We also continue capabilities. innovate platform around our

become on customer platform. has our instance, of For engagement increasingly driver powerful and PXP acquisition a

merchants previous see XX.X increasing actives money. traction gain quarter through innovate Venmo differentiate across Williams-Sonoma, with now and such deployed PXP volume, XXXX. we last pay way consequently continue over continue continues We're US processed over as than preferred TPV in as Venmo major versus Venmo levels monetizing to more new with year. and to Pay on billion in Seamless millennials making acquisition button. Venmo. progress to record with strong and move a rate offer. payment XX% as more installing has of and Venmo million in in to Grubhub, generate X their customer in up QX than Venmo to XX any is net in the dedicated billion We and for brands the services we manage acquired run Venmo

of leading of the a of monetized transaction dynamic throughout expect the out deployment our average. base. per Touch of We dramatically Overall We conversions will use quarter Venmo for mobile Touch million with our standard well Venmo fee now IR-XXX of the and the check is set using One brands button to with use as at consumer mobile simplicity distinct enabling merchants. the across the $X.XX The exceeding times One original deployment XX accelerate is expectations. two services year, cash that capabilities industry proud X.X a Touch, convenient at buttons. accelerating and the almost We're instant XX% million the One consumers continues speed out. for check concluded of out adoption

way and of now PayPal up that part thrive. and latest its the will help XX% capital to more volume. states comp is We customers platform. PayPal's payment extended by offering launch more in to compete, flexibility money processed to they now on consumers in XX% more to payment billion quarter, than services important merchants our capital since in in mobile we be an midsized grow conversion strategic also we pleased is announce in their PayPal's working to businesses our far improved a mobile In in a move and the that working XX now in and represent continue and has the fact has PayPal way In how the new X and total can study volume small mobile businesses. out. and year-over-year manage of It further to billion spend, give I'm leader XX% Credit check quarter, XXXX. launched where score the payments XXX,XXX

greater have of grow provide the financial their from We're as advanced selection system access balance partners bonds their tens their shadow ability lenders. as closely of and to manage by to to locations, access It journey. giving our accelerate as cash to to very add the the to available rely cash the mobile continue products cashers load capabilities retail tenant lets the be central financial millions sellers digital depositing Around As health. digital sellers the all at active that pay in in introduce across world current too a pay. XX,XXX PayPal is and to spend currently the taking on AliExpress services pleased direct expand first AliExpress and recently the their becomes challenged accepting we consumers device. order millions on our affordable PayPal I'm better United well new flexibility over card like to opportunities of and cash underserved afforded world, find on of the to half steps ATMs are shoppers via many We we're introduced economy expand financial ways card the States. physical by of with We at globe. account this what will their PayPal now locations. our and consumers the footprint. their introduced in around relationships underserved increasingly We've the the to financial for way Consumers consumers that store ecosystem to can comprehensive onboard PayPal mission It to aimed US gaps check master also consumers deposit checks unbanked convenient and at with via working to of holders and a approximately proposition value banking

customers system partnership M-Pesa Kenyan In launch money digital addition, We've offer the with consumers now and of consumers moved barriers removing We PayPal relationship, in and our with well in now to We're between that fully in Kenyan mobile millions PayPal Kenya. customers in pilot as world. for participating the now to prevented Kenyans businesses the millions the consumers local global in forward months. around our as the M-Pesa, almost meaningful consumers their a of merchants businesses coming transformative India we're India domestic services. Kenya, Through this financial move of welcome as that to the accounts, we with to million With successfully general PayPal payment of democratization see partners had can announce the from the shop PayPal's accept now recently consumers seamlessly across global globe. partnership Kenyan our BYJU around sell to to availability businesses to can M-Pesa working from can India. XX excited in step drive to economy. PayPal in pleased and

relationship our extend and PayPal both be companies. for profitable our continue have outcome. we're branded partners We're Finally, through ways contract working to that his for foreseeable a XXXX Devin team It's belief Wenig relationship. actively to that eBay and strategic deepen we to signed committed formalized close that the in my eBay drive to growth with with and future will July

shared our the by that anticipated Consequently, operating outlined pleased either strategic or parties was it both the we extend was values. with not relationship financial We're original eBay. short to relationship in previously, change with agreement. opportunity does this transition our As term in medium eBay gradual our and

our that forward momentum some While Based seer After strategy host platform to our continued with are multiple sided of growing partner And deepening us. we generation two the fastest expand results their it's at to the fronts. strategic very in next XXXX, delivering market looking our time our numerous to network encouraging rapidly to capabilities places. they're strong relationship and ability XXXX places. on a increasing the world's with direct conversations, same expanding attractive with know on market of enter

of team heart at dedication Our merchants, as consistent customers. everything customers entire call remain that, We with to to lot our many much the and consumers do for and been lives I'll work thanks I'd the And to difference to the make the of real hard of John. partners us a of and to PayPal has my but will a the now like always always never so we to ahead, extend greater. have still opportunity over their for in our turn accomplish

John Rainey

[indiscernible] margin quarter grow first momentum demonstrates our on income both revenue Thanks payment expanding strength revenue our earnings, across volume and the our our on model. accounts, platform. sustainable active Dan. two In of operating the and the outperformed we scalability operating building And from of highlights XXXX. sided to ability while

During the same at and delivered to strong strategic growth. the initiatives continued our invest quarter, earnings in we time

currency and to $X.XX a Non-GAAP was into a for I highlights a results, few go on XX% billion, detailed quarter, XX% growing Before financial revenue spot basis the XX% grew neutral on EPS basis. $X.XX.

of as with shareholders, During repurchasing shares billion Financial there QX buyback to to quarter and to to our Consistent our $X.X our normalized 'XX discussion, the for the sale, are program. receivables changes. sale of portfolio receivables returned periods. also relevant US Synchrony to the results approximately Where credit of result these part adjust a reclassification reduce results. of consumer the These as million I'll the we XX.X to presentation of the for prior to held comparability changes provide changes associated

no expect we of to sit the the balance portfolio our occur Following US transaction, which the longer QX, consumer credit closing sheet. will early on

to longer areas income affects charge offs cost three statement. any no interest. on our of direct will for This principal We incur related the reclassification

of and million reserves losses value loan a First, receivables; quarter by services benefited approximately result longer on receivables on the non-transaction interest. approximately recognition added impacted recognizing transaction million in interest offs no from of on no longer the other related expenses $XXX from as second, by million reserves were benefited principle negatively $XX revenue third, from and recognizing approximately principle by $XXX and charge incurred

payment international up including volume first billion, the and growth currency our basis, XX%. performance of XX% quarter, volume volume $XXX neutral growth of US on payment Turning financial to in total a our was XX%

representing a volume currency grew a QX represented billion. in billion core Venmo XX% of to across quarter, Zoom, merchant volume, billion. versus to currency merchant grew million volumes component XX% grew on and services includes last volume basis XX% associated payment net neutral Volume with active PXP QX basis total and In year. $XX $XXX is with eBay a $XX and XX% over approximately to services new the accounts, million neutral on first X% XX% added Our active X.X of accounts, 'XX. XXX ending growth we which

other X.X grew acquisition and dollar last total compares was revenue US nearly platform. on quarter, neutral by with losses. with driven over on transactions including million value the hedging versus partially international first on acquisition $X.XX million, added our XX% million the billion. to side, quarter On revenue revenue and again PayPal the first services and basis period. our value our Braintree currency in these Revenue of number X.X% Financial. Revenue per $XXX $XX of XX% driven the from PayPal the of services payment a year-over-year increased benefits, core from neutral revenue on XX% from added transactions million currency to spot million businesses, and Swift from transaction and basis gain grew on weaker growth basis. and transactions billion. our occurring from benefited revenue reclassifications loss In a neutral nearly months by offset related accelerated benefited XX% Swift The XX billion added trailing and while to US basis the and currency rate a predominantly held transaction revenues. to consumer reached businesses, $XX X.X for of In as increased active other $XX account payment revenue grew other we platform increased year. core a strength translation added to This growth basis on Overall, by XX.X approximately our sale was of revenue APAC merchants Adjusting revenue $XX same accounting. XX%. our hedging Venmo for by from services events, at XXX,XXX value QX grew 'XX once account active growth that XX% Transaction a XX% the

losses with XX rate was businesses decline TPV, basis transaction This Volume QX, Venmo take down effect sale more offset year-over-year. remainder than of headwind combined $XX same half our with X basis basis was look QX was lower ago. points quarter pressure business result basis with PXP. introduction $X.X held and TPV, expenses transaction our basis X million basis growth take driven is For risk in was the for the increase in points costs 'XX a from first of our Transaction of point from $XXX as losses. points XXXX. new represented Loan down XX the basis led period balance million hedging than Almost points being And rate products increase a take the growth total mix. of TPV, of QX. XX% growth where to rate the our basis X from based plans. or from take billion our to the were the year versus by points by rate accounting. of related XX% relates of quarter by X.XX%, points expense XX This grew decline mix decline or funding of point as X.XX%, more in $XX of PXP an tolerance contributed services year-over-year. XX% Funding rate X was to to million the a decrease the Transaction in the of loss of a in of a XX and we

representing XX% basis we year. for the margin transaction for of the For impact as purposes, XX% losses dollar grew Adjusted TPV X be the $X billion, billion. to accounting range in points for a growth were to versus sale margin last loan rate of year. held expect modeling dollars Transaction $X.X of

the sustainably level quarter, basis top-line employee XX.X% can XX% Adjusting approximately per Capital the delivering to is approximately transaction non-transactional held sale an $XXX For quarter. our in points. for XX% the points operating Adjusting acquisitions, accounting, XXXX expenses XXX XX% Non-transaction leverage. would first transaction the worth grew Normalizing deliver related Further reported the would independent held the acquisitions, XX.X%. organic operating for allowing expenses us XXX It's quarter, held adjusting for our noting. sale operating of of we a income margin rate accounting for held have was seen for incremental approximately was XX% operating investment grew continue have our grow these this related After basis to adjustments, of resulted to as for for on growth. and of to or expenses acquisitions incremental for highest expansion In million at these to earnings margin of XX resulting million $X.XX. This line of XX% expenses, related in cost points basis from grown margin in growth. Non-GAAP X% believe we This that as revenue. in revenue of treatment expenses associated out We margin revenue. and non-transactional expenditures our accounting year, with first margin $XXX sale every the margin which business operating $XXX $X.XX of we've is quarter, million in for mid-single sale share in last leverage. dollar with grow target X.X% accounting grew digit for expansion. an operating and operating were our backing with XX% for income only increased adjusting grew or quarter XX.X%. company.

been change from cash consumer new amount flows investing receivables operations activities. the our cash $X.XX from flow result loans net of billion credit in portfolio, to reduced designation, As this a in Prior of have designation of in would the recognized changes U.S. this from quarter.

for XXX negative $XX first operations of flow $XXX recognized result, a flow the cash in a free billion. would $X.XX investments and every free in on with cash cash cash, ended normalized in of We flow with of $X.X free was dollar As But million have revenue. million $XXX of cash we negative the basis, million. flow quarter quarter approximately cash from generating equivalents

ended down $X with we our credit billion borrowings addition, short-term quarter drawing on of the In unsecured facility.

we our QX outlook for of the I billion the $X.X quarter stock During returned updated repurchases. now and would in to the our to guidance shareholders of like discuss XXXX for form second full year.

For the second the of growth quarter, billion XX% or or a in neutral we expect $X.XX XX% on revenue currency billion range $X.XX to basis.

non-GAAP of share to expect to an also $X.XX We representing per earnings growth. $X.XX XX% XX%

outperformance. the charge additional financial operations, restructuring recognized our Before stock-based remaining guidance, I I on was in to would like now GAAP in down This not range Approximately XXXX We guidance. outlook of EPS to based wind related a global of to to reductions The we our increase within of our million to expect be $X.XX reflects to and non-GAAP updated $X.XX. attributable in from our a for workforce original $XX for which the third the compensation that decision GAAP is discuss year. this estimate to two-thirds quarter adjustments. discuss year outlook EPS is our a TIO change Networks full increase the

XX%. now revenue XX% expect and current on billion of based $XX.X XXXX year billion our $XXX between current at range. full We to neutral the growth our of we raising are million the representing revenue by trends, prior outlook $XX.X midpoint For

consumer sale the We Synchrony early of $X of for close expect in receivables to approximately credit US third quarter. billion our

impact we growth from to fees revenue a continue X.X portfolio. Following this transaction. we this the of revenue sale, will longer no related from to completion and estimate this late XXXX point Overall percentage recognize to interest

We on back to expect XXXX revenue to XX%. relative revenue At growing time at services transaction to decline the approximately continue in track same the from other is XXXX. value-added half of

contemplates modest expansion in XXXX Our our full non-GAAP year margin. operating guidance

platform continue positioning. to operating our margin We balance reinvesting business further to into strengthen expansion delivering competitive the back and with

opportunities, growth we have our investing. bias toward Given a

XX% the results I and another representing We strong to share our non-GAAP us effective $X.XX all per we To of I a be XX% raising are quarter. you. to great also to rate will of financial quarter Thank narrowing like for earnings $X.XX growth. up, for our position for operator now estimated XX% to well wrap customers, between to non-GAAP and tax to are turn range performance. for and our questions. would first thank it employees, that and And year partners with over XX%

Operator

Thank you. comes from first Tien-tsin [Operator Our Huang from question Instructions] JP Morgan.

Tien-tsin Huang

so Thanks much.

for level XX% than mostly executed guys of in that me looks It the or you So of buyback like was QX. in what it that more was bought you all 'XX.

M&A, shipping be curious Thanks. signal the are your comment I'm maybe buyback this allocation or on any great? is there capital more the this would PayPal is of just opportunistic or a potential priorities, being So kind sort of of you not seeing adequate returns

John Rainey

This John. is Tien-tsin. Sure,

so as couple changed. of not to clarity One a we We through either in quarter be growth on issues. M&A the tax cash believe happens have still or can is allocations returning activity, and investing first capital priorities but had we Our that also reform. in prioritize This that first important for organically shareholders.

that asset share you'll not an suggest would of see shareholders landscape. not do the transaction advantage. to in allocate competitive buyback improving manner more I for opportunities cash a returning capital acquire as us go with strong shareholder to that a continue don't management the what read is a peers believe than are for we done anything use other that there into to to amount allowed at announced The is a M&A if we sheet us But and the that It's lot have our in value it's strong to the us we and companies. to and Synchrony whether very team and that us and cash the of have create balance past. importantly, going as looking to out

measured can shareholder and the you as will just transaction As that deal and and do PayPal something to not appreciate you be close allocate complete can manner those right create a and if so a in quarter the take value. in capital for what's time start if we

Tien-tsin Huang

Thanks for that. it. Got

on Just follow-up just maybe my quick promotions. listed of a then Dan bunch the bank -

banks Just of these some far be maybe P&L curious in initiatives what seeing might so the are you QX? up curious and that the in shown of I'm early hasn't with funding returns kind you

Dan Schulman

Bill?

Bill Ready

is this Tien-tsin. Yeah, Hi, Bill.

So disclose those details partnerships we any one of specifically. don't of the

that tremendous growth and primary right transaction what source response really of our the to for are digital drive really However, our are receptivity been we those things which well to partners where us out to kind seeing of get the from for customers support we banking and into so as their tremendous seeing growing acts the was any are is great happen. PayPal issuing are committing now we partners as are from good they've because and programs not issuers of unnatural a place there

In fact, our banking promote it interest their much use to in to very to their partners PayPal. be customers have found

see make as of something but to those not that something happen. we that we unnatural things indicative So is are also certainly committing the partnership, acts

Tien-tsin Huang

so you much. thank Great,

Operator

Thank you.

from Keane next comes Deutsche Our with question Bryan Bank.

Bryan Keane

guys. Hi,

from puts ask and what services? comprehensive the after some financial about move unreserved the the offering are the and takes Just to of on revenue unbanked, cost wanted resulting to go or, more to

Dan Schulman

question Yeah, off that Byan for with on the the maybe that. and to then I'll over turn thanks on answer I'll start it and Bill

And some we banks, I do what's try about Fargo, services. access system, of the with working our financial low compete everyone that. think can name extending. just Bank secure we are so or digital of should work replace going I the services and to firmly as on there in Corps we gaps mean that them. system do that financial with all, right first the a fill cost closely are to convenient what economy Wells have everyone trying MasterCard, to financial I financial mean afford is in affordable current we marketizing to company the the not vision believe services that the opportunities ecosystem to have the partners now, So and is of the of think in that but with to rest is

are from we our merchants the putting no we with trying because way that just fee, like a the And to we occur make in no be minimum, the at do differentiated are that about think provide Cash place, you MasterCard consumer being on into typically. we If champion, that is that money for PayPal services is monthly marketplace. transactions instance

think mobile we economy. services we for provide can want and the as we a consumer a proposition proposition digital only a great bring but of you financial also into ecosystem use So sort great the reimagine to? people technology that the merchants rest value of and do from customer Bill, first not

Bill Ready

and, that to add what means just market would We've products us your question are, I market in some to to that financially merchant while, to us on exposure had it prepaid in those and things on a two, economics. used how mean a for these for what by debit customers cards, had give us Yeah products that. while one, we've for cards both like

in had those somebody things and is customers retail or versus example so there across no as would onto little for We've don't rest being those [indiscernible] PayPal any we being we've business. we go unreserved accounts would the had way we unreserved walk-in of in on as we see customers also monetize cash things the such digital unbanked to to the material and the the this the difference to location in our monetize for and a for like a how community those the look And participate economy. monetize in to material exposure difference way

Bryan Keane

count, the more out increase separate follow-up, kind in entity more got driving million of attention then more, something a function and getting or PayPal being And of out numerous you doing acceptance of the to XX has there just up helpful. paying merchant the recently that's Venmo getting merchants? a a are Okay, just is up guys additional as merchant

Dan Schulman

Yeah, one we've I kind think, we million platform. run a look, is now the that XXX,XXX a of from perspective probably that happens. have on signed point that number network effect this really seeing you a and thing hearing have We've great number us people the merchants tipping XXX mentioned, the as as there been so and effect And reached of rate about been flywheel is talk some merchants John quarter up. there

things, for a at on plus, rate times These typically our we and with that industry mobile we factor, people thing about with And using that an combination merchants, now and maybe a one and to obviously have and host add merchants but small to that our to but low. essential in thing consumers of average is as that that for merchants. is are but think that, as I of information being the small attracting Touch then not mobile for platform opposed through times, of with mobile just two would services their being checkout consumers that more more ton - and payment issue thing conversion adding out talked other I phone that those One an XX% phone of our as from device expanding more Touch working two just One great is obviously plus big capabilities are well. a the primary just acceleration is whole mobile mobile more but consumers, merchants a that we being The real a And are and as I midsize shop. have capital is for point button that conversion is

Bryan Keane

Okay. Thanks solid Congrats on results. the much. so

Dan Schulman

Thank you.

Bill Ready

Thanks, Bryan.

Operator

Thank you.

with Mihalos George from Cowen. comes question next Our

Dan Schulman

Hi, George.

George Mihalos

guys. Hey

address add me their congrats a perhaps of lot start strong you relates positioning. own I Maybe as there's you sort MasterCard results. checkout just embracing around will. it PayPal's kind universal of - wonder the Visa to off, on that can been the if networks of really Dan, market Let the wanted button obviously on to my

Dan Schulman

Yeah.

first me Let this. on [indiscernible]

as services stronger. the their and and institutions. and working just And that work those partners are and and quarter issuing networks benefits of where partnerships the partnership not for seeing hand We you've banking a quarter the that partnership. consumers capabilities been more seen platform that all incremental you was customers our - can from every find a so great all value the just with come more us I to we it's partners together, be and both with their growing closely my throughout with on reflecting one writing relationships hand this script and financial we merchants is through single combine observing our offer partnership, Our and of a could in just together strong as places working mutual Bill importantly firsthand very very said

about In little terms then of can the button couple a specifically, bit Bill a I that comments have on I and them. of think talk

Bill Ready

Sure.

interoperability really buttons by want the have offered quite while about networks. paying a and On providers of Google those PayPal we have MasterPass we as for Venmo of sort news we move it digital talked we for go and one also the do only digital the the Checkout was payment there, largest complete widely the of Visa now payment other the form specific or help digital to button new wallet world, and to not in forms between the used And experiences Apple about how are buy whether or Pay power Pay. to that's

with work those we So others.

power accelerate existed digital happy really to Even the those work experiences interoperability card But and new Visa our that partner Visa around others, of Visa new MasterCard to MasterPass. a MasterPass those between this to and into continue some previously specification. you that. entire Checkout news own want so we put wallet into interoperability that a these technical with sort as is and we towards seeing seamless or buttons movement buying and Checkout of to do are we buy And can

payments. a how well is each we efforts, how than on those are the there. But as those and with partners is our there meaningfully network excited previously ways checkout those not interoperability certification we have technical different many new between to we're we them seen continue working So with help as to forms partnering advance digital

George Mihalos

expanded, just I the then we follow-up, little guide maybe a of that margins high appreciate quick I looking XX end XQ? should that. the And in John, bps down for to come call it quarter, about at think $X.XX year-over-year just EPS bit a first Great, expect the

John Rainey

period expanding the guidance the margins to the point business move discretionary nice to the investments implied look or one going full one I year around. there you still us would make you at next, seasonality our any at full to from for really rate. if but do be shows year results. it With is We a period in things

I in consecutive prepared overall in I of of noticed think remarks, operating quarter. as This We've is, quarters in four it's had record accelerating revenue progress the the business. margin reflective a my we growth. the had

transactions. growth XX% averaged three last XX% in the For quarters, we've growth EPS and

how pleased is So I'm business with really the doing.

George Mihalos

you. Thank

Operator

you. Thank

next Our question [Indiscernible]. from is

Unidentified Analyst

call question. sort expectations. couple a you my us on a that earnings little Thanks including your You've give color Could more of tracking times on or Venmo? for granularity this mentioned of it's taking above

color would input in in of had guidance, year the your us type adjust you you around Venmo If the is can give to any near any that a monetization term driver be full appreciated? or incremental

Bill Ready

Sure. This is Bill.

in and we mentioned, year's strong new quarter saw for XX% on billion quarter up growth was ever continued our to as $XX.X biggest So Venmo. in volume Venmo the

efforts in saw great that that, there our adding new accept in already and we some you quite and to its broader EatXX, into [indiscernible] the retailers addition X brands plus come monetization through Venmo One million that we in calling In brought out, pool into Venmo, Seamless, with along addition Williams-Sonoma, with many fronts. network. merchants pleased others linking as are those we had Grubhub, were really multiple PayPal the are to

feeling participating as debit we So through fee cash MasterCard to we are or $X.XX for desire that them really terms in great aspect giving what earn things about our are instant and to seeing to as Visa demographics card. the merchants' connect much, access well funds to receptivity we instant where is a so love out other like the out of monetizing

better tracking are overall. in pleased defer better expectations. terms of our tracking, than to I our prior expectations. those John So question, We're much than very the quite things but guidance

John Rainey

to have of was and right ourselves. that being overall impatient many get performance. tremendous game. Dan Bill as long is we what's We is core here I experience our totally to revenue guidance really and And directly in Yeah. guide but want simply a on early invest experience And in is overall for talked earnings the it, and with in that the believe our reflection respect guidance, of - too The It's a and the to we monetize don't strength to this to our be out and able Venmo. both about demographic given get not the of point this we opportunity earnings the this increase at to that and important with connect the so and attributable have times. so increase term and revenue long about luxury financial business. in This

Dan Schulman

we've best I a metaphor it. Yeah. And talked is mean add to but just PayPal. Venmo for would I I this, the lot think about

merchants PXP in the the think I off into around expanded service, then started eBay merchants world. as then and a PayPal has

are pretty consumers are seeing would ahead to were there around expecting. think we say seeing. that's on of merchants have our Venmo and all a of with I think John is by and pleased is with lot we what by as we adoption room are be I what expectations that we said, we cautious But so what we here far.

Unidentified Analyst

your is stock-based any on this compensation? John. your of expecting can follow-up Okay. or any to changes your changes forward Are level just and cadence maybe the A that prior trends with thinking the you In going around you quick to changes guidance, comment for forward? go one GAAP earnings of context

John Rainey

just other eBay Sure. as to last eBay's program. vesting the cycle not from changes with those some of realized of we the The program, own I that. compensation exception what when made the to have the reminder changes in appreciate a question. noted and year related already separate our than mostly have We compensation don't effects we change were we in

you do guidance - in - But creates range closer to I provided take token just share a XX% same results. the growth growth By year, you little sale, if operating you income That's this our based for at just growth. the it's XX% think is around for that compensation held year. that GAAP if So if look we adjusting at bit because you the I'm that noise. look our assuming for and see for

forward. of your and are answer further question, changes year anticipating some were last we to the impacts going seeing bigger not we directly So

Unidentified Analyst

Thanks so much.

John Rainey

bet. You

Operator

Thank you.

Security. Our next with Cantwell Jeff question Guggenheim comes from

Jeff Cantwell

afternoon. good Hi,

John Rainey

Jeff. Hi,

Jeff Cantwell

past a just just called cost us few quarters partnership or strategy results Can strategy wanted us you what customer about I Good can provision important? your remind you over quarter most costs, bit little or that to Thanks. so. and partnership there of ask about the lower is bank acquisition and talk out bank this your about you just funding a your that you to you pieces find or to maybe the strategy

Dan Schulman

Yeah. Bill color. the I'll start off and then fill can in

financial right the thing all opportunity institutions and the and consumers giving around the I is financial choice. strategy. of and remember a as right are pay for to agrees a with closely choice to the optionality networks want Jeff, full of start work where the That's partners. transaction think first to routed result the issuing that really very on how we choose Everybody opened that's every they consumers everybody up

those an encouraging said linking growth actively to can and average link are were distribution industry There cards reason the account checkout. growth I go times very we drive when is largest we levels and in is for average a as two growth of, conversations Statistics the are management their be our Bill a they can mobile that highest either to have many on to the because directly into multiple TPV PayPal the times no why and that digital as our of institutions. partner as reason in of incremental within PayPal established and the partners. result get at industry existing very account. PayPal There them result them on to out issuing called or is shouldn't of their of you see XX%, that, attractive that's what's of we them As very, no customers

move those to that So acquisition as add obviously to signed that those very include of to us so Most drives tokens start offline. you same deals At all were to low remember, access of the they well, time, us, capabilities cost for well. not can acquisition. deals additional as

going do They we tokens mutual look to we spend issuing powerful we've so within the we capability We have doing an in that their really and them that's can will assume ecosystem consumers? by merchants. offline mentioned for and also to that the balance. rewards instruments their start you embed tokens that their for does our tokenization as It are network points into I something as for can think that before our points be forward. that do million our rewards are putting things to allows at XX PayPal application What

or those for ways a And easy maybe a points there low that reward cost them. it's mechanism other add easy it's way to consumers. value us our for For were a and are simple funding for less real consumers utilize

in that from two advancement would of And really which very - allies of digitization really this uneasy of are war multiple there we it works one on years being me so are it's front all, I together. close and the an to ways the environment kind partnership of in ago Anything say, different cash more being add? moved and to

Jeff Cantwell

Thanks. just a I'm and little Great thinking is understand in big blockchain your the talk bitcoin and to with then some longer in so sense think the wallet? the blockchain, can us us recently. what can of this you related functionality picture a blockchain way? PayPal file bit give what can you strategy you Maybe term just and to to and bitcoin about trying patents

Dan Schulman

long say we everybody the would that. is be I here that for blockchain Thanks about, excited say of would are potential hot Obviously I Yeah, on what of when might talks terms it I about blockchain. the say using mean new course. term and topic question. don't protect to identity and like identity in how distributed things to things I and like ways crypto. applications trusted just and I that mean able do what in different

have value innovative how on sort tell at in currency it's like there our long filing, perspective a be those to limitations very in transactions, we volatile, second a terms top create realized But volatile. ways propositions of takes that number not And the utilize blockchain which and how process we initiatives we can standings. transactions in first better blockchain - it transaction. process things things as to might even when you the is there in saw may are today. good still in that quite we still doesn't that from term blockchain you where of So underway of per from have just fast many things you what cryptocurrencies for are the limitations than for mean wait of are make are exploring also patent I'll are I long these a how completion of just for

the coin demand with crypto for or we in Right don't of base nor others add be the merchants that experimented from we've support don't So potential it crypto to of long not we are direct and you But indication Bill, that? in our currencies. terms blockchain run. we that connection to now do We currencies. consumers. directly not anything excited any our the about see should would see

Jeff Cantwell

it. very I Thanks much. appreciate

Dan Schulman

you Yeah, bet.

Operator

and from And have Terry Goldman Sachs. we you. that last Thank one with time is for question Heath

Heath Terry

you. thank Great,

have? wondering the PXP what's is a quarter, funding this over I'm we when kind in with you financials that and mix, channels give that the individual from Looking the can year-over-year the there of cost you funding are how what your a at in on of of if think stable saw at saw, we the and growth that upsize seeing you look sort growth costs of us relatively basis impacting benefits this - mix you the sense about how on should different of funding going the you

John Rainey

John. is this Heath, Sure.

That are think and where puts seeing way to So a but are you is question I and takes - we there is the PayPal, even wallet not the inflation look swings. importantly funding mix, the offset there just by in there of looking in appropriate if framing that to we the rest lot more stripping out at being PXP big PXP of usage. very at were that's is said, this

two a or about or talking there. here are We basis point

we the So in PXP, BPD even basis not really and certainly probably level this it to remember sort said it last that of it the I XXX we will the have of basis about for points to second line sighting to have kind us I noted point range comfortable we had in good year expense the year in expect to a this adjusting expected are range going pretty transaction this of a you everything still I that and two change business, next stay giving down was I we and we come and the high that will on principally. growth too - quarter for believe of with for from

Dan Schulman

question. today your that time. forward us of and Thank on you, know speaking all for appreciate to lot everybody Thanks Thank today. Heath there's to We look joining you. We a for going you really soon.

Operator

This concludes conference today's gentlemen, today's question-and-answer you program may disconnect. Everyone session. the Ladies thank for have participating in a you This call. and concludes afternoon. and great now