Shares of Paypal (NASDAQ: PYPL) jumped 7.5% to $83 per share on Thursday during after hours trading, up 13% YTD and 8% YOY. The increase was due to Paypal’s Q3 earnings and revenue report exceeding estimates with a huge support in payment volume through its peer to peer payment app Venmo. Venmo is a mobile payment service owned by PayPal that allows users to transfer money to others users through a mobile phone app but both the sender and receiver have to live in the U.S.
Refinitiv projected earnings at 54 cents per share and $3.66 billion in revenue while the payment company beat those earnings at 58 cents per share and $3.68 billion in revenue. Paypal’s Q3 revenue has grown 14% and earnings are up 26%. The peer to peer payment app Venmo’s total payment volume increases 78% for the quarter to about $17 billion. This is great news for investors who had yet to see the app prove itself a moneymaker for its parent company Paypal.
“I’m especially pleased with the strong overall momentum surrounding Venmo,” PayPal CEO Daniel Schulman said to analysts Thursday. “While it is still early, our monetization efforts appear to be reaching a tipping point.”
Paypal’s total payment volume rose 25% to $143 billion which is short of Refinitiv analysts’ expectations of $145 billion. 40% of the payment volume was from mobile payment growth. The company saw a 45% growth in mobile payment volume for the quarter while its total payment transactions increased 27% to 2.5 billion total for the quarter.
On top of that Paypal said this quarter it hit a “record” 9.1 million accounts which is a 15% increase from the last quarter amounting to a total 254 million active accounts.
According to Refinitiv, PayPal raised its Q4 earnings guidance to 65-67 cents and increased quarterly revenue guidance which is both aligned with analysts’ expectations. It also raised its full-year earnings guidance to $2.38 – $2.40 per share which is greater than analyst expectations of $2.34 per share.
Paypal announced an expansion of its existing partnership with American Express (NYSE: AXP) as well as new features. American Express also reported earnings after the bell on Thursday with shares trading up 3.6% at $106.54 per share. American Express customers will now be able to send money via Venmo or PayPal directly from their Amex mobile app as well as pay their credit card bills with their Venmo balances. The users can also use Amex Membership Rewards points for PayPal purchases.
In October, a partnership with Walmart was announced to incorporate PayPal money services at the retail giant’s locations. The company also announced a $2.2 billion deal to buy European payments start-up iZettle, which prior to the deal had been planning on going public on the Nasdaq in Stockholm. In other related news, PayPal has also made deals to buy Hyperwallet, Jetlore and Simility in 2018.
“We will continue to leverage acquisitions to strengthen our two-sided platform and maintain our position as the leading global open platform for digital payments,” Schulman said on the earnings call.