FinTech: Digital Payments Fired Up By The Pandemic Propel PayPal To Its Strongest Year Ever
PayPal tripled its profit in the fourth quarter.
PayPal (NASDAQ: PYPL) had a superlative fourth quarter fueled by the ongoing shift to digital payments following the pandemic. Its total payment volume (TPV), or the value of transactions made across the platform, rose to $277 billion, up 39% from $199.4 billion in the year-earlier period. PayPal beat analysts’ estimates of TPV of $268 billion. Active accounts surged to 377 million after the platform added 16 million in the fourth quarter. (MarketWatch)
Dan Schulman, President and CEO said on the full-year performance: “PayPal delivered a record performance in 2020 as businesses of all sizes have digitized in the wake of the pandemic. In this historic year, we released more products than ever before and have dramatically scaled our acceptance worldwide, giving our 377 million consumer and merchant accounts even more reasons to use our platform.”
New products take off
PayPal commenced cryptocurrency transactions on its platform during the year. US users were allowed to buy, sell, and hold cryptocurrencies, and this facility led to substantially higher user activity.
A Buy-Now-Pay-Later (BNPL) offering, which lets users pay for their purchases in installments, accounted for $750 million of quarterly TPV.
2020 the best year in PayPal’s history
For 2020, it processed a record $936 billion in payments, up 31% over 2019, its strongest ever annual performance.
It reported net revenues of $21.45 billion, up 22% year-on-year. Earning per share jumped 71% to $3.54. Net new active accounts jumped 95% from 37.3 million in 2019 to 72.7 million in 2020.
It generated cash flow from operations of $5.85 billion in 2020, growing 44%, and free cash flow
of $4.99 billion, growing 48%.
Outlook for 2021
PayPal forecasts 2021 TPV to grow in the high 20’s on a percentage basis. It expects revenue to grow ~19% to approximately ~$25.5 billion.
Schulman said on the conference call that the “digital-first world is no longer our future. It’s our current reality and it will forever change the way we interact across almost all elements of our lives.”
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