American multinational financial technology company operating an online payment, PayPal, has reported a better than expected fourth-quarter earnings, surpassing Wall Street estimates.
PayPal posted a fourth-quarter adjusted profit of $1.48 per share for the three months ended December 31, 2023. Analysts had expected $1.36 per share.
The company’s revenue rose 9% to $8 billion in the quarter, on a currency-neutral basis, beating expectations of $7.87 billion. The number of active accounts fell 2% to 426 million, trailing analyst expectations of 427.17 million.
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PayPal net income rose 52% to $1.4 billion, or $1.29 per share, from $921 million, or 81 cents per share, a year earlier. The company reported total payment volume of $409.8 billion for the quarter, up 15% from the prior year and surpassing the $405.51 billion expected by analysts.
Moving ahead, the payments giant provided guidance for the full year and first quarter that fell just short of expectations. The company anticipates full-year earnings of $5.10 per share, below the $5.48 analysts expected.
For the first quarter, PayPal estimated year-over-year (YoY) earnings per share growth would fall in the mid-single digits, compared with a consensus estimate of 8.7%.
In a bid to ensure a more profitable year for 2024, recall that last month PayPal introduced new Artificial Intelligence (AI) features, the first major announcement under CEO Alex Chriss who described it as the start of the company’s next chapter.
He disclosed that the integration of the technology is to drive significant transformations to drive profitable growth in the years ahead.
Speaking on the company’s plan for 2024, he said,
“We characterize 2024 really as a year that we need to focus on execution, and a year of transition while we start to have conversations about profitability with our partners and conversations about getting our go-to-market muscle really accelerated”.
PayPal is currently undergoing a transition under its new leadership as it faces tight competition in the market for online payments and navigates shifts in its business mix that have been weighing on margins.
For the current quarter, PayPal anticipates a mid-single digit increase in adjusted EPS relative to the $1.17 that the company posted a year prior.
With the integration of AI into its platform, PayPal looks to lean into future innovation to become everyday commerce enablers. The company expects more innovative features in 2024, which include commerce management tools like PayPal’s Smart Receipts and passwordless checkout.
By the end of 2024, it expects most of these features to be commonplace in all digital wallets, as it plans to lean further into innovation to differentiate itself from competitors.