"PayPal, Surge in New Sign-Ups Due to COVID-19... Strengthening Differentiation Through Service Diversification"

[Asia Economy Reporter Eunmo Koo] Paypal Holdings, a leading American electronic payment service company, recorded earnings that exceeded market expectations in the first quarter of this year, driven by a surge in new subscribers due to the COVID-19 pandemic. The company is being recognized for strengthening its differentiation through service diversification.

According to Hanwha Investment & Securities on the 23rd, Paypal's first-quarter revenue increased by 11.9% year-over-year to $4.62 billion. Non-GAAP operating income for the same period decreased by 2.8% to $910 million, while adjusted earnings per share (EPS) rose by 6.4% to $0.83, surpassing forecasts.

In the first quarter, transactions from services such as Uber, Airbnb, and Live Nation declined compared to the same period last year due to COVID-19. However, new subscribers increased by 3.8 million in March, bringing the total new subscribers in the first quarter to 10 million. Payment transactions rose by 14.9% year-over-year, resulting in an 18.0% increase in total payment volume (TPV).

The company is being praised for enhancing its differentiation through service diversification. Choi Bowon, a researcher at Hanwha Investment & Securities, stated in a report on the day, “Paypal’s payment transactions, which had slowed due to COVID-19, rapidly recovered in April, and with new subscribers also increasing, expectations for top-line growth in the second quarter remain high.”

Researcher Choi added, “Paypal recorded 7.4 million new subscribers in April, surpassing the combined 6.1 million new subscribers from January and February, and the daily payment volume in May has exceeded last year’s Black Friday.”

He also analyzed, “Paypal is diversifying its service areas within the payment industry through acquisitions such as Xoom, Hyperwallet, GoPay, and Honey. Furthermore, it is strengthening its differentiation by actively expanding overseas through MercadoLibre, known as the Amazon of Latin America, and the Swedish payment startup iZettle, raising expectations for long-term growth.”

Although Paypal withdrew its annual guidance, it projected that second-quarter revenue could increase by 13% year-over-year, and non-GAAP EPS could grow by 15-20%.