PayPal Holdings reported a robust performance for the first quarter of 2024, with earnings rising by 27% under a new accounting methodology, reaching $1.08 per share on an adjusted basis, and revenue climbing 9% to $7.7 billion. This exceeded analysts' expectations, who had forecasted earnings of $1.22 per share on revenue of $7.515 billion. Reinhardt Krause, Investors Business Daily author wrote, "‘Absent the adjustments made to operating expenses for SBC, adjusted EPS would have been $1.40, 15% ahead of consensus estimates of $1.22,’ said Evercore ISI analyst David Togut in a report.” The new accounting method includes the impact of stock-based compensation expenses and related employer payroll taxes, with PayPal recasting adjusted financial results for previous years to reflect this change. Additionally, PayPal updated its 2024 guidance, forecasting adjusted EPS growth of "mid to high single-digit percentage" based on the new reporting method. This adjustment proved to be a significant improvement from its previous forecast of flat EPS growth.
Key financial metrics for PayPal also showed strong performance in the first quarter, with total payment volume processed from merchant customers increasing by 14% to $403.9 billion. Additionally, PayPal's active accounts rose by 1 million to 427 million from the previous quarter which marked the first sequential growth since late 2022. PayPal's strategic focus on retooling its operations and executing a coherent strategy under new CEO Alex Chriss has been effective, with efforts aimed at driving profitable growth and returning the company to long-term success. Despite a competitive landscape with players like Apple and Square-parent Block, PayPal's continued investment in buybacks and restructuring indicates a commitment to sustained growth and shareholder value. Despite the broader market downturn on Tuesday, PayPal saw a modest 1.3% increase following its positive earnings report.