No. of Recommendations: 46
One word: Solid. Quarter after quarter this company just continues to deliver solid, consistent growth. Revenue growth of 14% to $3.68 billion (impacted negatively by about 7% from sale of consumer credit portfolio to Synchrony Financial). GAAP EPS of $0.36, increasing 17%; non-GAAP EPS of $0.58, increasing 26%. Shares were up about 7.5% in AH trading. From the press release:

"PayPal had another excellent quarter. New partnerships with American Express and Walmart will increase the value that we can offer to our customers. Our strong balance sheet and cash flow enable us to aggressively invest in innovation and growth, creating sustainable and long-term value for our shareholders," said Dan Schulman, President and CEO of PayPal.

See the entire release at https://investor.paypal-corp.com/releasedetail.cfm?ReleaseID...

The big news of the quarter was a partnership with American Express, one of the few obvious missing companies from the long list of partners PayPal has made with financial institutions and merchants over the last two years.

American Express (NYSE: AXP) and PayPal (NASDAQ: PYPL), today announced an expanded strategic partnership that will improve the digital payments experience for U.S. American Express Card Members paying with PayPal and Venmo. The companies will work closely on a host of solutions for joint customers to include the use of Membership Rewards points for PayPal purchases and an integrated peer-to-peer payment experience. As part of the agreement, both companies will also explore additional innovative digital products and experiences.

Read more at https://about.americanexpress.com/press-release/brand/americ...

Let's take a look at the numbers:


Revenues (millions) Q1 Q2 Q3 Q4
2014 1874 1983 1971 2193
2015 2137 2297 2258 2556
2016 2544 2650 2667 2981
2017 2975 3136 3239 3744
2018 3685 3857 3683*

EPS (non-GAAP) Q1 Q2 Q3 Q4
2014 0.27 0.28 0.24 0.28
2015 0.29 0.32 0.31 0.36
2016 0.37 0.36 0.35 0.42
2017 0.44 0.46 0.46 0.55
2018 0.57 0.58 0.58

*Sale of consumer debt to Synchrony Financial in July 2018

2018 Q3 Earnings (Current)

Revenue Growth (billions)
2017 Q3 TTM Revenue = 12.33
2018 Q3 TTM Revenue = 14.97
YOY Revenue Growth = 21.4%, previous quarter 23.6%

EPS Growth (non-GAAP)
2017 Q3 TTM EPS = 1.78
2018 Q3 TTM EPS = 2.28
YOY EPS Growth = 28.1%, previous quarter 29.3%

Non-GAAP P/E (Check Current Price) = 77.48/2.28 = 33.98

Trailing 1YPEG = 33.98/28.1 = 1.21

PayPal Metrics

Here is a look at some of PayPal's other important metrics growth:

# of active accounts: 254M, +15% YOY
Payment transactions: 2.463B, +27% YOY
Payment transactions per active account: 36.5, +9% YOY
Total Payment Volume (TPV): $143B, +24% YOY
Mobile Payment Volume: $57B, +45% YOY
Transaction margin: 54.9%
Operating margin (non-GAAP): 21.0%
Venmo processed $17B TPV, +78% YOY
Cash and cash equivalents: $10.5B
Short term borrowings: $2.0B
Repurchased approx. $600M in Q3, $3B YTD

And here’s a look at the historic growth of those numbers:

# of Active Accounts (millions) Q1 Q2 Q3 Q4
2014 148 152 157 162
2015 165 169 173 179
2016 184 188 192 197
2017 203 210 218 227
2018 237 244 254

Payment Transactions (millions) Q1 Q2 Q3 Q4
2014 918 930 972 1144
2015 1123 1161 1216 1428
2016 1414 1448 1512 1755
2017 1771 1817 1941 2240
2018 2214 2327 2463

Transactions Per Active Account Q1 Q2 Q3 Q4
2014 23 23 24 24.5
2015 25.2 26.1 26.9 27.5
2016 28.4 29.4 30.2 31.1
2017 31.7 32.3 32.8 33.6
2018 34.7 35.7 36.5

TPV (billions) Q1 Q2 Q3 Q4
2014 53.676 56.736 58.184 66.039
2015 63.021 67.482 69.738 81.523
2016 81.056 86.208 87.403 99.348
2017 99.327 106.44 114.05 131.45
2018 132.36 139.40 143.00

Transaction Margin (%) Q1 Q2 Q3 Q4
2014 65.0 65.7 63.1 63.5
2015 64.2 63.8 62.3 61.1
2016 60.4 59.8 58.7 57.7
2017 56.7 56.3 54.8 65.1
2018 57.1 56.0 54.9

Operating Margin (%)(non-GAAP) Q1 Q2 Q3 Q4
2014 18.4 20.4
2015 22.1 22.6 19.9 20.8
2016 21.1 19.9 18.4 21.1
2017 21.6 21.0 20.0 22.0
2018 22.5 21.3 21.0


Like I said, looks like another real solid quarter but I will be back with a more detailed look at the quarter after reviewing the conference call.

Matt
Long PYPL
Intuit (INTU), MasterCard (MA), PayPal (PYPL), and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx
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