By Aishwarya Venugopal and Anna Irrera
(Reuters) - PayPal Holdings Inc on Wednesday reported first-quarter profit that beat Wall Street estimates as the payment processor benefited from higher volumes of mobile payments and strong merchant services business.
PayPal processed $132 billion in payments in the first quarter of 2018, up 32 percent from a year earlier.
Mobile payment volumes were up 52 percent in the quarter to $49 billion, while merchant services payment volumes grew 30 percent and accounted for 87 percent of total payment volumes.
Shares of the company, which closed down 1.7 percent, rose 3.3 pct to $76.43 after the bell.
"Overall we believe this was a solid quarter for PayPal," Josh Olson, a senior analyst at Edward Jones Research, said in a note. "As the digital payments leader, we see PayPal benefiting from the fast-growing industry."
Since separating from online marketplace eBay in 2015, PayPal has reshaped itself from mostly processing transactions for its parent company to offering an array of global digital payment services.
These range from small business lending to facilitating money transfers between merchants and customers, as well as friends and family.
The company has sought to grow through acquisitions and partnerships with large banks and technology firms including Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM), Apple Inc (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB).
PayPal recently introduced a Mastercard payments card to enable customers to spend their PayPal balance in millions of physical stores and partnered with popular Kenyan mobile payments service M-pesa.
"We are clearly transforming from a payments button to an open digital payments platform," CEO Dan Schulman said on an earnings call with analysts.
"The goal of that platform is to enable merchants to compete in the mobile, digital payments world," Schulman added in an interview.
Venmo, the company's peer-to-peer payments app, processed more than $12 billion in payments in the quarter up 80 percent over the same period last year.
The San Jose, California based company raised revenue forecast for the full year to $15.2 billion to $15.4 billion from $15 billion to $15.2 billion.
Net income rose to $511 million, or 42 cents per share, in the quarter ended March 31, from $384 million, or 32 cents per share, a year earlier.
Excluding one-time items, the company earned 57 cents per share, beating the average analyst estimate of 54 cents, according to Thomson Reuters I/B/E/S.
Net revenue rose about 24 percent to $3.69 billion, beating expectations of $3.59 billion.