Investing.com -- PayPal Holdings, Inc. reported third-quarter earnings that beat analyst estimates, but revenue fell short of expectations, sending shares down over 7% on Tuesday.
The digital payments giant posted adjusted earnings per share of $1.20, surpassing the analyst consensus of $1.07. However, revenue came in at $7.85 billion, missing the $7.88 billion analysts had projected. Compared to the same quarter last year, revenue grew 6% YoY.
Total payment volume increased 9% to $422.6 billion, while payment transactions rose 6% to 6.6 billion. The company's active accounts grew 0.9% YoY to 432 million.
"PayPal (NASDAQ:PYPL) delivered strong financial and operating results during a highly productive third quarter," said CEO Alex Chriss. "We are making solid progress in our transformation as we bring new innovations to market, forge important partnerships with leading commerce players, and drive awareness and engagement through new marketing campaigns."
For the fourth quarter, PayPal expects revenue to grow in the low single digits, reflecting the impact of its price-to-value strategy and focus on profitable growth. The company raised its full-year non-GAAP EPS guidance, now projecting high teens growth compared to the previous outlook of low to mid-teens growth.
PayPal's operating margin expanded in the quarter, with GAAP operating margin increasing 198 basis points to 17.7% and non-GAAP operating margin rising 194 basis points to 18.8%.
The company returned $1.8 billion to stockholders by repurchasing approximately 28 million shares of common stock during the quarter.
Despite the stock price decline, analysts at RBC Capital said PayPal reported strong results "with revenue landing between our and Street estimates" and adjusted EPS beating
meaningfully. "We note transaction margin dollars grew 8% y/y, partially through its price-to-value strategy, which influenced PSP volume growth to decelerate to 11% FXN growth," wrote the bank. "FY24 guidance was increased, and 4Q24 guidance bracketed our and the Street's prior estimates."
Meanwhile, Jefferies described it as "another healthy gross profit beat, with ~4% upside on transaction margin dollars and a 2.5% beat on transaction gross profit."
Mizuho analysts believe the company's soft fourth-quarter guide is weighing on the stock but added that any notion of a strong 2025 could revive sentiment.