PayPal (NASDAQ: PYPL) on Tuesday issued a full-year profit forecast that exceeded Wall Street expectations, fueled by its ongoing push to boost growth in high-margin branded products, sharpen pricing strategies, and tighten cost-cutting efforts. The upbeat outlook sent the company’s shares up 5% in premarket trading.
Since taking over in late 2023, CEO Alex Chriss has steered the digital payments giant toward a strategy of “profitable growth.” Under his leadership, PayPal has shifted its focus away from revenue acceleration and toward refining its core business, emphasizing products that drive higher margins.
“We’re seeing the positive results of our efforts to improve branded checkout, peer-to-peer, and Venmo, while also executing on our price-to-value strategy,” Chriss said in a statement. “These improvements are beginning to show up in our financial results.”
For the full year, PayPal expects adjusted earnings per share (EPS) to range between $4.95 and $5.10, above analysts’ consensus estimate of $4.90, according to data compiled by LSEG. The company also anticipates a 4% to 5% growth in transaction margin dollars for 2025.
In the face of increasing competition from both big-tech giants and fintech rivals like Block, PayPal’s outlook appears to have reassured investors. The company has responded with new features, including its “one-click” checkout service, Fastlane, and expanded partnerships with companies like Global Payments (NYSE: GPN) and Fiserv (NYSE: FI).
For the fourth quarter ending December 31, PayPal reported a 4% increase in net revenue, reaching $8.4 billion. The company’s total payment volume rose 7%, aligning with results from traditional payment networks such as Visa (NYSE: V) and Mastercard (NYSE: MA). PayPal’s fourth-quarter adjusted profit of $1.19 per share also surpassed estimates of $1.12.
The company’s resurgence comes amid resilient consumer spending, as Americans continue to shop online and travel despite concerns over high interest rates and declining savings. The strong performance in the holiday season, particularly during Black Friday and Cyber Monday, contributed to the company’s positive results.
PayPal has also posted an impressive 40% surge in its stock price in 2024, reversing three consecutive years of declines and outperforming broader market trends. The company’s first-quarter adjusted EPS is projected to fall between $1.15 and $1.17 per share, beating analysts’ expectations of $1.14.
Despite challenges like rising tariffs and inflationary pressures linked to global trade tensions, analysts remain optimistic about PayPal’s ability to sustain its momentum through 2025.
