PayPal forecasts 2025 profit above estimates as turnaround gains traction (updated)

Global Payments

04/02/2025 12:03

(Adds shares in paragraph 1)
    By Manya Saini
       Feb 4 (Reuters) - PayPal  PYPL.O  forecast full-year
profit above estimates on Tuesday, fueled by a push to revive
growth in branded products, improve pricing and sharpen
cost-cutting efforts, sending shares of the digital payments
giant up 5% in premarket trading. 
    Since taking over in late 2023, PayPal CEO Alex Chriss has
focused on high-margin products and touted 'profitable growth'
as the company's new strategy. PayPal has since revamped its
pricing approach and shifted away from chasing revenue
acceleration. 
    The upbeat outlook will likely ease investor worries about
increasing competition from big-tech giants and fintech rivals
such as Block  SQ.N  in the digital payments sector.
    PayPal has worked to defend its dominant position with new
products, including a "one-click" checkout feature called
Fastlane, and forged lucrative partnerships with companies such
as Global Payments  GPN.N  and Fiserv  FI.N . 
    Transaction margin dollars, a key measure of the
profitability of its core business, increased 7% for the full
year. 
    "The improvements we made to branded checkout, peer-to-peer,
and Venmo, plus the progress we made on our price-to-value
strategy, are beginning to show up in our results," Chriss said.
    PayPal expects full-year adjusted profit to grow between
$4.95 and $5.10 per share, surpassing Wall Street views of $4.90
according to estimates compiled by LSEG. 
    It expects transaction margin dollars to grow between 4% and
5% in 2025. 
    
    SPENDING RESILIENT DESPITE CHALLENGES
    Stronger margins and profitability in branded checkout
products, which includes PayPal's core payment services,
headlined 2024 for the payments company after years of uneven
results.
    Consumer spending has also remained resilient as Americans
brush off concerns over high interest rates and shrinking
savings, splurging on everything from travel to online shopping.
    Analysts and investors are optimistic about the outlook for
the payments sector this year, though the recent imposition of
tariffs by the U.S. President Donald Trump's administration on
China are seen as potentially inflationary. 
    For the first quarter, PayPal expects to post an adjusted
profit in the range $1.15 to $1.17 per share, above expectations
of $1.14.   
    The holiday season also lured shoppers as retailers offered
deep discounts on Christmas, Thanksgiving, Black Friday and
Cyber Monday. 
    PayPal's net revenue increased 4% to $8.4 billion in the
fourth quarter ended Dec. 31. Total payment volume climbed 7%,
mirroring results at traditional card networks - Visa  V.N  and
Mastercard  MA.N .  
    It posted a fourth-quarter adjusted profit of $1.19, topping
estimates of $1.12. 
    PayPal's shares surged nearly 40% in 2024, outperforming
broader markets and ending three years of consecutive annual
declines.
    

 (Reporting by Manya Saini in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Manya.Saini@thomsonreuters.com; X: manya__saini;))