PayPal soars as consumer spending fuels margin boost, profit forecast hike

PayPal’s shares surged by 4% during pre-market trading after the company reported robust consumer spending and improved operating margins for Q1 2024. The payments giant raised its full-year adjusted profit forecast, as it continues to implement measures aimed at cutting costs and making itself leaner in response to economic worries that have clouded the outlook of the sector over recent months. PayPal’s CEO Alex Chriss emphasized a focus on execution during this “transition year”, aiming for key strategic initiatives to be realised alongside appropriate investment and cost-reductions as it works towards its 2024 goals. The company expects adjusted profit growth in the mid-to-high single digits, compared with earlier forecasts of no change from last year’s figures. PayPal also predicted second quarter revenue would grow by around 7% on a currency neutral basis – this is largely in line with analyst expectations. Total payment volumes increased by 14% to $403.9 billion for the first quarter, and net revenue climbed by 10% (on a currency-neutral basis) to reach $7.7bn. PayPal’s operating margins improved significantly during Q1 – rising by 84 basis points on an adjusted basis to hit 18.2%. This is in response to investor anxieties over the last year, as growth slowed post pandemic due to increased competition from firms such as Apple. Adjusted earnings per share for the three months ended March 31 were $1.08 – this was a rise on figures recorded during Q1 of 2023 ($0.85).