PayPal Holdings, Inc. Q4 FY2024 earnings call

• 2024 was a transition year where PayPal laid a strong foundation for durable growth. Total active accounts returned to growth, total payment volume grew 10%, revenue was up 7%, transaction margin dollar growth inflected, non-GAAP earnings per share increased 21%, and free cash flow was generated with share buybacks. • Focus areas for 2025: innovation (continuing to roll out new experiences and solutions), product adoption (scaling innovations and educating customers), partnerships (forming more significant partnerships), and efficiency/effectiveness (prioritizing AI use to improve experience and drive efficiency). • 2025 strategic initiatives: win checkout (upgraded experiences with leading checkout solution on desktop and mobile), scale Omni (expanding PayPal Everywhere to European markets and launching NFC capabilities in Germany), grow Venmo (improving social P2P experience and driving adoption of monetized products like Venmo debit card and Pay with Venmo), and accelerate SMB (building end-to-end suite of solutions for small businesses with PayPal Complete Payments and value-added services).

Total payment volume grew 10% to nearly $1.7 trillion. Revenue was $32 billion, up 7%. Transaction margin dollar growth increased 5% excluding the benefit of interest on customer balances. Non-GAAP earnings per share increased 21% year-over-year. Free cash flow was $6.8 billion, and $6 billion in share buybacks. By product: PayPal P2P accelerated 6% for six consecutive quarters. Venmo accelerated 2 points to 10% growth. Global branded checkout volumes increased 6% in Q4. PSP processing volume grew 2% in Q4. PayPal P2P contributed to growth, Venmo showed strong monetization with over 20% growth in Venmo debit card and Pay with Venmo monthly active accounts. Branded checkout had growth, with US branded checkout accelerating in Q4.

• Q1 2025: Expected flat to low single-digit revenue growth (currency-neutral) with a headwind from Braintree renegotiations and leap day lapping; transaction margin dollars between $3.6 billion and $3.65 billion (5% growth midpoint); low single-digit non-transaction OpEx growth; non-GAAP EPS range $1.15 to $1.17. • Full-year 2025: Transaction margin dollars approximately $15.2 billion to $15.4 billion (4.5% growth midpoint); interest rate cuts expected to be a $150 million headwind; non-GAAP EPS range $4.95 to $5.10; $6 billion share buyback; free cash flow $6 billion to $7 billion.

• Braintree renegotiations could impact revenue growth. • Interest rate cuts may affect margin. • Transaction loss normalization as new products roll out. • Uneven operating expense growth due to timing of initiatives, marketing spend, and comparisons to prior year.

Q: Harshita Rawat inquired about Fastlane merchant conversations and converting users.

A: Alex Chriss said Fastlane conversations with large merchants are positive, focusing on enterprise integration, with 75% of Fastlane users being new or dormant PayPal users, and efforts to reinvigorate them through marketing and incentives.

Q: Trevor Williams asked about Venmo's transaction margin dollar contribution and revenue mix.

A: Jamie Miller stated Venmo is a growing contributor to transaction margin dollars, with TPV growth in various segments, and detailed breakdowns to be shared at Investor Day.