**PayPal Beats Expectations, but Shares Fall on Operating Margin Concerns**
PayPal, the online payment giant, surpassed analysts’ expectations in various areas in the second quarter. However, the company’s shares experienced a decline in after-hours trading due to concerns about its operating margin.
**Impressive Revenue and Net Income**
In the second quarter, PayPal reported a quarterly revenue of $7.3 billion, representing a 7% increase compared to the previous year. This figure slightly exceeded the FactSet consensus of $7.27 billion. The company also recorded a net income of $1.02 billion, a significant improvement from the $341 million loss reported in the same quarter of 2022. Moreover, PayPal’s adjusted earnings per share were $1.16, surpassing analysts’ expectations of $1.15.
**Operating Margin Falls Short of Expectations**
Despite the positive results in terms of revenue and net income, analysts expressed more concern about PayPal’s operating margin. The company’s margin of 21.4% fell short of the expected 22%. As a result, the stock price dropped by over 7% in after-hours trading.
**Optimistic Outlook for the Second Half of the Year**
Acting CFO Gabrielle Rabinovitch remains optimistic about PayPal’s performance in the second half of the year. Rabinovitch stated that they anticipate an increase in ecommerce and cross-border payments, which will contribute to boosting margins. She believes that PayPal will exit the year in a much stronger position in terms of gross margin trajectory.
**Total Payment Volume and Revenue Breakdown**
PayPal reported a total payment volume of $376.5 billion in the second quarter, marking an 11% increase compared to the same period last year. The fees charged to merchants and consumers during transactions accounted for 90% of all second-quarter revenue.
**Cryptocurrency Support and Future Growth**
As for the company’s support for cryptocurrencies, PayPal’s app enables transactions involving prominent cryptocurrencies such as Bitcoin and Ethereum. PayPal expects to maintain year-over-year growth for revenue and adjusted earnings per share in the third quarter.
**Conclusion**
Despite beating expectations in terms of revenue and net income, PayPal’s shares faced a decline due to concerns over its operating margin. The company remains optimistic about the second half of the year and anticipates an increase in ecommerce and cross-border payments. PayPal’s support for cryptocurrencies and expectations for future growth further contribute to its positive outlook.
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