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PayPal $PayPal(PYPL)$ released their Q3/2021 results on 8th Nov 2021 and here are some of the highlights:

<++> these are positive developments

<??> these are areas of concerns

Currency: USD$

Notable highlights:

<++> Total Payment Volume (TPV) hit $310 billion. This is a growth of 26% and 24% on FX-neutral (FXN) basis. This led to growth of net revenue at 13% amounting to $6.18 billion. TPV came from 3 sources of Merchant services (grew 31% on a spot basis), Venmo grew 10% and lastly from eBay Marketplace.

<??> eBay Marketplace saw a volume decline of 45% on a spot basis, ie 3% of TPV (compared to 7% to same period in 2020).

<++> Revenues from value added services have been growing since Q3/2020 from $383 million to $575 million.

<++> US revenue is increasing since Q3/2020 but international net revenue is ranging sideways under $3 billion since Q3/2020.

<++> GAAP EPS grew from $0.86 to $0.92 compared to Q3/2020.

<++> 13.3 million Net New Active Accounts (NNA) were added, bringing a total of 416 million active accounts. We saw a stready grow of number of payment transactions (from 4,013 in Q3/2020 to 4,900 in Q3/2021).

<??> The transaction margin from TPV is stagnant between 52% to 57% between Q3/2020 to Q3/2021.

<++> Cash, cash equivalent and investments totaled $20 billion as per 30 Sep 2021. Operating cash flow grew 15% to $1.5 billion and FCF grew 20% to $1.29 billion

<++> for the next quarter (Q4/2021), TPV is expected to grow about 33% (based on current spot rates), net revenue to reach $25.3 billion at estimated growth of 18%, GAAP EPS is expected to beat $3.54 from Q4/2020 with estimate of $3.62. More NNA will be added including 3 million from recent acquisition of Paidy.

<++> Q3/2020 and Q3/2021 quarterly performance summary: NNA grew 12%, TPV grew 24%, FCF grew 20%, Net Revenue grew 13%, GAAP EPS grew 7%.

<??> GAAP operating margin was 16.9%, a drop of 103 basis points. for non-GAAP operating margin, it stood at 23.8%, a drop of 342 basis points

<??> comparing Q3 2020 with Q3 2021, though net revenue grew by 13%, TPV up by 26%, the net income grew only by 6%.

<++> Balanace Sheet (from 31 Dec 2020 to 30 Sep 2021). Total assets grew by $4 billion and cash & cash equivalent grew by under $3 billion. Retained earnings grew from $12.366 billion to $15.734 billion. Total equity grew from $20.063 billion to $22.090 billion. Total liabilities grew from $50.316 billion to $52.444 billion.

<??> Stock based compensation grew from $1.024 billion to $1.090 billion when we compare 9 months ending 30 Sep 2021 and 2020.

<++> Net Income increased from $2.635 billion to $3.368 billion when we compare 9 months ending 30 Sep 2021 and 2020.

Strategic initiatives and updates

<++> Partnership with Amazon

<++> Acquisition of Paidy in Japan (for a buy now, pay later payment platform) to establish a foothold in Japan, the 3rd largest e-commerce market in the world and compliment the current cross border business.

<++> New PayPal APP and plans to roll out PayPal Savings in US soon

<++> Expansion of Crypto product offerings in UK with tie up involving Venmo.

How to trade PayPal in lieu of the result?

the above shows PayPal as a growing company with strong (& improving) fundamentals.

From the 1D chart above, PayPal’s decline of stock price from a recent high of $310 should bottom up soon based on the MACD chart below. It would be prudent for us to to take BUY positions after MACD has bottomed up (with the 2 lines have crossed). This should take few days. After doing our own due diligence, we can consider adding new positions for this attractive company.

@Tiger Stars