+ Transactions per active account continued to climb. PayPal’s customer engagement as measured by the number of transactions per active user increased to 55x in2Q23 from 49x in 2Q22. The management has shifted its strategy to driving more engagement within existing users away from trying to grow active users. PayPal is boosting user engagements through new features, including Tap to Pay on iPhone, cryptocurrency buying and selling, and QR code payments. Moreover, PayPal’s Venmo (popular peer-to-peer payment platform) has been added as a payment option on Amazon’s checkout page.
+ Double-digit growth in total payment volume. In 2Q23, PayPal’s total payment volume (TPV) surged by 11% YoY to US$377bn driven by resilient consumer spending. Management highlighted that e-commerce spending is expected to grow by mid-single digits YoY in FY23e compared with its prior expectation of flat growth as there appears to be shift from travel and services to goods spending.
– Active account growth slows, continuation of gross margin compression. In 2Q23, active accounts grew by 0.5% YoY to 431mn but decreased by 2mn sequentially due to higher churn from lower usage accounts. In addition, the gross margin fell to 46% in 2Q23 from 49% in 2Q22. The drop was mainly due to both the volume mix shift towards the lower-margin Braintree unit and higher loan provisions. In 2Q23, credit losses spiked by 65% YoY to US$112mn. Management highlighted that the company has tightened its underwriting standards for business loans offered to merchants.