HomeNewsPayPal growth story continues as Q3 revenue spikes by 25%
PayPal growth story continues as Q3 revenue spikes by 25%

PayPal growth story continues as Q3 revenue spikes by 25%

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PayPal has recorded strong Q3’20 number; a trend that is similar to that of MoneyGram and Western Union.

PayPal releases strong Q3 results amidst COVID-19

PayPal Q3’20 figures are an indication of its strong performance amidst the ongoing coronavirus pandemic.  Its record transactions and significant increase in the number of customers are responsible for the noteworthy growth. At the beginning of October, the firm hit an all-time high of its total payment volume (TPV). Throughout the quarter, its TPV rose by a record 36% to $247 billion.

Besides, the firm increased its active customers by 15.2 billion. The figure is the second highest after last quarter’s 21.3 million new actives. At the same time, PayPal increased its merchants’ accounts by more than 1.5 million to reach the current 28 million merchants on the platform.   

As stated in its earnings call, PayPal’s revenue rose by 25.4% to $5.46 billion. Even as the firm invested considerably in its marketing, sales, and product sectors, its non-GAAP EPS grew by 41% to $1.07. What’s more, its operating margin rose by 377 basis points compare to Q3’19. 

Venmo, PayPal’s P2P platform, is one of the entities that contributed to the company’s strong numbers. In the quarter, Venmo had 65 million customers. The number resulted in TPV of $44.3 billion, which is a 61% increase year-over-year. As PayPal increases it investment in this digital platform, it expects Venmo’s revenue to reach $900 million in the coming year. Among these investments is the rolling out of the Venmo credit card in Q1’21.

Partnerships are another approach that have contributed to PayPal’s growth in its third quarter. While speaking on the earnings call, CEO Dan Schulman said, “We have also signed 20 channel partners and point-of-sale providers from VeriFone to Ardian…We anticipate ending the year with over 500,000 small and micro merchants accepting our QR codes.”

COVID-19 enhances the digital payments trend

A look at the digital payments companies that have released their earnings in the recent past shows enhanced digitization of the economy. Since the onset of the coronavirus pandemic in March 2020, more people across the world are embracing online shopping. Besides, digital payments and remittance transfers have become a key component of the ‘new normal’.

Last week, Western Union released strong Q3’20 numbers. In the report, the management noted that digital transactions were its fastest-growing division. A day later, MoneyGram released its Q3’20 earnings that were just as impressive. MoneyGram Online emerged as the key facilitator of the company’s growth. The product’s cross-border customers rose by 140% YoY. Between January and September of this year, cross-border transactions recorded steady triple-digit growth.  

Crispus Nyaga
Crispus Nyaga
Crispus is a financial analyst with over 9 years in the industry. He covers the stock market, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.