Paypal (electronic payments) closed the third quarter with revenues up 2% to 8.6 billion dollars and payment volumes up 6%, but the results remained below analysts’ expectations, which estimated 8.71 billion. Margin on transactions rose 2% to $4 billion; net of interest on customer balances, the increase is 3% to 3.7 billion.
Profit down, but better than adjusted estimates
On the profitability front, operating profit fell 8% to $1.4 billion under GAAP accounting standards, with earnings per share down 4% to $1.25. The adjusted figure, which excludes some extraordinary items, instead stopped at $1.45 per share, exceeding the market forecast of $1.31. Cash flow generated from operating activities amounted to $1.6 billion, while free cash flow stood at $1.4 billion.
Lores’ new course
The quarter comes after a period of profound change for the company. The board of directors ousted previous CEO Alex Chriss following the failure of his recovery plan. Negotiations with Stripe and Advent for a possible acquisition were started, and then interrupted. The new CEO, Enrique Lores, has started a corporate reorganization and in a note underlined that the company is “starting to see the concrete results of our strategy in the financial results, with a strong contribution from our main growth areas and increasing diversification”.
Forecasts raised for the entire year
On the outlook front, Paypal raised its full-year earnings forecast to approximately $5.6 per share from its previous estimate of $5.38. Analysts polled by FactSet currently expect a result of $5.39. After the release of the accounts, the stock lost 1.1% in the premarket on the Nasdaq.