PayPal business skyrockets as eBay gets left behind

28 Jan 2016

PayPal’s Q4 revenues were well up on estimates, coming in at $2.6bn, a rise of 17pc on this time last year, while it’s former partner eBay’s figures remained pretty stagnant, with little sign of an upsurge.

In the second quarterly financials released since the duo split, it’s clear that PayPal is on the up, rather than eBay.

The former’s shares rose 6pc following news of its Q4 success, with net income of $433m for the quarter up 27pc on the same time last year.

The bigger of the two companies now that they’ve split, PayPal (worth $39bn) has managed to monetise more than you think.

Services like the newly-expanded Venmo app, or Braintree, offer further revenue streams to the company, even when customers don’t realise the underlying payment systems for many online services are run through the company.

Revenue growth was largely driven by the record 6.6m new active numbers that use PayPal, with transaction payment volume up around a quarter in just one year.

Part of that growth included 1.6m accounts from the company’s $890m acquisition of Xoom back in November.

Venmo’s expansion – it’s a payment process that PayPal has targeted at millennials – will have “little financial impact” on the company, according to its chief executive Dan Schulman, but it’s “the most beloved way to pay for millennials”.

Meanwhile, eBay’s stagnant numbers led to a stark drop in share price, with full year earnings “weaker-than-expected”, according to Reuters.

Growing competition online from the likes of Amazon and Walmart saw the company post full-year revenues of $8.5-$8.8bn – last year it posted $8.6bn.

Due to the fact that over half of eBay’s business is outside of the US, the performance of the US dollar greatly impacts its profits. With currency fluctuations removed, Q4 revenue ($2.3bn) was up 5pc.

“I want to grow our metrics faster but I am very pleased with where we are,” said David Wenig, chief executive of the company. “We are re-platforming eBay.” Share prices dropped by around 13pc, nonetheless.

PayPal and eBay image via Yeamake/Shutterstock

Gordon Hunt was a journalist with Silicon Republic