PayPal Holdings, Inc. PYPL is slated to report second-quarter 2020 results on Jul 29.
Notably, the company’s robust services have been enabling it to maintain a deep and trusted relationship with merchants and consumers. Moreover, its two-sided platform helps in developing direct financial relationship with both customers and merchants.
The Total Payment Volume (TPV) for the second quarter is anticipated to reflect the impact of all these factors. Notably, TPV is a key growth metric for PayPal’s top line.
TPV in the last reported quarter improved 18% and 19% year over year on spot rate and currency neutral basis, respectively, to $190.6 billion. This can be attributed to well-performing Venmo, which accounted for more than $31 billion of TPV.
For second-quarter 2020, the Zacks Consensus Estimate for TPV is pegged at $209.3 billion, suggesting growth of 21.4% on a year-over-year basis.
Click here to know how the company’s overall second-quarter performance is likely to be.
Portfolio Strength: A Key Catalyst
PayPal’s persistent efforts toward strengthening services portfolio are likely to have aided the company in gaining traction across customers in the second quarter despite the coronavirus pandemic.
In the second quarter, the company unveiled QR Code Payments facility in order to ensure touch free payment service to curb the spread of coronavirus. The function has been launched in 28 global markets. This might have driven customer momentum during the quarter to be reported.
The company’s second-quarter performance is likely to reflect strength in product lines including Venmo and One Touch.
The company’s TPV is likely to have benefited from Venmo’s growing monetization efforts. Further, One Touch’sgrowing momentum across merchants on the heels of its robust mobile checkout services might have driven growth in PayPal’s mobile TPV in the second quarter.
Further, Venmo and One Touch are expected to have contributed to growth in the company’s net new active accounts. Further, these two products are known for accelerating customer engagement on PayPal’s platform, which may have bolstered total active accounts in the to-be-reported quarter.
Furthermore, the company’s diversified global platform remained a major positive. It has been witnessing activations across fashion, gaming, food and services verticals in several markets, which is expected to get reflected in the company’s second-quarter results.
Additionally, the acquisitions of Honey, iZettle, Hyperwallet, GoPay and Xoom, which have bolstered PayPal’s digital payment capabilities, might have contributed to the to-be-reported quarter’s performance.
There by, portfolio strength of PayPal is likely to get reflected in its second-quarter results.
Zacks Rank & Stocks to Consider
Currently, PayPal carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Synaptics Incorporated SYNA, Microchip Technology Incorporated MCHP and Advanced Micro Devices, Inc. AMD. While Synaptics and Microchip sport a Zacks Rank #1 (Strong Buy) at present, AMD carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate of AMD, Microchip and Synaptics is pegged at 40.25%, 14.5% and 10%, respectively.
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