- Fourth-quarter payments volume misses analyst expectations
- Investments in platform have been ‘transformative,’ CEO says
PayPal Holdings Inc.’s volume growth on its platforms slowed even faster than expected in the final three months of last year, yet another sign that consumer spending continued to stumble even during the normally busy holiday season. The firm also said Chief Executive Officer Dan Schulman plans to retire at year-end.
Total payments volume climbed 9% to $357.4 billion, missing the $365.4 billion average estimate of 23 analysts compiled by Bloomberg. Still, the company has set its sights on trimming costs and said adjusted profit for the year would climb 18% to $4.87 a share, exceeding the $4.75 analysts currently expect.
“2022 was a transformative year for PayPal,” Schulman said in a statement announcing fourth-quarter results. “We invested in our platform to better serve our customers, while focusing and streamlining our business. We will continue this work throughout 2023.”
PayPal has spent much of the last year contending with a slowdown in growth in spending on its platforms, as supply-chain shocks crimped e-commerce and consumers dealt with historic levels of inflation. Schulman has vowed to improve operating leverage, or the ability to grow revenue faster than expenses.
To that end, the company said earlier this month it would dismiss 2,000 employees, or about 7% of its workforce. On Thursday, PayPal said it would record $100 million in charges tied to that restructuring in the current quarter.
PayPal shares fell 1.6% to $78.42 Thursday in regular New York trading before the announcement. They have gained 10% this year.
The shares dropped more than 3% in extended trading.
Schulman, 65, joined the company in 2014. He’ll remain on the board and will help ensure “a smooth leadership transition” during a search for the next CEO, the company said in a separate statement.
The company’s results mirror that of Visa Inc. and Mastercard Inc., which both saw purchase volumes on their cards climb less than expected in the final three months of the year.
In all, PayPal’s revenue for the fourth quarter climbed 9% to $7.4 billion, in line with the average of 42 analyst estimates compiled by Bloomberg. Expenses climbed to $6.14 billion, below expectations.
“Our 2022 results demonstrate the ongoing progress we are making to optimize our cost structure while continuing to invest in our high-conviction initiatives,” Gabrielle Rabinovitch, PayPal’s acting chief financial officer, said in the statement.
