11/11/2023 0 Comments Paypal stock quote![]() The new outlook includes a 19-22% growth in TPV, a 15-17% growth in revenues, an EBIT margin of 23% (vs. PayPal's new 2022 outlook is below its mid-term target but still solid. However, management's new 2022 outlook has significantly lower growth than its 2020-25 CAGR targets. Source: PayPal investor day presentation (Feb-21) annotated by Librarian Capital. ![]() Dan Schulman, PayPal CEO ( Q4 2021 earnings call) We continue to believe that our revenue and earnings growth rates as well as our free cash flow objectives are achievable in the outyears of the period contemplated in our medium-term guidance." Nonetheless, management reiterated other 2025 financial targets: NNAs are expected to revert to the pre-COVID level of 30-40m a year "over time". ![]() Management now intends to let these churn and focus on driving up engagement instead. The reason behind the change is that PayPal's much higher NNAs since the pandemic have included accounts that end up generating insufficient returns, due to lower engagement and higher retention costs. PayPal is abandoning its target of 750m Active Accounts by 2025, and now expects only 15-20m NNAs in 2022, far lower than in prior years: We believe the biggest disappointment in Q4 2021 results was the change in strategy, moving away from the focus on NNAs. We believe the qualitative reasons in our investment case remain valid, unaffected by anything within PayPal's Q4 2021 results. The 2025 Free Cash Flow ("FCF") target is $10bn+, doubling from $5.0bn in 2020 (FCF as defined by management, which excludes stock-based compensation).
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