US global payments operator flexed its muscles in early trade on Wall Street but cracked under pressure on Wednesday due to heavy volatility.
The payment giant's shares dropped as much as 6% in late trading after it missed Wall Street's projections for Q2 sales and cut its full-year guidance.
Its revenue for the quarter was up $4.32 billion, an improvement of 12% from the previous period, though still below consensus estimates of $4.33 billion.
PayPal said it was easing its guidance for full-year sales to push forward at 14-15% to between $17.6 billion and $17.8 billion, from a recent estimate of 16-17 % to between $17.85 billion and $18.1 billion. Analysts in New York saw $17.98 billion in full-year sales.
According to Paypal Chief Executive Dan Schulman, in an interview with MarketWatch, the diminished forecast was the result of deferred partner implementations.
The San Jose, California-headquartered firm also projected lower revenue growth of between 14%-15%, a percentage point just under its previous range. The company's prior outlook focused for growth of 16%-17%. Schulman stated that he was upbeat PayPal would ultimately realize the effect of the new tie-up subject to implementation delays, adding the revenues "are just a matter of when not if."
Earlier this month, the company disclosed in a regulatory filing that recent key investments, which includes $750 million in Latin American electronic commerce site MercadoLibre, would strengthen Q2 earnings by 14 cents per share.
Expansion
Despite the volatility, there is a huge opportunity for PayPal in the digital marketplace. It has been quite successful carving its name in the US electronic commerce ecosystem and that opportunity outside US soil is promising and remains untapped.
The projected total addressable volume of marketplaces for 2021 that are not at present served by Paypal is valued at around $413 billion. This figure remains big even if Amazon and China's massive marketplaces are not included in this total volume.
The company remains optimistic about the international opportunity. Its main focus in terms of international growth is to ramp up existing user engagement in key non-U.S. markets like the United Kingdom, Australia, Canada, and Germany. At the same time, in the emerging markets, the rising net active users are the main growth lever.
Meanwhile, the American digital payments company on Tuesday announced the expansion of its business in India. Guru Bhat, Paypal India Vice-President and Head of Engineering, said the Hyderabad location would house around 100 engineers to provide advanced digital payments solutions to customers around the world.
