Payment processing firm PayPal managed to beat analysts' estimates across the board in its third-quarter results. The company's stellar performance for the quarter sent its stocks surging by as much as 8 percent a day after it released its earnings report.
According to market analysts, PayPal's third-quarter earnings is the strongest it has reported in over a year. The company's performance was partly boosted by the revenues brought in by its new mobile payment app Venmo and by the positive sentiments towards the company in its expansion into China.
For its latest quarter, PayPal reported revenues of $4.38 billion, beating initial analysts' estimates of $4.35 billion.
The company's adjusted earnings per share stood at 61 cents, beating analysts' expectations of 52 cents per share.
The company's total payment volume, which is one of the most important metrics for PayPal and its shareholders, surged to $178.7 billion. The performance of the metric was 25 percent higher than the company's two previous quarters and higher than any of its quarters in 2018.
PayPal's Venmo mobile app managed to see a 64 percent growth in payment volume when compared to the same quarter last year. The app, which has yet to break even, processed more than $27 billion for the quarter.
According to PayPal CEO Dan Schulman, the performance of the Venmo app was better than expected and it is on track to become a significant source of income for the company.
PayPal's recent approval from the People's Bank of China to acquire a 70 percent stake in the Chinese payment processing startup Go-Pay has also become a major factor in the company's foreseeable future growth.
The acquisition essentially makes PayPal the first foreign firm to enter China's highly lucrative digital financial services market. The deal to acquire a controlling stake in the Chinese firm is expected to close in December.
During its recent earnings call, Schulman stated that the approval from China is a significant development for the company. The deal apparently has the potential to dramatically expand the company's market and consequentially its long-term growth prospects.
While most of the factors have pointed to further growth in the coming quarters, some investors have pointed out that the expiration of the PayPal-eBay exclusive operating agreement could be a potential headwind for earnings in the next few years.
However, more optimistic investors have stated that PayPal could very well emerge from the eBay transition in a much stronger competitive and healthier financial position.
