PayPal raised its full-year adjusted earnings forecast on Oct. 27 after reporting third-quarter revenue growth alongside lower GAAP earnings. The results advance the questions in NextNow’s earlier earnings preview: payment activity increased, but the profit measures moved in different directions.
Volume grows, earnings diverge
Revenue rose 2% to $8.584 billion, while total payment volume increased 6% to $487.1 billion, according to the company’s earnings release filed with the Securities and Exchange Commission.
GAAP diluted earnings fell 4% to $1.25 a share. Adjusted diluted earnings rose 8% to $1.45. GAAP operating margin declined to 16.3%, while the adjusted operating margin increased to 18.8%.
PayPal now forecasts full-year adjusted earnings of approximately $5.60 a share, up from its July forecast of about $5.38. That is a management projection, not a completed annual result.
A different view of the turnaround
Reuters separately reported the higher outlook and said quarterly adjusted earnings exceeded analyst expectations, while revenue was below estimates. Chief Executive Enrique Lores described progress in the company’s multiyear transformation, while acknowledging that work remains.
The business distinction is between more payment activity and what the company retains from it. Neither the volume increase nor the adjusted earnings figure alone describes the complete operating result. The release identifies adjusted measures as non-GAAP and provides reconciliations; they should be considered alongside the GAAP figures, not substituted for them.