What Are Stifel's Takeaways From PayPal's Analyst Day?
The company still sees FX-adj. TPV (total payment volume) growth in the mid-20 percent range, FX-adj. revenue growth in the 15 percent range and "stable to growing" non-GAAP operating income margin, adding that there is an opportunity to double TPV over the next four years.
"While TPV growth remains robust, take rate is expected to continue to decline due to a higher mix of larger merchants, product mix shift and foreign exchange, not a result of pricing," Stifel analyst Scott Devitt wrote in a note.
Other Takeaways: One Touch, Venmo And Xoom
Among the key takeaways, One Touch continues to gain traction as the company "estimates that the 22 million One Touch users represent an incremental $50 million annualized revenue opportunity."
While Venmo leads user engagement across the PayPal ecosystem, the analyst commented, "As it relates to international expansion, our conversations with members of the product team indicate that regulatory issues present the largest hurdles."
"Overall, PayPal is well positioned in the payments arena with its global, two-sided network operating at scale," the analyst noted.
Paypal also talked about Xoom's $600 billion addressable market, with PayPal app integration coming in the near term.
"The company expects the impact from contextual commerce over the next 3–5 years to be similar to the impact from mobile in the past 3–5 years," the analyst shared, while noting it as a key area of investment for PayPal.
"We hold a favorable view of PayPal's competitive position though believe shares are accurately reflecting the opportunity and execution," said Devitt, who has a Hold rating on the stock.
At the time of writing, shares of PayPal were down 3.42 percent to $37.65.
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