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Bob Peck Offers Top 10 Takeaways From PayPal's First-Ever Analyst Day

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Bob Peck Offers Top 10 Takeaways From PayPal's First-Ever Analyst Day

Paypal Holdings Inc (NASDAQ: PYPL) just held its first Investor Day post after its separation from eBay Inc (NASDAQ: EBAY).

SunTrust Robinson Humphrey's Bob Peck, who has a Buy rating on the stock, provided the following top 10 takeaways from the event:

1. 'Financial Guidance: Reaffirmed/Unchanged, As Expected'

For the medium-term, 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.

Related Link: What Are Bernstein's Top 3 Open Questions To PayPal?

2. 'PayPal Wallet: A Lot Happening, A Lot Coming'

"One Touch has rolled out to 13 percent of PayPal users and is driving a 5 percent TPV (total payment volume) lift amongst adopters."

"Looking forward, expect cash-in cash-out of Wallets through ATMs and POS, sub-accounts and budgeting tools, NFC, tender splitting, and storing/management/use of merchant rewards (Paydiant)," Peck wrote in a note.

3. 'Braintree: Driving Merchant Acquisition'

Braintree is now in 46 markets. Transactions and cards on file surged 200 percent and 108 percent in the first quarter of 2016.

"Interestingly, across merchants powered by Braintree there is a 20 percent lift to spend through PayPal, highlighting the flywheel effect," the analyst wrote.

4. 'Contextual Commerce: An Emerging Driver'

"Braintree, via the Modest acquisition, is powering Pinterest's buyable pins and the Uber-Facebook Messenger partnership and appears out in front in this nascent area expected to be a key driver over the next five years."

5. 'Venmo And P2P: Driving Consumer Acquisition'

"The Pay with Venmo beta rollout continues positive with full rollout commencing 2H16 (unchanged). P2P users in general are 67 percent more engaged (Venmo 4x more engaged) and carry 2x the LTV."

6. 'Xoom: Good Momentum And Opportunity'

"Xoom continues to build out more receive markets (now greater than 50), will add more send markets [...] [allowing] for payout splitting between bank accounts, cash, PayPal Wallet, and bill pay."

7. 'Credit: Solely To Drive The Flywheel'

"Management sized Credit at 2–2.5 percent of TPV and 'high single digits' percent of revenue with percent of profit 'not appreciably' higher. Management reiterated that the company offers credit solely to drive customer acquisition, engagement, and retention."

Related Link: What Are Stifle's Takeaways From PayPal's Analyst Day?

8. 'Operating Leverage: Questions Remain'

Volume-based costs per transaction fell 3 percent in 2015; non-volume based costs per transaction fell 12 percent.

"Management expects continued strong leverage on the ~50 percent of costs not tied to volumes but did not size the cost rationalization opportunity in dollars or duration, thus the question of long-term model leverage remains remain," Peck highlighted.

9. 'PayPal: Drivers And Differentiators'

Key drivers continue to be the digitization of money and mobile. Key differentiators include unique 2-sided network at scale, world class risk management, security, compliance, support and brand.

Long term, the company sees a $100+ trillion TPV TAM.

10. 'No Network Partnerships Announced.

At the time of writing, shares of PayPal fell 3.98 percent to $37.43.

Latest Ratings for PYPL

DateFirmActionFromTo
Dec 2019Initiates Coverage OnBuy
Oct 2019MaintainsOverweight
Oct 2019MaintainsOutperform

View More Analyst Ratings for PYPL
View the Latest Analyst Ratings

Posted-In: Bob Peck BraintreeAnalyst Color Long Ideas Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga

 

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