PayPal Holdings, Inc. (NASDAQ:PYPL) announced non-GAAP profits per share of $1.17 in the first quarter of 2023, surpassing the Consensus Estimate by 6.4%. Year on year, the figure increased by 33%.

Net revenues of $7.04 billion increased 10% year on year in FX-neutral terms and 9% in reported terms. The number beat the $6.99 billion Consensus Estimate.

Revenue from transactions and other value-added services increased year over year in the reported quarter. Accelerating US and overseas income also had a significant role.

Detailing the Top Line

Sorted by Type: Transaction revenues were $6.4 billion (90% of net revenues), up 6% from the previous quarter. Other value-added services contributed $676 million in revenue (accounting for 10% of net revenues), a 39% increase year on year.

Geographical Distribution: Revenues from the United States reached $4.15 billion (59% of net revenues), an increase of 13% year on year. International revenues totaled $2.9 billion (41% of net revenues), a 3% increase over the prior-year quarter.

Important Metrics to Consider

PayPal had a 1% year-over-year increase in total active accounts, which totaled 433 million in the quarter under review.

The total number of payment transactions was 5.84 billion, a 13% increase year on year.

Payment transactions per active account at PAYPAL were 53.1 million, up 13% from the previous quarter.

Total payment volume (TPV) was $354.5 billion in the reporting quarter, representing a 10% year-over-year increase in spot rates and a 12% year-over-year increase in currency-neutral terms.

PayPal’s operational expenses were $6.04 billion in the first quarter, a 4.7% increase over the previous year’s number. Year over year, the figure shrank by 323 basis points (bps) as a proportion of net revenues.

The non-GAAP operating margin was 22.7%, up 201 basis points from the previous quarter.

The Balance Sheet and Cash Flow

Cash equivalents and investments were $10.7 billion as of March 31, 2023, down from $10.9 billion as of December 31, 2022.

PayPal reported a $10.5 billion long-term debt balance at the end of the first quarter, up from $10.4 billion at the end of the fourth quarter.

PYPL generated $1.2 billion in cash from operations in the third quarter, down from $1.6 billion the previous quarter.

The reported quarter’s free cash flow was $1 billion, down from $1.4 billion in the previous quarter.

PayPal repurchased 19 million shares, returning $1.4 billion to stockholders.

Guidance

PayPal anticipates year-over-year revenue growth of 6.5%-7% on a spot rate basis and 7.5%-8% on a currency-neutral basis in the second quarter of 2023. Revenues are expected to be $7.24 billion.

Non-GAAP earnings are estimated to be in the $1.15-$1.17 per share range, representing a year-over-year increase of 24-26%. Earnings are expected to be $1.18 per share, according to the Consensus Estimate.

PayPal boosted its non-GAAP earnings projection for 2023 from $4.87 per share to $4.95, implying a 20% increase over the previous quarter. The consensus estimate for the same is $4.92 per share.

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