PayPal Reports Robust Fourth Quarter and Full Year 2016 Results

Global technology platform and digital Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term provider PayPal today released its fourth quarter and full year results for the period ended 31 December, 2016.

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The company reported solid 2016 financial metrics with a marked increase in engagement on its platform, continuing strong momentum in mobile payments, together with an overall increase in customer numbers and market share.

Fourth Quarter Metrics

Financial highlights for the fourth quarter include revenue growth of 17 percent to $2.98 billion, or 19 percent on a foreign currency neutral (FX-neutral) basis. The company reported GAAP operating margin of 15 percent with non-GAAP operating margin of 21 percent.

Operating highlights for the fourth quarter include growth of 5.4 million active customer accounts, a total of 1.8 billion payment transactions, up 23 percent, and total payment volume (TPV) of $99 billion (TPV), up 22 percent, or 25 percent on an FX-neutral basis.

Paypal also extended its Mobile leadership in the fourth quarter, processing $31 billion in mobile TPV, which represents growth of 53 percent and 31 percent of TPV for the quarter.

Full Year 2016 Metrics

For the FY2016, Paypal reported revenue growth of 17 percent to $10.84 billion, or 21 percent on an FX-neutral pro forma basis. The company also reported GAAP operating margin of 15 percent with non-GAAP operating margin of 20 percent.

Operating highlights across the year included an increase in active customer accounts, up 10 percent, representing a growth of 18 million accounts which now stands at a total of 197 million.

Over the year, 6.1 billion payment transactions took place, an increase of 24 percent, with an average of 31 payment transactions per active account on a trailing twelve months basis, up 13 percent. TPV was $354 billion, up 26 percent or 28 percent on an FX-neutral basis.

Dan Schulman, President and CEO of PayPal, commented: "I'm pleased to report that PayPal ended 2016 with another strong quarter of financial results. We extended our industry leadership by generating 18 million active customer accounts, with greater engagement than ever before. We innovated across our merchant and consumer value propositions and extended our lead in mobile payments. In the past year, we transformed our market opportunity with a series of strategic partnerships with networks, financial institutions, technology companies, and mobile carriers.”

Other Highlights

In the fourth quarter, PayPal announced strategic partnership agreements with Citi, the largest global credit card issuer, and Fidelity National Information Services (FIS), which represents a multitude of financial institutions. The company plans to roll out new experiences with these partners throughout 2017 to drive incremental digital spend.

The company has also recently announced a strategic agreement with Discover Financial Services, a major issuer of credit products in the US to make it easier for PayPal customers to find and choose Discover as a funding option within the PayPal wallet.

Looking Ahead

PayPal has also issued financial guidance for 2017, expecting revenue to grow 15-17 percent at current spot rates and 17-19 percent on an FX-neutral basis, to a range of $12.45 - $12.65 billion.

For the first quarter 2017, the company expects revenue to grow 14 -16 percent at current spot rates and 16-18 percent on an FX-neutral basis, to a range of $2.90 - $2.95 billion.