Venmo is Making Parent Company PayPal A Lot of Money

09:00 02/03/2019

It's fair to say that PayPal's peer-to-peer lending app Venmo is doing pretty good. Okay, actually the app is doing remarkably well for PayPal.

PayPal reported fourth quarter financial results recently which revealed that Venmo had a blowout quarter at $19 billion in payments volume. The volume was an 80% year over year increase.

For the full year, Venmo has processed $62 billion in payments and is on course to do another $100 billion in payment volume this year.

"Perhaps the biggest positive of the quarter was management's commentary around progress on the company's Venmo monetization efforts," said Raymond James analyst John Davis says.

"We don't want to get again too far ahead of ourselves, but we're pretty pleased with what we're seeing on Venmo — it's really going from strength to strength," remarked PayPal CEO Dan Schulman. According to Schulman, the app has annual revenue of over $200 million, but it wont be until at least mid 2019 until it is in the black.

He also said, "The Venmo card continues to gain significant traction, Instant Transfer revenues continue to increase. And as a result, our Venmo initiatives have produced a revenue run rate going into 2019 that now exceeds $200 million."

"The next phase for us is to get Venmo to break even. And that's not something that's going to happen in the next quarter or two, but there's line of sight to that with what we're doing," PayPal CFO John Rainey said.

For the fourth quarter, PayPal reported $0.69 EPS for the quarter, beating analysts’ consensus estimates of $0.67 by $0.02. The company's revenue of $4.23 billion during the quarter, was in line with the estimate of $4.23 billion.

"Overall, although we had expected slightly better, the somewhat weaker results were largely due to further deceleration at eBay and therefore we are not overly concerned," Raymond James analyst John Davis said in a note to clients Thursday. "Perhaps the biggest positive of the quarter was management's commentary around progress on the company's Venmo monetization efforts."

Schulman also said on the earnings call, "In 2018 we set new benchmarks for the company for revenue, net new active accounts and engagement across our platform. We launched new products, strengthened existing relationships, and entered into new strategic partnerships with some of the biggest and most influential global brands in technology, retail, and finance. We greatly expanded our global reach, serving 267 million customer accounts, including 21 million merchant accounts. We believe 2019 will be another strong year for us, and we intend to build on our strengths to extend our leadership as the leading open digital payments platform."0

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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