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Key notes for $PYPL - Recent Conferences
In this memo we will briefly discuss the key points that grabbed our attention while reading the transcripts of the two conferences.

BofA – Company’s participant Dan Schulman, President & CEO – 9 June 2022

Checkout and BNPL

  • Notes: PayPal Checkout has clear advantages (size, trust, auth rates, lowest loss rates) over competitors as 60% of consumers choose PayPal first (when available) but there is still a lot to be done, with cutting seconds of latency being one of the targets. Additionally, the BNPL has a 21% halo effect on Checkout and 200k merchants already moved PayPal upstream on the product pages. For PayPal, it was not the economics of BNPL that lead to such heavy investments in BNPL but the value proposition they offer to consumers (no late fees) and to merchants (no incremental fees).

The focus on the core product with ongoing investments around it to drive further engagement and potentially higher transaction revenue per user makes sense as the company recently changed its focus from the net new active accounts growth to average revenue per account growth. As engagement increases, people would spend more on the platform and the platform becomes more appealing to new and/or existing merchants.

It is always good to verify these figures with third party data (a bit outdated but we will follow on this):

Take rates

  • Notes: Sequential take rate decline slowed significantly, and it is anticipated that it will continue to be the case.

This is somehow similar to the comments made in the latest earnings call by Gabrielle Rabinovitch SVP, Corporate Finance & IR and Interim CFO. It can be implied that higher growth would be generated from Braintree which has a higher funding cost compared to Venmo.


  • Notes: It has key apps on it like Airbnb, Uber, DoorDash, Live Nation, Spotify which use Braintree for the vast majority, if not all their full stack processing. It is considered the most sophisticated tech stack of the company when a merchant integrates full stack processing through Braintree, and it is fully native (seamless experience).

Big upside from Braintree.

Revenue growth

  • Notes: Dan Schulman stated that he feels comfortable and confident of the revenue accelerating growth through the year (Q1 and Q2 of 2021 had eBay and stimulus) but could not commented further for 2023 (premature).

We like the fact that there was no further downward revision on 2022 revenues (as it was the case in Q1) but we feel that this might change soon given the developments in the macro environment.


  • Notes: The company is investing in its business whereas its competitors seem to be cutting back on investments or even laying off employees. It was also stated that PayPal is not going to chase after non-profitable deals.

PayPal has the cash and generates enough cash to support its investments. Being long in the market and successfully managing the eBay transition (from c.40% of revenue to c.2% while maintaining growth) demonstrates that the company can withstand economic downturns (an economic downturn will have an impact on PayPal results due to reduced consumer spending).

CFO replacement

"There’s no shortage of really outstanding candidates that have raised their hands and I’ve been interviewing left and right and over weekends."

Looking forward to seeing who the new CFO will be and what he/she will bring on the table.

RBC – Company’s participant Douglas Bland, Senior Vice President and Head of Consumer - 14 June 2022

  • Checkout: Indicated (as done by Dan Schulman) that the focus is on reinforcing the checkout business to further streamline the process.

  • Honey/rewards: Other than security and convenience to pay, he considers that Honey has a unique opportunity under the current environment (inflationary period) as customers can benefit from rewards/discounts/savings.

  • Venmo & Digital Wallet: Digital wallet drives further engagement as those who use it generate 2x the average revenue compared to checkout only (nothing new here and like a comment made in Q1). P2P is core and starts the flywheel for Venmo and thus it is considered critical to PayPal as well.

As for Venmo, other than the expected launch with Amazon in the 2nd half of the year, it was stated that other large enterprise merchants are doing more than what was anticipated. We are pleased to see that kind of comments as Venmo has higher take rates.

  • BNPL: On a question for a bigger partnership for the BNPL and pushing off the balance sheet risk from potential credit losses, Douglas responded that this would absolutely be an option as the company is not a bank but rather a payments technology company. He also recognised the fact they are not immune to downturns and from credit delinquencies, however, having over $100m loans with most of them being existing PayPal customers places the company at a better position than just being a standalone BNPL company.

BNPL seems to be a must have offering with Apple recently joining this market (Apple Pay Later) and PayPal responding to the competition with the Pay Monthly Plan (the lender is WebBank) for purchases up to $10,000 (subject to credit approval) over 2 years which offers more flexibility (compared to the Pay in 4 which was for up to $1,500) to consumers that are willing to make larger purchases -> PayPal press release. There are risks in this market as there is lack of regulation and could lead to debt spirals, however, it is very appealing to consumers under the current environment.

  • Credit Card: Another addition to the impressive product offering of the company that was mentioned in the call was the new credit card through the Synchrony Bank partnership. It offers 3% unlimited cashback when you shop using PayPal within the digital wallet and 2% for everything else.

Final Thoughts: The wide product offering improves the value proposition both to consumers (think of BNPL, Venmo, Cards, Rewards, digital wallet etc.) as well as to merchants who have access to the massive number of consumers. By reading through the two transcripts, we did not identify any red flags and as a result we remain bullish on PayPal.

Disclaimer: Not a financial advice.
Preston | Investor Insight's avatar
Great writeup. Appreciate all the information!
StockOpine's avatar
Thank you @investorinsight. You are welcome
Green Candle Investments's avatar
What a great write up on $PYPL!
StockOpine's avatar
Thank you @greencandleit !