📈 5 Key Takeaways from PayPal’s Q4 Earnings Report

1. Strong Q4 Performance, but Market Reacts to Braintree Concerns

PayPal (PYPL) delivered a solid fourth-quarter earnings report, surpassing Wall Street expectations. Adjusted earnings rose 5% year-over-year to $1.19 per share, while revenue climbed 4% to $8.37 billion, exceeding analyst predictions of $1.13 per share on $8.27 billion in revenue.

Despite these positive numbers, PayPal stock fell 13% as investors scrutinised changes at its subsidiary, Braintree.

2. Braintree's Repricing Strategy Raises Questions

Braintree, PayPal’s payment processing subsidiary, underwent repricing efforts that affected revenue growth and transaction volumes. While these changes improved transaction margins, total payment volume (TPV) growth declined sharply from 30% in 2023 to just 2% in Q4 2024.

Analysts worry that as contracts come up for renewal, some Braintree clients, including Uber, Airbnb, and DoorDash, may shift to other payment processors, further impacting revenue.

3. Key Financial Metrics Show Mixed Signals

Despite Braintree's slowdown, PayPal's overall TPV rose 7% to $437.8 billion, aligning with expectations. However, branded TPV, which includes transactions made through PayPal's checkout button, remained at 6% year-over-year growth, falling short of investor hopes for 7-8% growth.

Another positive sign was the 7% increase in transaction margin dollars to $3.9 billion, surpassing estimates of $3.77 billion. This suggests that while revenue growth faces headwinds, profitability remains a priority.

4. 2025 Outlook Prioritises Profitability Over Growth

PayPal CFO Jamie Miller emphasised the company’s focus on profitability during the earnings call. For Q1 2025, PayPal expects revenue growth to be flat to low single digits due to the ongoing Braintree transition. However, full-year earnings guidance of $4.95 to $5.10 per share outpaced estimates of $4.91 per share, and projected transaction margin dollars of $15.2-$15.4 billion exceeded expectations of $15.05 billion. PayPal also announced a $15 billion share buyback program, further reinforcing its commitment to driving shareholder value.

5. PayPal Stock Faces Competitive Pressure

Despite strong financials, PayPal continues to face competition concerns, particularly from Apple Pay and other emerging payment solutions. Investors worry about PayPal losing checkout market share and its ability to retain key business clients. On the stock market, PYPL shares fell 13% after earnings, dropping below the 50-day moving average.

However, the stock remains up 4% in 2024 and has gained 42% over the past year.

Looking Ahead

As PayPal navigates a changing digital payments landscape, its strategy of focusing on profitability over aggressive growth will be key. Investors will be watching closely when PayPal hosts its investor day on February 25, where further insights into its long-term plans may shape market sentiment.

While PayPal has demonstrated resilience, its ability to retain Braintree clients and defend its checkout market share will be crucial for sustained success in 2025 and beyond.