10-Q, Member Exclusive

Q3: The PayPal story isn’t over

  • PayPal saw improved earnings in the third quarter compared to the previous one.
  • Chriss answered some of the burning questions and gave a bit more color on what firm assets could require more work to turn around than he thought.

Email a Friend

Q3: The PayPal story isn’t over

Welcome to the 10-Q newsletter

The 10-Q newsletter is part of the Tearsheet Pro subscription.

10-Q provides insight and market analysis into the moves of top banking and fintech stocks over the past week. In your inbox every Friday.

Weekly 10-Q

In today's edition:
Last week we covered:

Q3: The PayPal story isn't over

CEO Alex Chriss assures the payments firm will bounce back.


PayPal puts up a fight

  • Third-quarter revenues came in at $7.42 billion, compared to $6.85 billion in the corresponding period of 2022
  • Net profit was $1.02 billion or $0.93 per share in Q3, vs. $1.33 billion or $1.15 per share last year
  • Active accounts were 428 million, down 0.9% YoY, and down 0.6% from the previous quarter

PayPal's third-quarter results were surprisingly better than expected, with revenue and earnings beating analyst expectations. The company’s TPV growth was strong, primarily fueled by cross-border trade and its Braintree payment processing platform. On the downside, PayPal’s active account growth declined, attributed to the churn of minimally engaged accounts. The firm plans to focus on driving higher activity levels with existing active accounts.

Q3 vs. Q2/Q4 -- What's gone by, what's to come: PayPal saw improved earnings in the third quarter compared to the previous one in which narrow operating margins and a reduction in active user numbers added to the firm's broader woes. 

While PayPal is the most-used BNPL brand, Apple Pay Later has been gaining market share rather quickly, snipping out a portion of PayPal customers -- a growing and significant concern of investors over the past quarter.

Although a decline in active users persisted in the third quarter, PayPal's recent move of enabling its customers to add their eligible PayPal and Venmo credit or debit cards to Apple Wallet may help things going into the fourth quarter. This development will let PayPal and Venmo consumers make payments with a tap of their iPhone or Apple Watch in-store, online, or on their apps using Apple Pay — while still earning the same cashback and rewards on their eligible purchases. 

This advancement is likely a consequence of the US Consumer Financial Protection Bureau flashing red lights at tech giants -- while taking a direct shot at Apple Pay -- about overly restricting access to external payment apps and limiting consumers' choice for payments. Until now Apple restricted banks and payment apps from accessing the tap-to-pay functionality on Apple iOS devices, barring direct integration of apps such as PayPal, Venmo, and Cash App, while imposing fees through Apple Pay. This move may turn the tables and will likely create a more level playing field for both firms competing to gain market share.

Things that are high up on the new CEO's agenda: This was the first earnings season and analyst encounter for the company's new CEO, Alex Chriss, who took the reins of the firm on September 27, 2023. He happens to join the firm at a rather critical time when investors and analysts expect him to stitch PayPal’s narrative together as the firm is strategically moving in new directions, and amp up efforts so the stock is on the mend that has lost nearly 20% value year-to-date.

Chriss answered some of the burning questions out there following the financial results and gave a bit more color on what firm assets could require more work to turn around than he thought. 

"The biggest surprise that I didn't realize before coming in is probably around the data. I think we're just scratching the surface of the opportunity there," he said. Emphasizing the scope of data across PayPal's two-sided network, Chriss believes it provides a competitive edge and allows the firm to do things differently. Personalized branded checkout is another strong area to leverage and drive conversion for merchants, according to him. 

The new CEO reiterated the importance of SMBs and how it will be a priority for PayPal moving ahead. "I used to run a small business, and so it's in my DNA and something that not only is important to PayPal and has been in the past but it's really been the lifeblood of the organization," he added. Putting together the assets to be able to help small businesses by managing their cash flow in a way that helps them grow their business and get past any ups and downs in the market is one of the strategies the firm wants to solidify going forward. In the bigger scheme of things, Chriss voiced how he intends to form a broader strategy that aligns resources with the company’s most profitable growth priorities and reduces its cost base.

Market recap

A week of strong rally

LendingTree (TREE) - up 50% to $15.77 per share

  • LendingTree shares have rallied following its better-than-expected third-quarter 2023 results reporting revenue of $155.2 million.
  • The company raised its fourth-quarter revenue outlook, driven by strength in its Home segment.

Affirm (AFRM) - up 21% to $21.04 per share

  • Affirm Holdings's stock popped on Thursday after Amazon announced that its business-to-business store would begin offering Affirm's BNPL services at checkout.
  • Affirm becomes the first BNPL lender to be added to Amazon Business, while its service is already available to Amazon's retail customers.

Editor's picks

Tweet of the week

Just look at the charts

1. Block's Q3 earnings show strong growth in both Cash App and Square revenue

Source: Block

2. Coinbase ended Q3 with $5.5 billion in total available resources, an increase of $20 million Q/Q

Source: Coinbase

This week's reads

Q3 earnings: Block reported a top- and bottom-line beat 


Block reported third-quarter earnings that beat analyst estimates on the top and bottom line and showed strong growth in both Cash App and Square revenue. Revenue came in at $5.62 billion vs. $5.44 billion expected. The firm is guiding to an adjusted full-year operating income of $205 million to $225 million, a sharp increase from prior guidance of $25 million.

Coinbase’s Q3 revenue beat expectations, but growth prospects remain underwhelmed


Coinbase generated $674 million in total revenue, down from $707.9 million in the previous quarter. Net revenue was $623 million, down 6% from Q2 2023, but up from $576 million one year ago. The trading top line was down at Coinbase, but the company managed to post growth compared to the year ago on the back of interest-based incomes.

Amazon Business enters BNPL space with Affirm partnership


Amazon Business is offering BNPL services in collaboration with Affirm. Amazon Business started rolling out Affirm Thursday to eligible sole proprietor businesses and will be available at checkout to all eligible Amazon Business sole proprietor customers by Black Friday. The partnership marks the debut of Affirm’s B2B pay-over-time solution for sole proprietors.

0 comments on “Q3: The PayPal story isn’t over”

10-Q, Member Exclusive

How Affirm Card plans to kill credit cards

  • How would you dub a card that has the practicality of a debit card with the added functionality of a credit card? That's the Affirm Card.
  • Launched in early 2021, the Affirm Card has been in the spotlight lately. But what led to garnering significant attention now?
Sara Khairi | December 04, 2023
10-Q, Member Exclusive

Robinhood unveils a 5% APY for Gold members, but how will users respond?

  • Robinhood's recent move to challenge traditional banks includes its increased savings offering, a 5.0% APY for Robinhood Gold Members. 
  • The stock trading platform appears to be in a precarious balancing act, grappling with the escalation of deposit strategies while facing a decline in both transactions and monthly active users.
Sara Khairi | November 20, 2023
10-Q, Member Exclusive

Q1’24 affirms Affirm’s upswing in BNPL

  • Affirm's quarterly results indicate that back-to-back enterprise collaborations in conjunction with collective strategies are eventually winning out keeping the firm on course.
  • Going forward the BNPL provider intends to focus on continuing to invest in risk management, technology, and product development.
Sara Khairi | November 13, 2023
10-Q, Member Exclusive

Ted Pick is Morgan Stanley’s new leader. Where does it go from here? 

  • The question, 'Who will succeed James Gorman at Morgan Stanley?', that echoed in Wall Street's nooks and crannies has finally been answered.
  • The present and incoming CEOs might have different management styles. What they both share, however, is a shrinking economy and growing macroeconomic pressures at the time of assuming control.
Sara Khairi | October 30, 2023
10-Q, Member Exclusive

It’s complicated: Big banks have a love-hate relationship with high interest rates

  •  Although it's a new season, things seem pretty much the same as the last quarter for big banks – except that the figures and their impacts have heightened.
  • The common underlying theme in Q3 was increased write-offs – but it's still raining profits for (most of the) big banks.
Sara Khairi | October 23, 2023
More Articles