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During PayPal's earnings call on Tuesday, PayPal CEO Alex Chriss didn't directly address Apple's agreement to allow external companies to access near field communication, or NFC, technology, but made note of the changing competitive environment.
"Given the changes in Europe around NFC … that opens opportunities for us and we will be prepared to operate in that space," said PayPal's Chriss during Tuesday's earnings call.
Chriss' comments on mobile pay technology followed a strong quarter for PayPal, which is attempting to mount a recovery following an earnings slump in 2022 and 2023. For the quarter ending June 30, PayPal reported revenue of $7.15 billion, up 9% from the prior year's revenue of about $6.55 billion, better than analysts' projections of $7.08 billion; and earnings per share of $1.19, beating the analyst consensus of $0.98. Total payments volume was $4.16 billion, up 11% from about $3.78 billion, and near the analyst forecast of $4.17 billion. New income was $1.2 billion, up 28% from $971 million the prior year.
Bite of the Apple
Part of PayPal's growth strategy includes boosting merchant and consumer share outside of the U.S., expanding products and enhancing customer experience to drive cross-selling to consumers and to enable businesses to use PayPal as a "one stop" for payments and other financial products. Chriss, for example, noted that 60% of PayPal's growth in buy now/pay later comes from non-U.S. users. By competing more directly with Apple Pay, PayPal can expand the reach of its mobile wallet, which can then drive access to other products.
Analysts from
Samsung Pay is among the firms trying to take advantage,
Apple is planning changes that could pressure PayPal. Apple Pay's looming desktop rollout in the second half could hinder PayPal's growth, according to an analyst note from Jeffries. Apple's update will let consumers use Apple Pay on any third-party web browser through a code on their iPhone.
PayPal has not seen an adverse impact based on how merchants and businesses use different browsers, Chriss said during the earnings call. Apple did not provide comment by deadline.
"We play in a massive multi-trillion dollar market and it's not a zero-sum game," Chriss said. "There's lots of different buttons and branded experiences."
Signs of a turnaround
PayPal's second quarter earnings followed a
"We're seeing early contributions from the changes that we have made," Chriss said during Tuesday's earnings call, adding that the full impact of the product changes and reorganization will contribute more fully to the company's earnings in future quarters as more initiatives come out of pilot testing.
"While a gross profit beat was expected, the magnitude of the upside surprised positively," said Jeffries analysts in a research note.