PayPal CEO: “I don’t think there will be a reversal” of e-commerce after COVID-19

Shares of PayPal Holdings Inc rose 1.5% in out-of-hours trading on Wednesday after the digital payments company showed strong growth in its business stemming from increased use of digital payments during the COVID-19 crisis.

Read: PayPal Exceeds Earnings Expectations as COVID-19 Drives Ecommerce Growth Strong

“The world has moved into a digital economy first and I don’t think there will be any setbacks,” Chief Executive Dan Schulman said in an interview with MarketWatch ahead of the company’s earnings call. He said the COVID-19 crisis has meant a “tipping point” for digital payments that, in the past three to five months, fueled an acceleration in e-commerce penetration that might otherwise have taken three to five years.

Even as more stores began reopening their physical locations towards the end of the second quarter, PayPal PYPL,
+ 4.72%
According to Schulman, its greatest growth year after year in the total volume of payments, or the value of transactions processed on the platform, during the month of June. He called the period “the strongest quarter in our history.”

Overall, PayPal generated a payment volume of $ 222 billion during the quarter, up from $ 172 billion a year earlier and ahead of the $ 210 billion analysts polled by FactSet had predicted. The company’s Venmo service processed around $ 37 billion in volume, 52% more than the previous year.

The company added 21.3 million net new active accounts during the quarter, of which 1.7 million were business accounts. Schulman said merchant account growth was three times greater than what PayPal normally adds on a quarterly basis.

PayPal said it had 60 million active Venmo accounts as of the second quarter, which the company defines as accounts that have transacted through the service over a 12-month period. “Venmo is experiencing the fastest growth in its history,” said Schulman, with a 60% annual increase in revenue growth during the first three weeks of July.

The company posted second-quarter net income of $ 1.53 billion, or $ 1.29 cents a share, up from $ 823 million, or 69 cents a share, in the prior-year quarter. PayPal’s adjusted earnings per share rose to $ 1.07 per share from 71 cents a year ago, while analysts surveyed by FactSet were modeling 87 cents. That includes a negative impact of 7 cents on loan loss reserves.

Revenue for the quarter increased to $ 5.26 billion from $ 4.31 billion. The FactSet consensus demanded $ 4.99 billion.

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Schulman said PayPal is making progress with adopting in-store payments since it announced the availability of QR code technology for 28 markets in May. The company announced at launch that it will partner with CVS Health Corp. CVS,
+ 1.50%
to implement PayPal and Venmo QR codes at physical payment points in 8,200 independent stores by the end of the year. This is the first retail chain to partner with PayPal, according to the company’s launch.

For the third quarter, PayPal expects 30% growth in total payment volume, 25% growth in revenue on a neutral currency basis, and 25% growth in adjusted earnings per share.

The company also reinstated a 2020 forecast after withdrawing the previous one earlier in the year due to uncertainties related to the pandemic. For the full year, the company expects a high growth of 20% in total volume of payments, a growth of 22% in neutral foreign exchange earnings and a 25% growth in adjusted EPS.

PayPal shares have recovered 49% in the past three months as S&P 500 SPX,
+ 1.24%
It has gained 11%.