(Bloomberg) – PayPal Holdings Inc. rose after executives said a rise in digital payments on its platform in the second quarter marks an accelerated and permanent change in cash in the wake of the coronavirus pandemic.
The technology giant, which has been registering consumers scared by the virus, said on Wednesday that it now expects revenue to rise 25% this quarter, while the volume of payments increases 30%. Annual revenue increases 22%.
“This is our time,” Chief Executive Dan Schulman told analysts in a conference call. “We intend to seize the moment.”
Blocks to prevent viral infections, and the consequent shift to online commerce, spurred people to learn how to make digital payments. That helped increase the number of new net active accounts to 21.3 million. The company said it now expects to add 70 million active accounts in the second half of the year.
“The big competition for e-commerce was cash, and there was inertia around moving online and people were not familiar with it,” Schulman said in an interview. “Now that they’ve experienced it, and people no longer want to handle cash, there has been an explosion of digital payments.”
Total payment volume increased 30% to $ 222 billion in the second quarter, beating the $ 208 billion average of analyst estimates and helping the company achieve record revenue. Throughout the quarter, the company consistently saw the kind of spending it typically only sees in the five days between Thanksgiving Day and Cyber Monday, Schulman said.
PayPal shares rose more than 5% at 6:44 pm in New York extended trading after hitting a record high earlier in the day. The stock is up 71% this year, compared with a 17% advance in the S&P 500 Information Technology Index.
The volume of payments on Venmo, the company’s digital wallet that became popular with millennials for splitting restaurant bills or the cost of vacation rentals, rose 52% to $ 37 billion. With the pandemic stifling social interactions, users turned to the wallet to pay for online fitness classes or other forms of digital entertainment, executives said Wednesday.
The company added roughly three times as many merchants to its platform than during a typical second quarter, giving it confidence that widespread consumer adoption of e-commerce is more permanent than originally thought.
“What at first felt like a potentially short-lived phenomenon as a result of the initial panic and pantry packing and even stimulus controls has turned into a much more lasting and profound behavior change,” Chief Financial Officer John Rainey said. during the conference call.
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