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PayPal saw strong growth in Q4 2018 as it continues to ramp up its business across segments.
Business Insider Intelligence
As the firm advances on its acquisition clip — PayPal bought multiple high-profile companies in 2018, and plans to set aside roughly $3 billion annually for acquisitions — it’s seeing a boost in both results and engagement.
- PayPal’s customer base is on the rise as it extends its reach. Throughout 2018, PayPal added 38.7 million accounts to reach 267 million customers, up 17% year-over-year (YoY) — for context, PayPal surpassed 250 million accounts in September 2018, toward the end of Q3 2018. Further, 13.8 million of those accounts joined in Q4 alone — many of which came as a result of high-profile buys: 2.9 million accounts came from its acquisitions of both HyperWallet, a global payout provider for digital marketplaces acquired in November 2018 for $400 million; and iZettle, a Sweden-based point-of-sale (POS) firm, which PayPal acquired in September 2018 for $2.2 billion.
- These customers are engaging with PayPal regularly, indicating that the service is sticky. Growth is reflected in PayPal’s quarterly volume, which hit $164 billion in Q4 2018, representing 23% annual growth — a deceleration from 32% growth in Q4 2017, but still representing very healthy gains. And as customers onboard to PayPal, they’re using the service more: Customers are now making an average of 36.9 payment transactions annually, up 9% annually, reaching 2.9 billion total payment transactions.
One key driver of volume for PayPal is peer-to-peer (P2P) payments — and Venmo in particular, which the firm has been striving to monetize through value-added services. Venmo is becoming an increasingly meaningful part of PayPal’s overall business: In Q4 2018 alone, Venmo processed $19 billion, comprising nearly 12% of PayPal’s total payment volume (TPV), up 80% annually, marking a slight deceleration, but still rapid growth. And CEO Dan Schulman noted that Venmo is on pace to drive $100 billion in TPV in 2019.
But as Venmo grows, it’s been eating into PayPal’s take-rate, as it’s largely free for users — but that could be aided through value-added services. Throughout Q4 2018, Venmo took various approaches to expanding its merchant acceptance network as it pursues monetization, including becoming a payment option for merchants using e-commerce platforms BigCommerce and Shopify, and forging partnerships with Hulu and Uber.
Those efforts — which build on similar efforts to monetize in previous quarters — are paying off so far: 29% of users have made a “monetizable” action, up from 24% in Q3 2018 and 13% in May 2018. Adding use cases to Venmo as it grows could ultimately continue to help PayPal propel both top- and bottom-line growth.
See Also:
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- Apple Pay surpassed 1.8 billion transactions in Apple’s fiscal Q1 2019
- IHS Markit has acquired stake in UK-based blockchain startup Cobalt
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Source: Business Insider