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Below is an ongoing record highlighting notes from select PYPL investor presentations and earnings calls (newest content shown first).

Goldman Sachs Financial Services Conference, 12/4/2018


Interview with Dan Schulman

  • How do you frame PayPal’s fit in the broader financial services landscape?
    • PYPL has 254mm people using the platform on a regular basis and 20mm merchants in 200 different countries
    • How do we move 85% of the world’s transactions that are still in cash into the digital world
    • E-commerce globally is growing 17% and PYPL growing double that excluding EBAY business
    • The world is clearly moving to mobile and digital, and we are an important user in that
  • Use case for customers to choose PYPL? Why is on-boarding of new customers so high?
    • Had 9.1mm net new actives last quarter. That is not coming from one place.  The biggest thing we did strategically was to fully open platform to choice
    • We used to steer customers to low-cost instruments for us
    • We were defaulting customers to cash or bank accounts, but customers were calling wanting to use credit cards for points for example
    • Once we gave consumers choice, our potential partners started incentivizing customers to sign up for PYPL because when users use PYPL, the conversion rate is 2x
    • We are also expanding internationally
    • We have 10% market share of e-commerce market, so tremendous room to growth
    • We have a network effect with our business right now…more consumers lead to more merchants which leads to more consumers
  • Talk about Venmo’s appeal and why has it had such success?
    • More of a social payments experience
    • 94% of all transactions on Venmo are tagged in some way with a comment or emoji
    • People check their Venmo feed 3-5x per week just to see what other people are doing
    • $70Bn run-rate of transaction volume processed through Venmo and grew 78% last quarter
    • All-time record net new actives for each of the last three quarters, so it is accelerating as it gets larger
    • We have reached a tipping point in the monetization of Venmo. We have started introducing a number of new features where we can monetize Venmo
  • How’s PYPL approaching in-store?
    • You can expect us to move more aggressively off-line
    • People order on mobile and then go pick up in the store. I was meeting with CEO of a Fortune 20 retailer, and they are investing billions into the blurring lines of mobile
    • Advent of NFC and QR codes makes it easier to move into offline world
  • How do you think about size and complexity of opportunity to pursue the unbanked and underbanked?
    • There are 1.7Bn people in the world that are unbanked
    • In the US, there are 70mm adults that are underserved today
    • People spend a lot of time waiting in line to do a transaction
    • PYPL and partners need to combine services to offer something that neither can do on its own
  • How are you approaching mobile broadly and relationship with mobile platforms like Android and Apple?
    • Our mobile is growing 40-50% yoy and is north of 40% of the business, so we only think about mobile
    • 99% of all Uber transactions come through our platform. 90% of Airbnb comes through our platform.  Over 50% of Apple Pay comes through our platform (Braintree integration).  Large percentage of Facebook goes over our platform.  We work very closely on Google’s Android Pay.  We are natively integrated into Chrome
    • A lot of these tech companies do not want to be in payments…it is a means to an end
  • China
    • China is the future of how retail will look. Predominantly done through QR codes
    • Alipay and Tencent are at each other’s throats to get the next merchant
  • Apple has not opened up its Near Field Communications (NFC) capabilities
    • In generally, in-store payments have been quite slow to pick up steam in the US, which is why we haven’t jumped on it yet
    • The reason is because if digital payments is just a form factor change, then, it will take a long time to adopt. Consumers are not weighed down by their credit cards
    • However, if you start to think about retailers incentivizing you to do certain things (think Starbucks app), then, in those cases, we can be an embedded solution for merchants
    • QR codes – we will see more popularity of this in the US since it is a very simple solution
    • We work closely with Apple on a number of fronts and will see what direction in goes in (as far as NFC). We are fully integrated into Android, which is more popular internationally

RBC Tech-Media-Telecom Conference, 11/13/2018


Interview with Dan Schulman

  • Trends that you are thinking about in the digital payments marketplace?
    • There are two big macro trends. Money is clearly digitizing in front of us although 85% of the world’s transactions are still in cash, so there is a long runway
    • Second big macro trend is explosion in mobile. Will be 6Bn devices in next few years, so will have a bank branch in the palm of your hands
  • How do you think about e-commerce platforms, social platforms, entertainment platforms and the integration of PayPal into those platforms?
    • In general, our view is that open platforms need to connect with other open platforms
    • Our goal is to pull the best assets of our platform and combine it with the best assets of other platforms to offer a value proposition that neither platform can do on its own
    • Some Chinese players are more vertically integrated
  • Demonetization in India – do you see these types of things as a large catalyst?
    • Governments are pushing hard for digitization of money because it can bring in all their citizens into the digital economy. Right now, there are so many middle men that are in the middle of basic transactions
    • 7Bn people in the world that are underserved by traditional financial institutions. Things we take for granted such as getting and paying a bill, cashing a check, getting credit is incredibly time consuming and people wait in line for 30-40 minutes
    • Changing currency from one form to another costs them money
    • In the US, there are 70-75mm adults that spend $140Bn every year (10% of disposable income) on unnecessary fees
  • Walk through elements of strategy with bringing together merchant and consumer?
    • Our business strategy is to be a “customer champion”
    • We had 1mm customers a month signing up with their credit cards, and we would force them to sign up with their bank account, so 1mm per month were dropping off
    • Then, we announced that we would be giving customers complete choice, which unleashed a whole bunch of new consumer demand
    • It also allowed us to create more partnerships once we announced Choice…signed with Visa, Mastercard
    • Now, banks are incentivizing their customers to sign up for PayPal
    • We have a full suite of services on a common platform that merchants can tie in their applications to, and we are the plumbing underneath. We do unbranded processing…any credit card, debit card, bank account can all come through our platform
    • Half of Apple Pay traffic comes through our platform
  • Cyber security
    • We are attacked well over 1Bn times per year
    • One Touch – we do two factor authorization on the device, and from there, we don’t require a user to re-sign in. We have a lot of indicators that bad guys can’t take money out
    • It is impossible to prevent bad guys from coming in, but you can prevent bad guys from taking money out
  • Machine learning and AI
    • We have a run-rate of 10Bn transactions a year, so we have a lot of data
    • We believe our models using AI for credit are 30-40% more accurate than FICO, so we can extend credit more efficiently
    • We are one of the top 5 lenders for working capital for small business and we don’t look at FICO scores. We just look at their history with us.  That history is a great predictor of what their behavior will be
    • 25% of loans goes to 3% of counties in the US where 10 or more banks have closed branches (lower income areas), so we can disproportionately lend to minority and women owned businesses
  • Regulation and privacy
    • I think there has to be some framework for data privacy. It is very complicated to do it
    • It is in all of our best interests for consumers to feel safe
  • Our mission is to democratize financial services and democratize capabilities for small businesses

Third Quarter 2018 Earnings Call, 10/30/2018


  • $3.68Bn in revenue, up 14% yoy and normalizing for sale of consumer credit receivables to Synchrony, revenues grew 21%
  • Non-GAAP op margin of 21.4% up 142 bps from last year
  • Highlight of the quarter was our growth in net new actives and engagement
  • Drove a record 9.1mm net new active accounts, surpassing 254mm customer accounts by quarter end
  • Added 34mm net new actives in past 12 months, averaging 3mm net new customers per month
  • During quarter, drove 2.5Bn transactions, growing 27%
  • Engagement per active user increased 9.5% to 36.5x per year
  • One Touch continues to expand with 112mm consumers and 10.4mm merchants
  • Saw mobile growth of 45% with $57Bn of mobile volume processed in the quarter
  • Mobile checkout now represents 40% of total payment volume
  • More than 55mm PYPL customers have used Choice
  • Today, signed a multi-faceted partnership agreement with American Express
    • Over next few quarters, PYPL will have enhanced access to Amex as a payment option in our wallet
    • Deep integration of PayPal and Venmo P2P capabilities in the Amex platform
    • Use of Amex points to pay for PayPal merchants
    • Now have agreements with all major card networks
  • Walmart
    • PayPal money services will be available at all Walmart locations in the US beginning in November
    • Using mobile app, customers can load cash into their PayPal balance and withdraw from their balance at Walmart retail stores
    • WMT and PYPL have a shared belief that moving and managing money should be affordable, efficient, and secure for all segments of the population
  • Recently struck an agreement with Chevron to improve payments experience at its gas stations
  • Pleased with strong overall momentum at Venmo
    • Volume grew 78% to $16.7Bn with annualized run-rate of $70Bn
    • 24% of Venmo users have participated in a monetizable action, up from 17% one quarter ago and 13% in May 2018
    • Pay with Venmo monthly active users increased 185% month over month September vs. August
  • Funds Now – gives PayPal merchants ability to access funds from their sales within minutes, eliminating holds, delays, reserves. Over 1mm merchants using Funds Now
  • PayPal Working Capital and PayPal Business Loans
    • Provided $1Bn in funding last quarter and believe PYPL is now a top 5 provider of working capital to small businesses
  • Financial performance
    • Total payment volume of $143Bn, up 24%
    • Merchant services volume of $127Bn, growing 28% on an FX-neutral basis. EBAY makes up 11% of volume on platform, which grew 3%
    • P2P volume (part of merchant services) of $36Bn, up 50%
    • Total take rate of 2.58% vs. 2.81% in 3Q17. Sale of consumer credit receivables resulted in a 16bps hit to take rate
  • In May, announced that we will return 40-50% of free cash flow to shareholders over the next five years
  • For the fourth quarter, we expect revenue in the range of $4.195 Bn to $4.275 Bn or 13%-15% growth on a currency-neutral basis or 20-22% growth normalized for credit receivable sale
  • Now expect 2018 revenue to be in the range of $15.42 Bn – $15.5 Bn
  • Raising our non-GAAP EPS guidance to $2.38-$2.40
  • 2019 – revenue to grow 17% on currency-neutral basis or 20-21% growth normalizing for US credit receivable sale
  • 2019- expect non-GAAP EPS to grow approximately 20%
  • 2018 acquisitions expected to add 1.5% to growth and dilute EPS by 8-10 cents in 2019 but be accretive to EPS by 2020
  • Q&A with Sell-side Analysts
  • EBAY performance on PYPL platform
    • Think EBAY and PYPL will be strategic partners for the foreseeable future. Most important thing is that our mutual sellers and consumers demand to have PayPal.  Their sales depend on it
    • Ipsos said that consumers are 54% more likely to buy when a merchant accepts PayPal
    • Both EBAY and PYPL committed to having PayPal on intermediated payments by beginning of next year
  • 2019 guidance – pricing and shift from Venmo operating in the red and going into the black
    • On Venmo, have seen record new customers come to platform in last 3 quarters and will be measured to make sure we optimize for the experience. Profitability will then come
    • Expect to see improvement in Venmo economics next year and each year thereafter
  • Confidence to achieve EPS growth in 2019?
    • Continue to expect to achieve operating leverage in the business. For every $1 of incremental revenue, non-volume related cost only went up $0.10
    • When you have net new actives growing 30-35mm per year and engagement growing 8-10%, that bodes well for the future
  • Efforts to drive increased acceptance of Venmo and pricing initiative on instant transfer fee structure
    • We have a very strong pipeline of large merchants to integrate Pay with Venmo buttons
    • Rolling out smart payment button capabilities, so if it’s a Venmo customer, we will dynamically present a Pay with Venmo button
    • Seeing Venmo customers engage with restaurants and groceries so becoming an embedded part of customers’ lives
  • Partnership opportunity with Chinese digital wallets and large global merchant acquirers
    • Started to work with leading Chinese players today. We support 300k Chinese merchants allowing consumers outside of China to purchase from those merchants
    • Very close partners with First Data. We also work with Wells Fargo and Chase and bring in a tremendous amount of volume
  • Net new active adds of 9mm – anything unusual in this quarter or might this be a new run-rate?
    • Nothing unusual with this level. See no reason for these types of numbers to be our new run-rate going forward
    • Great checkout experiences such as PayPal, One Touch, P2P, Choice bringing new users to the platform and deepening engagement
  • Impact of the 37 major partnerships signed in last two years?
    • Seeing nice momentum but still early days
    • We have 4 issuers putting rewards points onto platform, allowing users to combine points and use them at 20mm merchants