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PayPal cuts targets in Q1 22 amid global uncertainty

PayPal’s past run of unabated growth appears to have come to an end in Q1 2022. A lack of clarity about post-Covid ecommerce consumer behaviour, the Russia/Ukraine war, supply chain pressures and inflation are all dampening growth. As a result, the company has downgraded some of its key targets for 2022.

PayPal's share of cross-border trade levels out, values fall: quarterly cross-border value and share of total payments, Q1 2018 to Q1 2022

PayPal Q1 2022 earnings

  • PayPal has reported year-on-year net revenue growth of 7.5% to $6.5bn, as well as 13.1% YoY growth in its total payment volume (TPV) to $323bn. However, these figures were lower than Q4 2021 – only the second time the company has failed to improve on its previous quarter since the start of the pandemic.
  • The company is ‘rethinking’ its forecasting for 2022, and now expects TPV growth to be in the range of ~13-15% across FY 2022, lower than the ~19-22% it projected for the year last quarter. The same goes for its net revenue projection, which has fallen from ~15-17% to ~11-13%. 
  • Cross-border share of TPV has levelled out at 14%, the same as Q4 2021, having been in decline since Q1 2021. Potential factors for this include supply chain issues, the elimination of US government stimulus and eBay sellers no longer being paid via PayPal.
  • PayPal’s cross-border totals for Q1 2022 were the lowest they have been since Q4 2020, with an 8.3% drop to $44bn year-on-year from $48bn in Q1 2021. Key corridors in Q1 2022 included intra-European, UK to the EU and US to the Philippines.
  • There has been a significant slowdown in net new active accounts (NNAs) added this quarter at 2.4 million, compared to 9.8 million in Q4 2021. However, PayPal noted a 9% YoY growth in active accounts overall to 429 million. The company has now changed the target for NNAs set out in its Q4 report from 15-20 million to 10 million.
  • PayPal also saw more customer engagement in this quarter, with payment transactions per active account rising 11% YoY to 47, while the total number of payment transactions rose 18% YoY to 5.2 billion. 

Looking forward, PayPal said it was focused on growing revenue faster than the rate of ecommerce growth, expanding its digital wallet offering and increasing its market share in digital payments. 

Who is PayPal competing with in cross-border payments?

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