PayPal holds $9.4 billion in cryptocurrency assets for customers, raises financial forecast for the year

Payment giant PayPal has released its first-quarter financial report for 2023, with revenue growing by 10% to $7.04 billion. The adjusted EPS is $1.17, surpassing market expectations, and the company has also raised its full-year earnings forecast. The financial report also reveals that PayPal holds cryptocurrency worth as much as $943 million for its customers, a 56% increase from the previous quarter.

Financial Report Exceeds Expectations, Raises Full-Year EPS

Payment system provider PayPal, stock code PYPL, announced its latest financial report after the market closed on Monday. The first-quarter financial report exceeded expectations, and the company also raised its full-year earnings per share (EPS) outlook. For the first quarter ending in March, PayPal's revenue grew by 10% to $7.04 billion, with adjusted EPS of $1.17, higher than the market estimate of $0.88.

Holds $940 Million in Cryptocurrency for Customers

PayPal first launched its cryptocurrency trading feature in October 2020 and obtained a BitLicense from the New York State Department of Financial Services (NYDFS) in June 2022 for conducting virtual currency-related business activities. It then provided verified U.S. users with the ability to transfer cryptocurrencies to external addresses, including exchanges and hardware wallets.

In December 2022, PayPal partnered with MetaMask to introduce purchasing options via PayPal within the MetaMask wallet for U.S. users.

Currently, the cryptocurrencies available on PayPal include BTC, ETH, BCH, and LTC, with Bitcoin being the most popular. The value of cryptocurrencies this quarter reached $943 million, a significant increase of 56% from the previous quarter's $604 million.

Aggressive Business Restructuring and Stock Buybacks

In the first quarter of 2023, PayPal initiated a global workforce reduction plan to focus resources on core strategic priorities and improve cost structure and operational efficiency. The restructuring costs for the three months ended March 31, 2023, amounted to $117 million, primarily for employee severance and benefits.

During the three months ended March 31, 2023, PayPal repurchased approximately 19 million common shares worth about $1.4 billion at an average price of $76.6 per share. These shares were repurchased on the open market under the stock buyback programs authorized in July 2018 and June 2022. As per the program, $14.4 billion remains available for future repurchases of common stock.

Despite PayPal's better-than-expected financial results and efforts to boost its stock price through layoffs and buybacks, investors seem unimpressed as PayPal closed at $65.91 yesterday, marking a new low for the year.