Thread by @mikulaja, Hey all - it's that time!I'm going to take a look* at [...]

Hey all - it's that time!

I'm going to take a look* at $PYPL's recently released Q4 2020 earnings info & investor update...

A THREAD

[*remember, I'm not a real financial analyst, but I like to play one on Twitter]

#fintech #finserv

2/

First: some helpful context.

Throughout the earnings presentation & call, ebay & Honey are freq mentioned. Why?

eBay: eBay is transitioning away from using Paypal as its default payment service. Paypal wants to show they're not overly dependent on eBay payment volumes...

3/

Honey: Honey is a coupon finding browser extension. I was kind of curious why Paypal would spend **$4 billion** to acquire it.

This Wired piece reviews some possibilities.

Basically, moving up the funnel and/or bundling "deals" with Paypal & Venmo. https://www.wired.com/story/paypal-honey-4-billion-dollars/

Why Did PayPal Pay $4 Billion for a Coupon Browser Extension?

Honey’s value may be in its mobile app, which solved a problem retailers have struggled with for years—and could give PayPal an edge.

https://www.wired.com/story/paypal-honey-4-billion-dollars/

4/

OK, with that out of the way... I wish Paypal clearly segmented by platform (eg Paypal, Braintree, Venmo)

Year/year:

-73MM new accounts across platforms
-31% Total Payment Vol growth (TPV)

Kind of thought TPV growth would be higher, given covid + increase in users?

5/

But deck does mention negative COVID impact on verticals like travel/entertainment.

2021 forecasts:
-50MM add'l accounts
-20% growth in TPV vol over 2020
-Product focus on in-store payments, BNPL, crypto

6/

Interestingly, only a 1% increase in avg transactions per account (5% ex-Honey).

Paypal IS adding users across its services - but they're NOT using it more frequently.

Would be helpful to know trend of avg payment size as well.

7/

Paypal *has* shipped an impressive number of features/products in 2020, especially for a large, old (in fintech years) company.

If I understood earnings call right, 3MM cust have already used the new #BNPL functionality with a 40% repeat use rate --- wow!

8/

I didn't see any stats on Venmo Credit Card uptake in the presentation or on earnings call.

It feels like customer segment-wise, it would be head to head with Apple Card, which is arguably "cooler" (I guess?) and better integrated into iPhone / iOS experience.

9/

What is Paypal focusing on to drive growth? BNPL + Cryto.

BNPL:
-impressive, quick uptake
-earnings all stated that merchant discount rate for BNPL is no higher than Paypal --> encourages adoption
-curious vol by merchant - is there concentration risk, like @Affirm / Peloton

10/

Users w/crypto login in 2x as often: suggests speculative/gambling behavior - may fade if mass crypto interest turns out to be a passing fad or if crypto values decline significantly.

Paypal is well positioned to enable crypto payments for its huge merchant network.

11/

Warm fuzzies - Paypal processed $17.7B in giving in 2020 (+11% vs 2019).

Doesn't specify if Paypal waives its processing fee for these, that would be more generous than just facilitating the transactions :-)

12/

Finally, they throw us a crumb on Venmo-specific metrics:

Venmo +60% Y/Y in Q4 to $47B (~17% of overall TPV)

13/

This is basically the "don't worry about eBay" slide:

Merchant services TPV is growing faster and represents a much larger share of TPV than eBay does.

14/

Net new active (NNA) accounts are growing - but its unclear which services/brands are driving this:
Paypal, Xoom (int'l money transfer), Venmo, or Honey?

15/

Total expenses up ~21.6% Y/Y, driven mostly by marginal transaction volume-related expenses.

16/

Historical capital allocation... Paypal HAS shown a willingness to spend on complementary acquisitions:

Venmo, Xoom, Honey.

With its strong balance sheet & share price, 2021 could hold additional marquee acquisitions for Paypal.