00:00Revenue was up about 7%. It was a decent beat, about 6% EPS beat. Adjusted EPS was ahead of
00:06consensus. Volume was up 11%. Venmo volume accelerated to 14%. So operationally, it wasn't really a bad quarter, but the
00:15stocks are still down.
00:17So how I'd frame it is that this is a decent show-me result, but the bigger issue here is
00:23around credibility. And I think the market basically wants to see, can new leadership really demonstrate some stabilization and execution?
00:33So not a blowout quarter, especially given the tough environment, but it was better than what we feared.
00:41Was Wall Street happy, though, with guidance for the current quarter? Because I'm sort of reading some mixed things here
00:47on the Bloomberg terminal and also saw them guide toward a decline in earnings per share in the second quarter.
00:55Yeah, you're right, right? See, this is what we had flagged in our react as well. I think there is
01:01a lot to prove yet. Like, so this was a great quarter, but one data point does not make a
01:07trend.
01:08We are still yet to see whether branded checkout growth can increase sustainably, ideally grow above low single digits. The
01:17second thing is whether transaction margin dollars return to growth after the second quarter dip.
01:23So guidance to that is also signaling weakness, you know, like it doesn't really inspire confidence in that sense. And
01:32thirdly, I think the market also wants to see whether the new CEO can convert this whole $1.5 cost
01:38program into product velocity rather than just like some EPS support.
01:43What's the bear case here for PayPal?
01:47FinTech is a A, it's a exciting growth segment, but boy, it just feels like competition is everywhere.
01:55You're right, Paul. I think, see, the bear case, investors have heard several turnaround stories before with PayPal, and there
02:04is that fatigue setting in.
02:05the second quarter guidance does not suggest that the reset is still ongoing so the bear case is
02:11evidence stocks are moving what i'd argue is that is there a bull case here uh and especially like
02:17just looking at the valuation and the capital situation with paypal like they have targeted
02:23six billion plus dollars of free cash flow this year and they plan to buy back as much of stock
02:28so that is definitely very um interesting for value investors it's a it's a very cheap highly
02:35profitable company but i think there is still nervousness around um can new management turn it
02:41around and it really was considered a pioneer wasn't it in the payment space um and would you
02:47say that it just was too late to sort of change with the times and and other companies in that
02:53space started to eat its lunch i think it's i mean definitely there are a lot of new players that
03:00are coming in stripe being one of them adian coming in with the more non-branded kind of offering so
03:08there are lapses particularly the challenges around the branded business for paypal but um i wouldn't
03:15say the battle is lost right just the scale and the size of this company and the two-sided network
03:20these are very enviable um attributes and i think there's still room for that uh one thing i would
03:26kind of allude to is the whole job cut situation as well we've been getting a lot of questions around
03:32that um that i'm glad you brought that up because it's an unspecified number of job cuts right or did
03:38they say how many they're looking to let go so i saw a news line saying 20 job cuts um
03:44wow and
03:45paypal's like 24 000 plus employees um at the end of last year and that could mean around
03:50four and a half thousand jobs um being culled and i mean the the job cuts technically are a double
03:56-edged
03:57signal right on one hand they show that management is serious about taking costs and complexity out of
04:02the business but on the other hand when a company is cutting this deeply investors tend to ask whether
04:08this is just margin repair or whether it actually fixes the growth problem does like basically paypal
04:15does not need to be smaller just for the sake of being smaller right it needs to be faster
04:19more focused and more competitive at checkout so that's the question like will they be able to deliver
04:24on that
04:25you
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