PayPal has reported its Q4 and FY 2023 results and while it topped Q4 revenue estimates, it fell short on previous FY projections. Q4 23 revenue increased 8.7% YoY to $8bn, above the previous projected range of $7.8bn-7.9bn. However, for FY 23 it reached $29.8bn in revenue, an 8.6% increase on 2022, falling short of previous projections of $30bn-30.3bn.

Total payment volume (TPV), meanwhile, saw a 15% increase in Q4 23 to $409.8bn, growing 13% YoY for FY 23 to $1.5tn. 

The company opted not to provide full-year projections for 2024 and projected Q1 2024 full-year net revenue growth of between 6.5% and 7% on an FX-neutral basis. This disappointed investors, prompting the company’s share price to tumble following the announcement.

CEO Alex Chriss, who began the role less than five months ago, was keen to characterise 2024 as a “transition year” as he repositions the company for more effective long-term growth. Describing the results as “solid”, he acknowledged that there was “much room for improvement” as the company faces another quarter with somewhat soft results.

Chriss highlighted the need to invest more in technology, particularly around a single platform with the ability to cross-sell, arguing that 2024 would be key to laying a foundation for such improvements. He also made multiple references to his First Look keynote in January where he announced a range of product improvements largely targeted at merchants, which were promised to “shock” the industry but left many disappointed.

TPV breakout provides insights into P2P payments; Xoom

The earnings were also the first with recently appointed CFO Jamie Miller, who provided several, previously unshared, additional metrics in the company’s earnings as part of PayPal’s increased focus on transparency. This included a breakout of TPV share by business segment for FY 2022 and 2023, along with growth figures.

Here, its unbranded card processing segment, which includes Braintree, saw both the largest share and growth rate, accounting for 35% of TPV and growing 30% YoY on an FX-neutral basis in 2023, following a 39% growth rate in FY 2022. This was followed by PayPal branded checkout, which accounted for 29% of TPV and grew 6% YoY.

Also of note was P2P ex-Venmo, although not for growth. Accounting for 8% of TPV in 2023 (down from 10% in 2022), this saw a 4% YoY contraction in FY 2023, which followed a 1% drop the previous year. This segment covers PayPal P2P volume, with “some contribution from Xoom”, the company’s remittances brand that has been the subject of sale rumours for some time. 

While domestic (and therefore PayPal P2P) will account for the majority of this volume, PayPal makes most of its revenue in this segment from cross-border, indicating that Xoom may be a key revenue contributor here.

Braintree, PayPal checkout helps drive revenue

Echoing their TPV growth rates, Braintree and PayPal branded checkout were also key revenue drivers in Q4 23 over the vital holiday season, continuing a trend seen in previous recent quarters. Here, overall Q4 23 revenue growth of 9% was driven by a 9% increase in transaction revenue, which largely stems from both brands, over the same period.

This made Q4 2023’s strongest quarter for transaction revenue growth across the year. Accounting for 90-91% of all revenue in 2023, transaction revenue saw a 7% YoY increase in Q3 23 and 5% and 6% in Q2 and Q1 respectively.

However, overall projected revenue growth of 6.5-7% for Q1 2024 suggests that the company expects this growth rate to again reduce this quarter.

Cross-border share shows signs of stabilisation

Meanwhile, cross-border TPV saw relatively strong growth of 8% YoY to $49bn, or 5% on an FX-neutral basis. This follows a 9% growth rate in Q3 23, suggesting that here the company has achieved a U-turn from its 2022 performance, where it was reporting successive periods of decline in cross-border TPV.

This puts cross-border at 12% of TPV in Q4 23, the same as Q3 and Q2 but below the levels seen in 2022 and earlier. There was also a notable lack of discussion about cross-border in the earnings call, suggesting that this is not currently a core priority for the leadership team.

Customer churn continues to impact active accounts

Finally, PayPal once again reported a drop in active accounts – the fourth quarter it has reported a decline both successively and overall in its history as a publicly traded company. Here, net new active accounts were at -2 million, with total actives dropping to 426 million – a level last seen in Q4 2021.

However, the company did report an increase in transactions per active account, which climbed to 58.7 – 13.3 above their Q4 2021 level.

This decline has once again been attributed to previously discussed churn of unengaged accounts, which Miller said were largely in “less developed markets, predominantly in Latin America and the Asia-Pacific region”.

The company also reported a new subset of active accounts, monthly active accounts (MAA), for the first time. Primarily made up of PayPal and Venmo customers, these are accounts that have completed at least one transaction in the month of measurement. Reporting MAAs reflects the company’s switch to focus on engaged customers instead of overall customer numbers, and here it saw a small rise of 1% for Q4 23 to 224 million, or 1% for FY 23 to 218 million.

How can our data help your cross-border ecommerce strategy?

Lucy Ingham

LinkedIn

Lucy is Head of Content & Editor-in-Chief at FXC Intelligence, overseeing all content and taking deep dives into the trends and data driving changes in payments. Before joining FXC Intelligence, Lucy worked as a technology journalist and editor, interviewing CEOs and major names across enterprise technology, including fintech. She has an MSc in Development Anthropology from Durham University.