PayPal faced a 7% drop in its shares during extended trading, despite exceeding market expectations in its fourth-quarter earnings report. The payments giant, anticipating flat growth in adjusted profit for the current year, unveiled a strategic plan to streamline operations under newly appointed CEO Alex Chriss.
Chriss emphasized a clear-eyed approach to near-term benefits from initiatives and acknowledged that the impact would take time to scale. The company's 2024 guidance anticipates minimal contribution from recent innovations.
The adjusted earnings per share for 2024 is expected to remain unchanged from the previous year at $5.10. However, the company did not provide a full-year outlook for revenue and operating margin.
PayPal's profit forecast includes adjustments of around $1.8 billion, encompassing estimated stock-based compensation expenses, related payroll taxes, and a restructuring charge of approximately $120 million.
Despite the cautious outlook, the fourth-quarter results exceeded expectations, with an adjusted profit of $1.48 per share and a 9% rise in revenue to $8 billion, on a currency-neutral basis.
The company has been making strategic moves, including a workforce reduction of 9% (approximately 2,500 jobs) and a commitment to focus on execution for long-term success in 2024.
Analysts noted that the full-year profit forecast represented a "reset button," with particular attention on PayPal's margins, which have been a concern for investors.
The company aims to address challenges in its branded business, such as Venmo, by capitalizing on strong growth in unbranded segments like payments processing.
The adjusted operating margin for the fourth quarter expanded to 23.3%, a 39 basis points improvement from the previous year. Despite uncertainties, PayPal remains committed to navigating 2024 as a transition year.
Paraphrasing text from "The Star" all rights reserved by the original author.
