Q4 2021 PayPal Holdings Inc Earnings Call
Good afternoon, My name is Donna and I'll be I'll be a conference operator for today at this time I would like to welcome everyone to people Holdings earnings Conference call for the first quarter of 2000 inside one all lines have been placed on mute to prevent any background nice after the speakers' remarks, there will be a question.
Speaker 1: Good afternoon, my name is Donna and I'll be your conference operator for today. At this time, I would like to welcome everyone to people holdings earnings conference call for the fourth quarter of 2021. All lines have been placed amused to prevent any background lights.
Speaker 1: After the speakers remarks, there will be a question in after the session. If you would like to ask questions during this time, simply press star, then follow by the number one on your telephone keypad. If you would like to withdraw your question, press the pound.
And answer session. If you would like to ask a question. During this time simply press Star then followed by the number one on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you I would now like to introduce your host for today's call Ms. Gabrielle Robyn I'll bet Senior Vice President corporate finance and Investor.
Speaker 1: Thank you. I would like to introduce your host for today's call with Gabrielle Rabinovic, Senior Vice President, Corporate Finance and Investor Relations, Peace Go ahead.
Relations Pease go ahead.
Speaker 2: Thank you, Johnna. Good afternoon, and thank you for joining us. Welcome to PayPal's earnings conference call for the fourth quarter of 2021. Joining me today on the call are Dan Schoelman, our President and CEO , and John Rainey, our Chief Financial Officer and EVP Global Customer Operations.
Thank you Donna good afternoon, and thank you for joining US welcome to Paypal is earnings conference call for the fourth quarter of 2021, joining me today on the call are Gantt Sherman, our president and CEO and John Rainey, Our Chief Financial Officer, and EVP Global customer operations, we're providing a slide presentation to accompany our.
Speaker 2: We're providing a slide presentation to accompany our commentary. This conference called also being webcast, and both the presentation and call are available on our investor relations website.
Our commentary this conference call is also being webcast and both the presentation and call are available on our Investor Relations website.
Speaker 2: In discussing our company's performance, we refer to some non- GAAP measures . You can find the reconciliation of these non- GAAP measures to the most directly comparable GAAP measures in the presentation accompanying this conference call.
In discussing our company's performance, we will refer to some non-GAAP measures you can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in the presentation accompanying this conference call.
Speaker 2: Management will make forward-looking statements that are based on our current expectations, forecast and assumptions, and involve risks and uncertain.
Management will make forward looking statements that are based on our current expectations forecasts and assumptions and involve risks and uncertainties. These statements include our guidance for the first quarter and full year 2022, and our medium term outlook.
Speaker 2: These statements include our guidance for the first quarter and full year 2022 and our medium term outlook. Our actual results may differ
Our actual results may differ materially from these statements you can find more information about risks uncertainties and other factors that could affect our results and our most recent annual report on Form 10-K , and quarterly reports on Form 10-Q filed with the SEC and available on our Investor Relations website.
Speaker 2: You can find more information about risks, uncertainties, and other factors that could affect our results in our most recent annual report on Form 10K and quarterly reports on Form 10Q filed with the SEC and available on our Investor Relations website. You should not place undue reliance on any forward-looking states.
You should not place undue reliance on any forward looking statements. All information in this presentation is as of todays date February one 2022, we expressly disclaim any obligation to update this information with that let me turn the call over to Dan.
Speaker 2: All information in this presentation is as of today's date, February 1, 2022.
Speaker 2: We've stressly display any obligation to update this information. With that, let me turn the call over to Dan. Thanks, Gabrielle. And thank you.
Thanks, Kevin and thanks, everyone for joining us.
Speaker 3: Today I'm going to highlight our 2021 results, but I also want to spend time discussing the opportunities and challenges we face this year.
Today I'm going to highlight our 2021 results, but I also wanted to spend time discussing the opportunities and challenges we face this year.
2021 was one of the strongest years in Paypal history.
Speaker 3: 2021 was one of the strongest years in PayPal history. Our revenues grew by eight...
Our revenues grew by 18% to $25 $4 billion.
Speaker 3: $25.4 billion.
Speaker 3: And our non-GAP EPS grew 19% to $4.60.
Our non-GAAP EPS grew 19% to $4 60.
Speaker 3: We surpassed $1 trillion in annual TPPV for the first time in our history, ending the year with $1.25 trillion of total payment volume.
We surpassed <unk>, one trillion dollars and annual PPV for the first time in our history ending.
Ending the year with 1.25 trillion dollars of total payment volume.
Speaker 3: We had a record 5.3 billion transactions in Q4 alone, up 21%.
We had a record $5 3 billion transactions in Q4 alone up 21%.
Speaker 3: We added 49 million net new active accounts to exit the year with 426 million active accounts including 34 million merchants.
We added 49 million net new active accounts.
The year with 426 million active accounts.
Looting 34 million merchants.
Speaker 3: In the last two years, we added 122 million net new active accounts. And despite that spike in new users, our transactions for active account grew to 45 this past year, an 11% increase.
And the last two years, we added 122 million net new active accounts and despite that spike in new users or transactions per active account grew to 45, this past year and 11% increase.
Speaker 3: And last but not least, we generated $5.4 billion in annual free cash flow.
And last but not least we generated $5 $4 billion.
Annual free cash flow.
With all that said 2021 was also a difficult year.
Speaker 3: With all that said, 2021 was also a difficult year.
Speaker 3: It was a particularly hard year to forecast.
It was a particularly hard year to forecast.
Speaker 3: Ebay's migration to manage payments happened faster than we anticipated.
E base migration to managed payments happened faster than we anticipated.
Speaker 3: Overall, eBay put $1.4 billion of pressure on our top line.
Overall, ebay put one $4 billion of pressure on our topline.
Speaker 3: reducing our revenue growth by 700 basis points.
Reducing our revenue growth by 700 basis points.
Speaker 3: X eBay, our revenue growth was very strong, growing 29% on a spot basis for the full year, and 22% in Q4.
Ex ebay our revenue growth was very strong growing 29% on a spot basis for the full year and 22% in Q4.
<unk> factors also did impact our results supply chain issues disproportionately impacted our cross border volumes and our small business merchants.
Speaker 3: Exogenous factors also did impact our results.
Speaker 3: Supply chain issues disproportionately impacted our cross-border volumes and our small business merchant.
Inflationary pressures impacted spending within certain segments of our user base.
Speaker 3: Inflationary pressures impacted spending within certain segments of our user base.
Speaker 3: Rising threats from COVID variants cut travel and event bookings.
Rising threat from Covid variance cut travel and event bookings.
Speaker 4: and the elimination of government stimulus had an impact as well.
And the elimination of government stimulus had an impact as well.
Speaker 3: e-commerce growth rates during the holiday season were lower than industry expectations, despite a strong two-year growth rate of almost 50 percent.
e-commerce growth rates during the holiday season, we're lower than industry expectations. Despite a strong two year growth rate of almost 50%.
Speaker 3: And we are also lapping some of the strongest quarters of growth in our history.
And we are also lapping some of the strongest quarters of growth in our history.
Speaker 3: Even so, we once again grew our market share and came within our revenue guidance for the quarter.
Even so we once again grew our market share.
Within our revenue guidance for the quarter.
Speaker 4: 2022 is going to be a year of transformation and investment as we transition from outsized growth driven by lockdowns during the pandemic and finalize the lapping of eBay's managed payments transition.
2022 is going to be a year of transformation and investment as we transition from outsized growth driven by Lockdowns during the pandemic and finalize the lapping of ebay's managed payments transition.
Ebay transition will put an incremental $600 million of pressure on our topline.
Speaker 3: eBay's transition will put an incremental $600 million of pressure on our top line.
Speaker 3: Approximately $400 million in Q1 and $200 million dollars.
Approximately $400 million in Q1.
And $200 million in Q2.
In the second half of the year I look forward to being able to stop adjusting for ebay and letting the strength of our core results speak for themselves.
Speaker 4: In the second half of the year, I look forward to being able to stop adjusting for eBay and letting the strength of our core results speak for themselves.
Speaker 4: Our growth ex-eBay has consistently been above 20 percent.
Our growth ex ebay has consistently been above 20%.
Speaker 3: And our year-over-two-year growth rates have been remarkably stable, again demonstrating the underlying strength of our platform.
And our year over two year growth rates have been remarkably stable again, demonstrating the underlying strength of our platform.
As I take a step back to reflect its clear we are in a significantly stronger position than when we entered the pandemic.
Speaker 4: as I take a step back to reflect, it's clear we are in a significantly stronger position than when we entered the pandemic.
Speaker 4: with the world continuing to digitize, the use of cash dissipating, and the move towards omni-channel commerce accelerating.
With the world continuing to digitize the use of cash dissipating and the move towards Omnichannel commerce accelerating.
Speaker 4: Our vision of becoming an essential consumer financial super app across payments, basic financial services, and shopping tools is more relevant than ever before. And our tens of millions of merchants continue to look to us to provide a comprehensive platform for them to navigate the digital economy where the lines between virtual and physical commerce are disappearing.
Our vision of becoming an essential consumer financial Super App across payments basic financial services and shopping tools is more relevant than ever before.
And our tens of millions of merchants continue to look to us to provide a comprehensive platform for them to navigate the digital economy, where the lines between virtual and physical commerce are disappearing.
Speaker 3: The past two years have revealed new insights about our customers.
The past two years have revealed new insights about our customers.
Speaker 4: We have seen their behaviors and expectations evolve throughout the pandemic.
We have seen their behaviors and expectations evolve throughout the pandemic.
Speaker 3: with corresponding impacts on the key drivers of our business model.
With corresponding impacts on the key drivers of our business model.
Speaker 3: Consequently, as John will discuss in more detail, we are shifting our emphasis more towards engagement and towards driving higher value NNAs.
Consequently, as John will discuss in more detail, we are shifting our emphasis more towards engagement and towards driving higher value and then as.
Speaker 3: Consumers who are more engaged drive incremental sales for our merchants, and they drive growth at much higher margins and ROI.
Consumers, who are more engaged drive incremental sales for our merchants and they drive growth at much higher margins and ROI.
Speaker 3: Over time, we obviously still expect to grow our net new actives.
Over time, we obviously still expect to grow our net new actives.
Speaker 3: but more in line with our pre-pandemic levels.
But more in line with our pre pandemic levels at the same time, we fully expect engagement will increase above our current trend lines, while we.
Speaker 3: At the same time, we fully expect engagement will increase above our current trend lines while we accelerate revenue and EPS growth throughout the year.
To accelerate revenue and EPS growth throughout the year.
Speaker 3: Our forecast for 2022 is appropriately measured, given the difficult comps in the first half and an unpredictable macroeconomic environment.
Our forecast for 2022, this appropriately measured giving given the difficult comps in the first half and an unpredictable macroeconomic environment.
We're going to focus our energy on what we can control, including key product and go to market initiatives.
Speaker 3: We're going to focus our energy on what we can control, including key product and go-to-market initiatives.
Speaker 4: that will enable us to capture the numerous opportunities that are inherent in the secular shift to digital.
That will enable us to capture the numerous opportunities that are inherent in this secular shift to digital.
Speaker 3: At the same time, we will drive increased operating leverage in order to enter 2023 with revenues and non-GAAP EPS growing at over 20 percent.
At the same time we.
We will drive increased operating leverage in order to enter 2023 with revenues and non-GAAP EPS growing at over 20%.
Speaker 3: The underlying fundamentals of our business are strong.
The underlying fundamentals of our business are strong.
Speaker 3: And our team is executing to win. Last year, we launched more products and experience for our customers than any other year in our history.
And our team is executing to win last year, we launched more products and experience for our customers than any other year in our history.
Speaker 3: We integrated Honey into the new PayPal app to help consumers shop and discover deals and new brands.
We integrated honey into the new Paypal App to help consumers shop, and discover deals and new brands, we expanded our checkout capabilities to help consumers pay on their own terms, whether in store with QR codes over time with buy now pay later.
Speaker 3: We expanded our checkout capabilities to help consumers pay on their own terms, whether in store with QR codes.
Speaker 4: over time with buy now pay later or with emerging funding sources like cryptocurrencies or reward points.
Or with emerging funding sources, like crypto currencies or reward points.
Speaker 3: And we acquired Happy Returns to anchor our post-purchase process and make returns easier and more affordable.
And we acquired happy returns to anchor our post purchase process and make returns easier and more affordable.
Speaker 4: We expect these investments will continue to drive increasing engagement.
We expect these investments will continue to drive increasing engagement.
We are intently focused on taking our best in class checkout experiences.
Speaker 3: We are intently focused on taking our best-in-class checkout experiences to even greater heights.
Even greater heights.
Speaker 3: Through our investments, we are making it faster and easier to check out with some of the highest authorization rates in our history.
Through our investments, we are making it faster and easier to check out with some of the highest authorization rates in our history.
Speaker 4: Today, more than 70% of the top North American and European retailers, including more than 80% of the top US retailers, accept PayPal or Venmo at checkout.
Today more than 70% of the top north American and European retailers, including more than 80% of the top U S retailers, except Paypal or venmo at checkout.
We continue to grow our market leadership in branded payments with our average share of checkout among top merchants continuing to increase.
Speaker 3: We continue to grow our market leadership in branded payments, with our average share of checkout among top merchants continuing to increase.
Speaker 3: Last quarter, we signed new or expanded agreements with Instacart, Gap Inc.
Last quarter, we signed new or expanded agreements with instant card <unk>.
Gap, Inc.
Speaker 3: DoorDash, Adobe, Oracle, and Salesforce.
<unk> Dash Adobe Oracle and Salesforce.
Speaker 3: Buy now, pay later is a perfect example of the type of investment we are making to give shoppers and retailers more reasons to engage with PayPal.
Buy now pay later is a perfect example of the type of investment, we're making to give shoppers and retailers more reasons to engage with Paypal.
Speaker 3: Buy now, pay later is available in eight markets, including with PayD in Japan.
Buy now pay later is available in eight markets, including with PD in Japan.
Speaker 3: We continue to see rapid consumer adoption with $3.2 billion of Buy Now, Pay Later TPV in Q4 alone, a $13 billion run rate with Q4 growth of over 325% year over year.
We continue to see rapid consumer adoption with $3 $2 billion of buy now pay later T. PV in Q4 alone.
A $13 billion run rate with Q4 growth.
Of over 325% year over year.
Speaker 3: We've processed 54 million loans globally since launch with 13 million unique consumers and 1.2 million merchants using our Buy Now, Pay Later services.
We've processed 54 million loans globally since launch with 13 million unique consumers and one 2 million merchants using our buy now pay later services.
Speaker 3: Venmo had a solid finish to the year and closed out 2021 with more than a quarter of a billion dollars of revenue in the fourth quarter up 80 percent year over year.
Venmo had a solid finish to the year and closed out 2021 with more than a quarter of a billion dollars of revenue in the fourth quarter.
80% year over year.
We are still at the beginning of our monetization journey with Amazon implementing the option to pay with Venmo later this year.
Speaker 3: We are still at the beginning of our monetization journey, with Amazon implementing the option to pay with Venmo later this year.
Speaker 3: and Venmo is turning in important corner. And in Q4, help to drive the sequential increase in our overall take rate. As always,
And venmo is turning an important corner.
In Q4 helped to drive the sequential increase in our overall take rate.
As always we've got a lot of work ahead of us.
Speaker 4: We are fortunate that we have so many assets to leverage in a future that is clearly moving in our direction.
We are fortunate that we have so many assets to leverage at a future that is clearly moving in our direction.
Speaker 4: We have a two-sided network at scale. We are one of the most trusted brands in the world. We have tremendous financial strength with a strong balance sheet and we anticipate generating approximately $6 billion of free cash flow in 2022.
We have a two sided network at scale. We are one of the most trusted brands in the world, we have tremendous financial strength with a strong balance sheet, and we anticipate generating approximately $6 billion of free.
Cash flow in 2022.
Speaker 3: We have a seasoned and experienced team with strong relationships with customers, regulators and policy makers around the world.
We have a seasoned and experienced team with strong relationships with customers regulators and policymakers around the world.
Speaker 4: I want to thank the PayPal team for all they do, for staying focused, innovating at scale, delivering more product than ever before, with record platform stability and availability, in a time where our payment volumes have nearly doubled over the past two years.
I wanted to thank the Paypal team for all they do for staying focused innovating at scale delivering more product than ever before with record platform stability and availability in a time, where our payment volumes have nearly doubled over the past.
Two years.
I'm excited about building on the underlying momentum of our core business and I know our team feels that same sense of purpose and optimism.
Speaker 4: I'm excited about building on the underlying momentum of our core business, and I know our team feels that same sense of purpose and optimism. And with that, let me turn
And with that let me turn the call over to John .
Speaker 5: Thanks, Dan. I'd like to start off by thanking our customers, partners, and employees for helping us deliver an outstanding year following our record-breaking performance in 2020. There are several
Thanks, Dan.
I'd like to start off by thanking our customers partners and employees for helping us deliver an outstanding year following a record breaking performance in 2020.
There are several important points that I want to discuss today.
Im going to discuss a pivot in our strategy to focus more on engagement and what that means for our net new actives going forward.
Speaker 5: I'm going to discuss a pivot in our strategy to focus more on engagement and what that means for our net new actives going forward.
Speaker 5: I also want to discuss why we are taking a more conservative outlook for 2022 for both revenue and earnings.
I also want to discuss why we are taking a more conservative outlook for 2022 for both revenue and earnings.
Speaker 5: And lastly, that we don't believe either of these items will prevent us from achieving the revenue and earnings growth rates along with our free cash flow objectives in the out years of the period contemplated in our medium term guidance.
And lastly that we don't believe either of these items will prevent us from achieving the revenue and earnings growth rates, along with our free cash flow objectives, and the out years of the period contemplated in our medium term guidance.
Speaker 5: But first, I want to spend a moment discussing our Q4 performance.
But first I want to spend a moment discussing our Q4 performance.
2021, certainly had its ups and downs, but when one steps back and looks at our overall performance. It was really an amazing year.
Speaker 5: 2021 certainly had its ups and downs.
Speaker 5: But when one steps back and looks at our overall performance, it was really an amazing year. TPV grew 33%. Revenue grew 18%. And we generated $5.4 billion in free cash flow.
<unk> grew 33% revenue grew 18% and we generated $5 4 billion in free cash flow.
Speaker 5: We also added 49 million customer accounts, ending the year with 426 million. And our engagement metric, transactions per active account, grew 11%, an acceleration of approximately 10 percentage points from 2020.
We also added 49 million customer accounts, ending the year with $426 million.
And our engagement metric transactions per active account grew 11% and acceleration of approximately 10 percentage points from 2020.
Remarkably in 2021 growth on our platform, excluding ebay accelerated meaningfully on top of extraordinary performance in 2020.
Speaker 5: Remarkably, in 2021, growth on our platform, excluding eBay, accelerated meaningfully on top of extraordinary performance in 2020.
Speaker 5: GPV growth accelerated more than 500 basis points to 38%
TPB growth accelerated more than 500 basis points to 38%.
Speaker 5: and revenue growth accelerated more than 600 basis points to 29%.
And revenue growth accelerated more than 600 basis points to 29%.
Since 2019, our volumes ex E Bay have nearly doubled and overall, we've consistently grown volumes well ahead of industry growth rates.
Speaker 5: Since 2019, our volumes XE bay have nearly doubled. And overall, we've consistently grown volumes well ahead of industry growth rates. We also advanced our-
We also advanced our leadership position and checkout.
Speaker 5: Since the start of the pandemic, on average, our share of checkout among the largest publicly traded merchants has increased by nearly 200.
Since the start of the pandemic on average our share of checkout. Among the largest publicly traded merchants has increased by nearly 200 basis points.
Speaker 5: further in the US, consumer adoption of our digital wallets is several times higher than the next nearest wall.
Further in the U S consumer adoption of our digital wallets is several times higher than the next nearest Walmart and.
Speaker 5: And our merchant acceptance leads all other checkout buttons by an even more sizable margin.
And our merchant acceptance leads all other checkout buttons by an even more sizable margin.
Speaker 5: By any measure, we are a leader in digital payments.
By any measure we are a leader in digital payments.
Speaker 5: There are only a handful of companies that generate the amount of revenue and free cash flow growth that we do annually.
There are only a handful of companies that generate the amount of revenue and free cash flow growth that we do annually and.
Speaker 5: And we are confident that our long-term market opportunity is greater than ever.
And we are confident that our long term market opportunity is greater than ever.
Speaker 5: In the fourth quarter, total payment volume grew 23% to $340 billion.
In the fourth quarter total payment volume grew 23% to $340 billion.
Ebay volumes in the quarter declined 45% and represented two 7% of total volumes versus 6% last year.
Speaker 5: eBay volumes in the quarter declined 45% and represented 2.7% of total volumes versus 6% last year.
Speaker 5: And excluding eBay, volumes grew 28% on a currency neutral basis.
And excluding ebay volumes grew 28% on a currency neutral basis.
Revenue in the quarter increased 13% to $6 9 billion.
Speaker 5: Revenue in the quarter increased 13% to $6.9 billion. Revenue XEB A grew 22%, which is two points ahead of our medium term growth out.
Revenue ex ebay grew 22%, which is two points ahead of our medium term growth outlook.
Speaker 5: The strong performance was broad-based across brain tree, Venmo, core PayPal, and our credit product.
This strong performance was broad based across Braintree, and venmo core Paypal and our credit products.
Relative to the fourth quarter of 2020 U S revenue grew 27% and international revenue decreased 1%.
Speaker 5: relative to the fourth quarter of 2020. US revenue grew 27%, and international revenue decreased 1%.
Supply chain shortages in ebay's transition adversely impacted cross border volumes and foreign exchange fees ex.
Speaker 5: The applied change shortages and eBay's transition adversely impacted cross-border volumes and foreign exchange fees. Ex-E-Bate International Revenue
Ebay International revenue grew 11%.
Speaker 5: Importantly, on a currency-neutral basis, the two-year compounded growth rate for revenue in the quarter remained consistent with the fourth quarter of 2020, underscoring the strength and consistency of our business.
Importantly on a currency neutral basis, the two year compounded growth rate for revenue in the quarter remained consistent with the fourth quarter of 2020, underscoring the strength and consistency of our business.
Speaker 5: In the fourth quarter, total take rate was 2.04% and transaction take rate was 1.88%.
In the fourth quarter total take rate was 2.04% and transaction take rate was 188%, notably both increased sequentially reversing an approximately two year trend of sequential take rate declines both product mix and pricing benefited.
Speaker 5: Notably, both increased sequentially, reversing in approximately two-year trend of sequential take rate declines. Both product mix and pricing,
Our performance.
In the fourth quarter, our volume based expense performance was strong transaction expense increased three basis points as a rate of TPB to 87 basis points, driven by volume mix, particularly our growth in Braintree volumes in Q4 seasonality, which increases credit card mix relative to other funding instruments.
Speaker 5: In the fourth quarter, our volume-based expense performance was strong. Transaction expense increased three basis points as a rate of TPV to 87 basis points driven by volume mix, particularly our growth in Braintree volumes, and Q4 seasonality, which increases credit card mix relative to other funding instruments.
Transaction losses improved one basis point to nine basis points, which mass it matches the best performance, we've reported in our history.
Speaker 5: Transaction losses improved one basis point to nine basis points.
Speaker 5: which matches the best performance we reported in our history.
Speaker 5: Credit losses were one basis point as a rate of TPPV versus three basis points last year, driven by our mix of originations, portfolio performance, and $9 million in reserve releases.
Credit losses were one basis point as a rate of PPD versus three basis points last year, driven by our mix of originations portfolio performance and $9 million in reserve releases.
Speaker 5: At the end of the quarter, our credit loss reserve coverage ratio was approximately 9%.
At the end of the quarter, our credit loss reserve coverage ratio was approximately 9%.
Speaker 5: In total, we released $312 million of reserves in 2021.
In total we released $312 million of reserves in 2021.
Speaker 5: Transaction margin dollars increased 6% to $3.6 billion, and XEB grew 18%.
Transaction margin dollars increased 6% to $3 6 billion.
And ex ebay grew 18%.
Transaction margin as a rate declined 365 basis points to 52, 3%.
Speaker 5: Transaction margin as a rate declined 365 basis points to 52.3%.
Speaker 5: and our non-transaction related expenses grew 10% in the quarter.
In our non transaction related expenses grew 10% in the quarter.
On a non-GAAP basis operating income was flat in comparison to last year and operating margin declined 291 basis points to 21, 8%.
Speaker 5: On a non-gap basis, operating income was flat in comparison last year, and operating margin declined 291 basis points to 21.8%.
non-GAAP earnings per share were $1 11.
Speaker 5: Non-Gap Furny's for Share were $1.11.
Speaker 5: We ended the year with cash, cash equivalents, and investments of $16.3 billion. In addition, free cash flow increased 38% in the fourth quarter to $1.6 billion, and we repurchased $1.5 billion of stock in the quarter.
We ended the year with cash cash equivalents and investments of $16 3 billion.
In addition, free cash flow increased 38% in the fourth quarter to $1 6 billion.
And we repurchased $1 5 billion of stock in the quarter.
I would now like to discuss our net new accounts and provide more context for our performance and our expectations for 2022.
Speaker 5: I'd now like to discuss our Net New accounts and provide more context for our performance and our expectations for 2022.
Speaker 5: For the quarter, our guidance contemplated generating about 12.9 million net new active on an organic basis.
For the quarter, our guidance contemplated generating about $12 9 million net new actives on an organic basis.
Speaker 5: We had a slower than expected finish to the year and came in below our target.
We had a slower than expected finish to the year and came in below our target.
Speaker 5: There are three factors that contributed to this, which I will discuss in increasing order of magnitude.
There are three factors that contributed to this which I will discuss in increasing order of magnitude.
Speaker 5: First, the more muted into the year for e-commerce growth driven by both supply chain challenges, as well as pullback and spending by lower income consumers affected consumer growth.
First the more muted into the year for e-commerce growth driven by both supply chain challenges as well as pullback in spending by lower income consumers affected consumer growth.
Second in the back half of the quarter. We also changed course on some of our customer acquisition strategies, including incentive led campaigns.
Speaker 5: Second, in the back half of the quarter, we also changed course on some of our customer acquisition strategies, including incentive lead campaigns.
Speaker 5: And lastly, and most impactful to the quarter, there were certain accounts that we disqualified or excluded from our net new active number.
And lastly, and most impactful to the quarter there were certain accounts that we disqualified or excluded from our net new active number.
For context.
Speaker 5: We regularly assess our active account base to ensure the accounts are legitimate.
We regularly assess our active account base to ensure the accounts are legitimate.
Speaker 5: This is particularly important during incentive campaigns that can be targets for bad actors attempting to reap the benefit from these offers without ever having an intent to be a legitimate customer on our platform.
This is particularly important during incentive campaigns that can be targets for bad actors attempting to reap the benefit from these offers without ever having an intent to be a legitimate customer on our platform.
In the fourth quarter in connection with the increased use of incentive campaigns throughout 2021, we identified $4 5 million accounts that we believe were illegitimately created.
Speaker 5: in the fourth quarter, in connection with the increased use of incentive campaigns throughout 2021, we identified 4.5 million accounts that we believe were illegitimately created.
Speaker 5: This number is immaterial to our overall base of 426 million customer accounts, but it affected our ability to achieve our guidance in the quarter.
This number is immaterial to our overall base of 426 million customer accounts, but it affected our ability to achieve our guidance in the quarter.
Speaker 5: Now I want to shift to how we're thinking about Net New Active Accounts in 2022, which is separate in a part from the factors impacting Q4.
Now I want to shift to how we're thinking about net new active accounts in 2022, which is separate and apart from the factors impacting Q4.
Speaker 5: I'm going to start with the headline here and then provide some explanation.
I'm going to start with the headline here and then provide some explanation.
Speaker 5: We are evolving our customer acquisition and engagement strategy, and we now expect to add 15 to 20 million net new customer accounts this year.
We are evolving our customer acquisition and engagement strategy and we now expect to add 15 to 20 million net new customer accounts this year.
Speaker 5: In addition, we no longer believe that the 750 million medium term account aspiration we set last year is appropriate. I'll explain.
In addition, we no longer believe that the 750 million medium term account aspiration, we set last year is appropriate I'll explain.
Speaker 5: Over the past two years, we've added more than 120 million customer accounts to our platform.
Over the past two years, we've added more than 120 million customer accounts to our platform.
Speaker 5: This is without question, remarkable growth. And a complete step change from our trajectory prior to the pandemic.
This is without question remarkable growth and a complete step change from our trajectory prior to the pandemic.
Speaker 5: Our strategy for this has been twofold. Continue to add new actives and increase the engagement of our customer base.
Our strategy for this has been twofold continue to add net new actives and increase the engagement of our customer base.
Last year, given the strong user growth, we pursued a strategy to retain those customers most likely to churn as well as attract many more new customers. We also leaned into incentivize customer acquisition tactics to a much greater extent than we ever have in our history.
Speaker 5: Last year, given the strong user growth, we pursued a strategy to retain those customers most likely to churn, as well as attract many more new customers.
Speaker 5: We also leaned into its incentivized customer acquisition tactics to a much greater extent than we ever have in our history.
Speaker 5: At the same time, we've continued to focus on and invest in areas that deepen our engagement with our customers, particularly as we continue to add new products and services.
At the same time, we've continued to focus on and invest in areas that deepen our engagement with our customers, particularly as we continue to add new products and services.
Speaker 5: to assess the effectiveness of these strategies. We look at the impact on customer behavior in the months that follow account creation, in essence looking at the ROI or return on that investment spend from their expected contribution to TPV, revenue, and operating income.
To assess the effectiveness of these strategies, we look at the impact on customer behavior in the months to follow account creation in essence looking at the ROI or return on that investment spend from their expected contribution to TPB revenue and operating income.
Speaker 5: These programs are very successful in generating account creation. But overall, these customers have lower engagement and a higher propensity to term, and have not met our required level of return.
These programs are very successful in generating account creation, but overall these customers have lower engagement and a higher propensity to churn and have not met our required level of return.
Speaker 5: This dynamic compounds over time as it requires increasing investment simply to keep minimally engaged users on our platform.
This dynamic compounds over time is it requires increasing investment simply to keep minimally engaged users on our platform.
Speaker 5: Similar to a lot of businesses, we have a Pareto dynamic in ours where the vast majority of our volume comes from about a third of our customers.
Similar to a lot of businesses, we have paredo dynamic in ours, where the vast majority of our volume comes from about a third of our customer base. What this means is that unlike a subscription model where more users equates to more revenue in our business that relationship as much.
Speaker 5: What this means is that unlike a subscription model where more users equates to more revenue in our business, that relationship is much more attenuated.
More attenuated.
Speaker 5: and assessing our marketing effectiveness. Our engagement initiatives were considerably more successful than the incentive campaign.
In assessing our marketing effectiveness, our engagement initiatives were considerably more successful than the incentive campaigns.
We successfully move customers up the engagement continuum into higher levels of engagement throughout the year.
Speaker 5: we successfully moved customers up the engagement continuum into higher levels of engagement throughout the year.
Speaker 5: These strategies had strong returns and over time will be important contributors to achieving our long-term revenue per user object.
These strategies had strong returns and over time will be important contributors to achieving our long term revenue per user objectives.
Moving forward, we will continue to grow our users, but our focus will be on sustainable growth and driving engagement.
Speaker 5: Moving forward, we will continue to grow our users, but our focus will be on sustainable growth and driving engagement. To be very clear.
To be very clear.
This is a choice on our part.
Speaker 5: We could increase our spin and accelerate our net new active trajectory. However, we believe there are better ways to achieve our financial results.
We could increase our spend and accelerate our net new active trajectory. However, we believe there are better ways to achieve our financial results.
Speaker 5: We strongly believe that we are making the right decisions in redirecting our spin toward high value customer acquisition and engagement channel.
We strongly believe that we are making the right decisions and redirecting our spend toward high value customer acquisition and engagement channels.
Speaker 5: That said, over the next 12 months, as these less engaged customers naturally roll off, it will materially reduce our quarterly net ads.
That said over the next 12 months as these less engaged customers naturally roll off it will materially reduce our quarterly net ads.
Speaker 5: Over the next couple of quarters, we plan to supplement the disclosure of net new actives with the addition of monthly active unique user and ARPU metrics.
Over the next couple of quarters, we plan to supplement the disclosure of net new actives with the addition of monthly active unique user and <unk> metrics.
Speaker 5: These metrics have a more meaningful correlation with our financial results. And we believe that incremental disclosure will allow you to better assess engagement on our platform and the degree to which our strategies are working.
These metrics, having more meaningful correlation with our financial results and we believe this incremental disclosure will allow you to better assess engagement on our platform and the degree to which our strategies are working.
Speaker 5: I'd now like to discuss our financial guidance for 2022 in the context of our fourth quarter performance and the initial outlook we provided in November .
I'd now like to discuss our financial guidance for 2022 in the context of our fourth quarter performance and the initial outlook we provided in November .
Speaker 5: Overall, revenue performance for the quarter came in about how we had expected. October was a strong month, bullied by some expected pull forward and holiday shopping. However, the back half of the quarter was weaker than we expected.
Overall revenue performance for the quarter came in about how we had expected.
<unk> was a strong month buoyed by some expected full port pull forward and holiday shopping.
However, the back half of the quarter was weaker than we expected.
Speaker 5: Consistent with the reported sequential decline and seasonally adjusted retail sales and consumer spending in December , we experienced a softer end to the quarter.
Consistent with the reported sequential decline in seasonally adjusted retail sales and consumer spending in December we experienced a softer end to the quarter.
Speaker 5: The impact of Omicron and the effect of inflationary prices combined with lack of stimulus is having an impact on spending and by extension our business.
The impact of Omicron and the effect of inflationary prices combined with lack of stimulus is having an impact on spending and by extension our business.
Speaker 5: This impact is most pronounced on our lower income cohorts and has continued into the first quarter.
This impact is most pronounced on our lower income cohorts and has continued into the first quarter.
The persistence of inflationary effects on personal consumption labor shortages supply chain issues and weaker consumer sentiment have led us to adopt a more cautious outlook.
Speaker 5: The persistence of inflationary effects on personal consumption, labor shortages, supply chain issues, and weaker consumer sentiment have led us to adopt a more cautious outlook.
Speaker 5: On last quarter's call, we preliminarily indicated high-teens revenue growth for this year. Instead, that if we had to pinpoint it, it would be around 18%. We have an incredible business, but we are not...
On last quarter's call, we preliminarily indicated high teens revenue growth for this year and said that if we had to pinpoint it it would be around 18%.
We have an incredible business, but we are not immune to the vagaries of the economy.
Based on our more conservative stance today, we are starting the year with an expectation for revenue growth in the range of 15% to 17%.
Speaker 5: Based on our more conservative stance today, we are starting the year with an expectation for revenue growth in the range of 15 to 17%.
Speaker 5: If these issues do not improve, it could cause us to be toward the lower end of that range. Should we see improvements relative to what we're seeing right now, it could result in being toward the upper end of that range. The environment continues to be difficult to predict, and this guidance provides our best estimate of the likely range of outcomes.
If these issues do not improve it could cause us to be toward the lower end of that range should.
Should we see improvements relative to what we're seeing right now it could result in being towards the upper end of that range. The environment continues to be difficult to predict and this guidance provides our best estimate of the likely range of outcomes.
Speaker 5: In addition, as we discussed when we reported our third quarter results, our earnings growth in 2022 will be constrained by lapping the release of the credit reserves and a very low effective tax rate last year.
In addition, as we discussed when we reported our third quarter results. Our earnings growth in 2022 will be constrained by lapping the release of the credit reserves and a very low effective tax rate last year.
Speaker 5: In 2021, we released 312 million dollars in credit reserve.
In 2021, we released $312 million in credit reserves. This benefited operating margin by approximately 125 basis points and earnings per share by 21.
Speaker 5: This benefited operating margin by approximately 125 basis points and earnings per share by 21 cents. Our effective tax rate
Our effective tax rate was 10, 5% last year.
Speaker 5: resulting from favorable discrete items, settlements, and resolution.
Resulting from favorable discrete items settlements and resolutions.
Speaker 5: and benefited earnings per share by approximately 33 cents for the year. This is compared to an estimated tax rate of 16 to 18% this year.
And benefited earnings per share by approximately 33 for the year. This is compared to an estimated tax rate of 16% to 18% this year.
Speaker 5: In the aggregate, these factors total 54 cents of EPS pressure year over year and represent a 12-point headwind to earnings growth this year.
In the aggregate. These factors totaled 54 cents of EPS pressure year over year and represent a 12 point headwind to earnings growth this year.
At the same time, continuing to invest in innovation and our go to market strategies as essential over.
Speaker 5: At the same time, continuing to invest in innovation in our go-to-market strategies is essential.
Speaker 5: Over the last two years, we've invested nearly $1 billion over and above our historical spend. In areas like engineering, technology, marketing, and customer support, all of which have generated tremendous returns for us.
Over the last two years, we've invested nearly a billion dollars over and above our historical spend in areas like engineering technology marketing and customer support all of which have generated tremendous returns for us. This.
Speaker 5: This year, we're focused on leveraging these investments while continuing to innovate at scale, strengthening our competitive positioning, and advancing our leadership in digital payments.
This year, we're focused on leveraging these investments while continuing to innovate at scale and strengthening our competitive positioning and advancing our leadership in digital payments.
Speaker 5: Importantly, we expect to deliver solid leverage in our non-transaction related expenses in 2022, which will be offset by volume-based expense growth predominantly related to our changes in our credit reserves. As a result, we expect operating margin to be in the range of 23% this year.
Importantly, we expect to deliver solid leverage in our non transaction related expenses in 2022, which will be offset by volume based expense growth predominantly related to our changes in our credit reserves. As a result, we expect operating margin to be in the range of 23% this year.
Sure.
Speaker 5: And for the year, we expect to deliver $4.60 to $4.75 and non-GAP earnings per show.
And for the year, we expect to deliver $4 60 to $4 75, and non-GAAP earnings per share.
Speaker 5: In the first quarter, we're up against our hardest comps, as we grew revenue 31% and non-GAAP EPS 84% in Q1 last year.
In the first quarter, we're up against our hardest comps as we grew revenue, 31% and non-GAAP EPS, 84% in Q1 last year.
The first half of last year benefited from stimulus stronger consumer confidence and a greater contribution from ebay.
Speaker 5: The first half of last year benefited from stimulus, stronger consumer confidence and a greater contribution from eBay.
Speaker 5: For the first quarter, we expect revenue to grow approximately 6% to $6.4 billion, and non-GAAP EPS to be $0.87, which represents about a 30% decline from last year.
For the first quarter, we expect revenue to grow approximately 6% to $6 4 billion.
And non-GAAP EPS to be <unk> 87.
Which represents about a 30% decline from last year.
As we progressed through the year, our revenue growth will accelerate we plan to deliver at least 20% revenue growth in the fourth quarter and exit the year at a top line growth rate in line or ahead of our medium term target.
Speaker 5: as we progress through the year, our revenue growth will accelerate. We plan to deliver at least 20% revenue growth in the fourth quarter, and exit the year at a top-line growth rate, in line, or ahead of our medium-term target.
Speaker 5: In addition, while the trajectory of the economy has been difficult to predict and may give rise to short-term deviations in our expected performance, over the long term, nothing has changed as it relates to our confidence in our business and our expectations for performance beyond 2022.
In addition, while the trajectory of the economy has been difficult to predict and May give rise to short term deviations in our expected performance over the long term nothing has changed as it relates to our confidence in our business and our expectations for performance beyond 2022.
That said when we laid out our medium term outlook one year ago underlying the assumptions was a more normalized steady state expectation for overall economic activity and consumer demand.
Speaker 5: That said, when we laid out our medium-term outlook one year ago, underlying the assumptions was a more normalized, steady state expectation for overall economic activity and consumer demand.
Speaker 5: Our medium-term targets simply did not contemplate inflation at a 40-year high and supply chain issues not seen in my life.
Our medium term targets simply did not contemplate inflation at a 40 year high and supply chain issues not seen in my lifetime.
Speaker 5: As such, 2022 is now off to a slower start than we previously anticipated. And we are taking a more conservative stance on the year.
As such 2022 is now off to a slower start than we previously anticipated and we are taking a more conservative stance on the year.
Speaker 5: We continue to believe that our revenue and earnings growth rates, as well as our pre-cash flow objectives, are achievable in the out years of the period contemplated in our medium-term guidance.
We continue to believe that our revenue and earnings growth rates as well as our free cash flow objectives are achievable in the out years of the period contemplated in our medium term guidance.
I want to close with these thoughts.
Speaker 5: We arguably just had one of the best years in our history when you examine our financial metrics.
We arguably just had one of the best years in our history when you examine our financial metrics.
Speaker 5: Eclipse in 25 billion in revenue and generating almost five and a half billion dollars in free cash.
Eclipsing 25 billion in revenue and generating almost five 5 billion and free cash flow by.
Speaker 5: By virtually any measure, we are a market leader in digital payments and will continue to grow faster than the market.
By virtually any measure we are a market leader in digital payments and we will continue to grow faster than the market.
Speaker 5: There are very few companies of our size, with our global reach, with our growth rates, and cash generation.
There are very few companies of our size with our global reach with our growth rates and cash generation.
Speaker 5: But we're in a dynamic industry and one that is constantly evolving, even more so because of COVID.
But we're in a dynamic industry and one that is constantly evolving even more so because of COVID-19 .
Speaker 5: and we are evolving with it. Notably, our strategy as it pertains to engagement and net new activity.
And we are evolving with it notably our strategy as it pertains to engagement and net new actives.
Speaker 5: And even with the broad diversity of our business, we are not completely insulated from macroeconomic factors that while maybe impacting short-term performance have nothing to do with the long-term intrinsic value of our business.
And even with the broad diversity of our business. We are not completely insulated from macroeconomic factors that while it may be impacting short term performance have nothing to do with the long term intrinsic value of our business.
Speaker 5: We're going to continue to innovate, to grow, to increase our relevance to customers, and focus on the things that we can control, to continue to create value, and be a global leader in digital payments. Thank you. I'll turn it over to the operator for questions.
We're going to continue to innovate to grow to increase our relevance to customers and focus on the things that we can control to continue to create value and be a global leader in digital payments. Thank.
Thank you I'll turn it over to the operator for questions.
Yeah.
Operator.
Yeah.
Operator, we can Brian .
Mhm.
Speaker 1: At this time, I would like to remind everyone in order to ask a question, please press start and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A room.
At this time I would like to remind everyone in order to ask a question. Please press <unk>.
Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Speaker 1: Your first question comes from the line of attention, Wong, from JP Morgan. Your line is now open.
Your first question comes from the line of Tien Tsin Huang from Jpmorgan. Your line is now open.
Hi, Thanks, so much I wanted to drill in on the.
Speaker 6: NNA is again, if you don't mind, just what drove the decision here to focus on engagement?
And then as again, if you don't mind, just what drove the decision to focus on engagement.
Speaker 6: folks in quality instead of growth in M&A's, I'm just trying to gauge your confidence here in expanding our poo as in plies in the guidance, both this year and I suppose.
Our focus on quality instead of growth and M&A. So I'm just trying to gauge your confidence in expanding ought to that's implied in the guidance. Both this year and I suppose in the midterm.
Speaker 6: midterm that the $750 million is off the table.
$750 million that's off the table. Thanks, so much.
Sure Tien Tsin, I'll start and Dan might want to jump in.
Speaker 5: Sure, Tingen, I'll start and Dan might want to jump in. Look, I'll start with some context. We're a data driven business. And if you just look at the last year.
Look I'll start with some context, we're a data driven business and if you just look at the last year.
We did almost 20 billion transactions on our platform.
Speaker 5: We did almost 20 billion transactions on our platform.
Speaker 5: And each of those transactions has hundreds of signals about that transaction.
And each of those transactions has hundreds of signals about that transaction.
Speaker 5: you know, what was the size of the transaction, was it, what was the price point, was it on a mobile device, was it a repeat customer, did it happen after a P2P transaction? And that informs our strategy. And we analyze that, it informs the strategy, we measure the results, and it creates this feedback loop that we then refine and pivot our strategies as well. And what we've been able to see
What was the size of the transaction was it what was the price point was it on a mobile device that was at a repeat customer or did it happen. After a P to P transaction and that informs our strategy and we analyze that informs the strategy we measure the results and it creates this feedback loop that we then refine and.
Pivoted, our strategies as well and what we've been able to see is that when we assess the strategy around trying to retain these very low engaged users versus attempting to move people up maybe from the medium engaged user to the high engaged user group the <unk>.
Speaker 5: When we assess the strategy around trying to retain these very low engaged users versus attempting to move people up maybe from the medium engaged user to the high engaged user group.
Speaker 5: The latter is much more effective. It's much more effective for us to focus on engagement. And I think it's important to note.
Ladder is much more effective it's much more effective for us to focus on engagement and.
And I think it's important to note we are not a subscription model business, where there's a direct relationship between our net new actives in the amount of revenue as I noted in my prepared remarks.
Speaker 5: We are not a subscription model business where there's a direct relationship between our net new actives and the amount of revenue. As I noted in my prepared remarks.
Speaker 5: There's a Pareto dynamic in our business where the vast majority of our volume comes from about a third of our customers.
There's a there's a parade of dynamic in our business, where the vast majority of our volume comes from about a third of our customers and so we think that we.
Speaker 5: And so we think that we need to pivot to evolve with the feedback that we've received.
We need to pivot to evolve with.
The feedback that we've received and go achieve our medium term guidance of different way than what we initially had laid out but importantly, there is very encouraging signs that we see around engagement.
Speaker 5: and go achieve our medium-term guidance a different way than what we initially had laid out. But importantly, there's very encouraging signs that we see around engagement. And we've talked about some of those, but when we, for instance, add a, provide a separate product or service for a customer and they're engaging with us in a different way, the R proof for that customer increases
We've talked about some of those but when we for instance, add a provide a separate product or service for a customer and they're engaging with us in a different way the are approved for that customer increases appear.
Appreciably and so this is a pivot in our strategy, we think it's appropriate for our business, but it does not mean that we don't have confidence in our medium term outlook as it relates to both revenue and earnings and free cash flow.
Speaker 5: And so this is a pivot in our strategy. We think it's appropriate for our business, but it does not mean that we don't have confidence in our medium-term outlook as it relates to both revenue and earnings and free cash flow.
Speaker 3: You know, maybe I'll just add a couple of things on to John's response.
Yeah, maybe I'll just add.
Couple of things on to John's response.
Speaker 4: First of all, we did put on 122 million NNAs over the last two years, which is.
First of all we did put on $122 million and then as over the last two years, which is obviously substantially more than our pre pandemic levels where and.
Speaker 4: Obviously substantially more than what our pre-pandemic levels were.
Speaker 3: And within that, there are always a number that are low engaged for, I've done one transaction, and nothing else. And we drove some programs.
And within that there are always a number that are low engaged or have done one transaction.
Nothing else and we drove some programs incentive based programs to see if they would reengage and then engage back with the base and what we found.
Speaker 3: incentive-based programs to see if they would re-engage and then engage back with the base. And what we found is that they would do one transaction and then fall dormant again.
Is that they would do one transaction and then fall Dorman again.
Speaker 3: So our view is spending money on lower value NNAs that are not engaged in the base.
So our view is spending money.
One lower value and then as that are not engaged in the base becomes increasingly expensive proposition over time and does nothing for our revenue.
Speaker 3: becomes an increasingly expensive proposition over time and does nothing for our revenue growth. In fact, this year, when we're saying that we're gonna do 15 to 20 million, there's probably gonna be about 20 million incremental one and done customers that roll off. That does nothing to our revenue. That is actually just people coming out of the base that were never engaged. Over time, we feel like our NNAs are gonna revert.
Growth in fact, this year, when we're saying that we're going to do $15 million to $20 million, there's probably going to be about $20 million incremental one and done customers that roll off.
That does nothing to a revenue that is actually just people coming out of the base that we're never engage.
Over time, we feel like our <unk>.
We're going to revert more back to pre pandemic, which was in the $30 million to $40 million a year range and could that change slightly could that be more as we go into more international penetration.
Speaker 3: which was in the 30 to 40 million a year range. And could that change slightly? Could that be more as we go into more international penetration?
Speaker 4: We're seeing some very encouraging signs, as John said, with the digital wallet, where if somebody adds one more service to the digital wallet, their average revenue per active goes up by 25%.
We're seeing some very encouraging signs as John said with the digital wallet, where somebody adds one more service to the digital wallet. Their average revenue per active goes up by 25%. The average revenue per active of the digital wallet users two times.
Speaker 3: the average revenue, a proactive of the digital wallet user is two times that of a checkout only. And so we really feel like we are going to invest.
That of checkout, only and so we really feel like we are going to invest our dollars in the best way to drive our revenues and our earnings and in the most efficient way and so we have great confidence in the medium term outlook.
Speaker 3: in the best way to drive our revenues and our earnings and in the most efficient way.
Speaker 4: So we have great confidence in the medium-term outlook.
Speaker 4: And this shift is one that doesn't mean that we won't bring on tens of millions of NNAs every quarter. It just means that we're not going to throw marketing dollars at low value subscribers coming in. And that, as John mentioned in his remarks, is a conscientious choice that we're making.
And this shift.
Is one that doesn't mean that we won't bring on tens of millions of M&A as every quarter. It just means that we're not going to.
Throw marketing dollars at low value subscribers coming in in that as John mentioned in his remarks is a conscientious choices that we're making.
Yeah.
That's very clear I appreciate the thoughts yes.
Thank you. Your next question comes from the line of Darrin Peller from Wolfe Research. Your line is now open.
Speaker 1: Thank you. Your next question comes from the line of Darren Keller from Wolf Research. Your line is now open.
Speaker 7: Hey, thanks guys. Can you just, can you touch on the assumptions for your revenue guidance? I know your fifth.
Hey, Thanks, guys can you just can you touch on the assumptions for your revenue guidance I know your 15% to 17% is obviously lower than the prior 18% as expected as of a few months ago. So maybe John or Dan. If you could just touch on the magnitude of the <unk> expansion are considered.
Speaker 7: So maybe John or Dan, if you could just touch on the magnitude of ARPU expansion.
Speaker 7: have any color on the tape rate or other factors and just maybe any assumptions that might be conservative here. Also, John , just the Cated...
And perhaps any color on the take rate or other factors and just maybe any assumptions that might be conservative here.
And also John just the cadence and trajectory I know you talk about exiting the year at 20% plus growth rates. Obviously, it's great to hear just we needed a good ramp as the year progresses. So anyway that guys any color on that would be helpful. Sure. Darren you packed a lot into that one question I'll try to get most of it most of it so.
Speaker 5: Sure, Darren, you packed a lot into that one question. I'll try to get most of it. So.
Look as I noted, we are adopting a more conservative stance on the year and that's informed a lot.
Speaker 5: Look, as I noted, we're adopting a more conservative stance on the year, and that's informed.
Speaker 5: a lot by what we've seen over the last eight to 10 weeks in our business. And I think underlying the outlook that we have for 2022 is e-commerce growth, the consensus estimates that we see are in the 10% range. And so that's sort of fundamental assumption to start with.
By what we've seen over the last.
Eight to 10 weeks and our business and I think underlying the outlook that we have for 2022 is e-commerce growth. The consensus estimates that we see are in kind of a 10% ranch and so that's sort of a fundamental assumption to start with.
Speaker 5: As I noted in my prepared remarks, we've seen weakness around spending in our lower income cohorts. And imagine for us, the percentage of our user base is pretty similar to what you see just like in the U.S. overall. So it is a large percentage of our user base. And this was a cohort.
As I noted in my prepared remarks.
We've seen weakness around spending and our lower income cohorts and imagine for us it's.
The percentage of our user base is pretty similar to what you see just like in the U S. Overall. So it is a large percentage of our user base and this was a cohort that certainly benefited from stimulus in prior periods earlier this year and we're seeing the effects of inflationary pricing around that where there was a more elastic <unk>.
Speaker 5: Certainly benefited from stimulus in prior periods earlier this year. And we're seeing the effects of inflationary pricing around that where there's a more elastic demand curve around that.
<unk> curve around that.
Speaker 5: Certainly, with higher income cohorts, you've got a more inelastic demand curve, and that's a lower percentage.
Certainly.
With higher income cohorts, you've got a more inelastic demand curve and thats, a lower percentage of our base, but generally speaking I don't think people are going out and buying boats with venmo.
Speaker 5: of our base, but generally speaking, I don't think people are going out and buying boats with Venmo. Maybe they are, but this has had an impact on our business.
And maybe they are but but this this has had an impact on our business and so when we provide that range of revenue guidance for the year. If this persists and doesn't improve then it's going to be at the lower end of that range. If it improves appreciably then it's the upper end of that range and so if you take the midpoint, we do have some expectation that some of.
Speaker 5: And so when we provide that range of revenue guidance for the year, if this persists and doesn't improve, then it's going to be at the lower end of that range. If it improves appreciably, then it's the upper end of that range. And so if you take the midpoint, we do have some expectation that some of the supply chain issues and inflationary pressures that we've seen right now improve in the back half of
The supply chain issues and inflationary pressures that we've seen right now improve in the back half of the year with respect to cadence. The first half of the year clearly is the most difficult from a year over year comp perspective, and most notably because of the impact that ebay has on our business Dan talked.
Speaker 5: With respect to cadence, the first half of the year.
Speaker 5: clearly is the most difficult from a year-over-year comp perspective, and most notably because of the impact that eBay has on our business.
Speaker 5: Dan talked about in his prepared remarks, sort of the impact that it has $600 million in the first quarter. As we get, I'm sorry, first half, I'm sorry, first half, as we get past that and also at the same time, begin to see some of the benefit from some of our new product initiatives roll out through the year. The second half will be much better. And look, we...
About in his prepared remarks sort of the impact that it has $600 million in the first quarter.
As we get I'm, sorry, first half I'm, sorry, first half as we get past that and and also at the same time begin to see some of the benefit from some of our new product initiatives.
Rollout through the year, the second half will be much much better and look we we want as much as anyone to demonstrate to all of you the power of our business and so we're very much looking forward to the back half of the year and an exit rate that is much more in line with our medium term guidance.
Speaker 5: We want as much as anyone to demonstrate to all of you the power of our business. And so we're very much looking forward to the back half of the year and an exit rate that is much more in line with our medium term guidance. today, and I see you also.
Darren I think also if you.
Speaker 4: you know, uncouple the headline revenue numbers from our revenue numbers ex-eBay.
Uncouple, the headline revenue numbers from our revenue numbers ex ebay.
Speaker 4: and look at it, whether it be in the fourth quarter or 22%, you know, revenue growth, ex-eBay, growing over 27%.
And look at it whether it be in the fourth quarter or 22%.
Revenue growth ex ebay growing over 27%.
Speaker 4: revenue growth ex-eBay from a year ago. And you look at that two-year CAGR, it's about 25% CAGR. You look in the first quarter, which is our low quarter of the year, and, you know, ex-eBay, we're growing revenues 13%, on top of 38%.
Revenue growth ex ebay from a year ago, and you look at that two year CAGR. It's about 25% CAGR you look in the first quarter, which is our low quarter of the year and ex ebay, we're growing revenues, 13% on top of 38%.
Speaker 4: you know revenue growth, XCB a year ago, add the two up, you've got a two year kicker of about 25% again. So what I was saying in my remarks is that, you know, our, our,
Revenue growth ex ebay a year ago add the two up you've got a two year CAGR of about 25% again, so what I was saying in my remarks is that R. R.
Business ex ebay.
Speaker 4: Business x eBay, you know, is remarkably consistent in our two-year Cagers are also remarkably remarkably
Is remarkably consistent in our two year.
CAGR are also markedly remarkably consistent and so we're lapping ebay, which goes away by the end of June as we go into the back half of the year and we're also lapping our two strongest quarters of growth in the first and second quarter and just as we look at the math of that and then on top of that.
Speaker 4: And so we're lapping eBay, which goes away by the end of June as we go into the back half of the year. And we're also lapping our two strongest quarters of growth in the first and second quarter. And just as we look at the math of that, and then on top of that, obviously, all the initiatives that we're doing.
Obviously all of the initiatives that we're doing.
Speaker 4: We see growth rates exceeding 20% plus as we exit the year. And I think if you look behind the headline numbers, you can see those numbers have maintained their strength quarter over quarter.
We see growth rates exceeding 20% plus as we as we exit the year and I think if you look behind the headline numbers you can see those numbers have maintained their strength.
Quarter over quarter.
Right understood. Thanks, guys.
Yes.
Thank you. Your next question comes from the line of Bryan Keane from Deutsche Bank. Your line is now open.
Speaker 1: Thank you. Your next question comes from the line of Brian Keith from Deutsche Bank. Your line is now open.
Speaker 8: Hi guys, thanks for taking my question. I wanted to ask about the take rate. It did stop, I think, at a two-year decline.
Hi, guys. Thanks for taking my question wanted to ask about the take rate. It did stop I forgot two year decline.
Speaker 8: And just thinking about it going forward with Venmo monetization, especially pay with Venmo being a factor, thinking about pricing, if there's any other benefits domestically or internationally there, and then mix P2P versus branded and Braintree, it looks like from the guide that take rate, the moderation of take rate going down also, you know, alleviates there. So just thinking about those factors, John , maybe you could help us with that.
And just thinking about it going forward with venmo monetization, especially pay with venmo being a factor thinking about pricing if there's any other benefits domestically or internationally, there and then mix P to P versus branded and Braintree. It looks like from the guy that take rate the moderation of uptake.
Rate going down also.
Alleviates there so just thinking about those factors John maybe you could help us with that.
Sure.
Speaker 5: Sure, well, we were pleased to see the sequential increase in take rate in the quarter versus the third quarter. And I do think it.
We were pleased to see the sequential increase in take rate.
In the quarter versus the third quarter and.
I do think it.
Speaker 5: you know, sort of underscores some of the strength in our business, particularly around pricing and also, as Dan noted, Venmo.
Sort of underscores some of the strength in our business, particularly around pricing and also as Dan noted venmo quite excited to see that venmo having.
Speaker 5: quite excited to see that Venmo, having achieved its, you know, roughly $900 million in revenue last year, that it's starting to be a contributor to TakeRate. And we've been, look, we've been saying this for some time. We're glad to actually show the results. I don't think it's fair to assume, though, that...
Having achieved it's roughly $900 million in revenue last year that it's starting to be a contributor to take rate and we've been we've been saying this for some time.
We're glad to actually show the results I don't think it's fair to assume though that.
Speaker 5: Brian , that every quarter we're going to see a sequential increase going forward, but it's a step in the right direction. I think maybe a better way to think about take rate for this year is really looking at the factors that drove the year-over-year change. And of course, year-over-year take rate declined. But if you look at that decline of 17 basis points, roughly half of that.
Brian that every quarter, we're going to.
See a sequential increase going forward, but it's a step in the right direction I think maybe a better way to think about take rate for this year is really looking at the factors that drove the year over year change and of course year over year take rate declined, but if you look at that decline of 17 basis points roughly half of that.
Was related to ebay and <unk>.
Speaker 5: And certainly that goes away as we get into the back half of the year.
Certainly that goes away as we get in to the back half of the year the other.
Speaker 5: The other next largest contributor, which was about four or five basis points related to that decline, was a decrease in forward exchange fees that we monetize on cross-border transactions. And so that sometimes goes up. So if you look at the core business,
Next largest contributor which was about five four to five basis points related to that decline was a decrease in foreign exchange fees that we monetize on cross border transactions and so.
That sometimes goes up so if you look at like the core business. There is actually a very small change in what's happening with take rate. So.
Speaker 5: there's actually a very small change in what's happening with take rate. So I'm quite pleased about that. And I think it really, like when you also overlay on that the pricing change that we made that contributed.
Quite pleased about that and I think it really like when when you also overlay on that the pricing change that we made that contributed to that I think it underscores the value proposition and how that resonates with our customer base, we're seeing users, becoming more loyal to brand ecosystems like ours and look.
Speaker 5: I think it underscores the value proposition and how that resonates with our customer.
Speaker 5: We're seeing users becoming more loyal to brand ecosystems like ours, and look, when side by side, given the choice to choose PayPal or other wallets, more than 50% of the time people are choosing PayPal, and so this shows the strength of our business, the ubiquity, the network effect of it, and that's translating into the effect on our take rate, and frankly we're just
When side by side, given the choice to choose Paypal or other wallets more than 50% of the time people are choosing Paypal and so this shows the strength of our business. The ubiquity the network effect of it and that's translating into the effect on our take rate and frankly, we're just.
Speaker 5: pleased to see that we don't have some of the noise that's been persisting in that comparison over the last couple of years, and we'll get into much cleaner compares in the back half of next year. Yeah.
Pleased to see that we don't have some of the noise that's been <unk>.
Assisting in that comparison over the last couple of years and we'll get into much cleaner compares in the back half of next year.
And I think.
Speaker 3: I just expand on one part of John's. Mark, I mean, if you look at Venmo exiting the year,
Just expand on one part of Johns remarks, I mean, if you look at venmo exiting the year.
Speaker 4: with $250 million of revenues growing at 80% plus. I mean, as we think about Venmo revenues this year, we can see their revenues growing another 50% plus as their average revenue per active continues to grow. And so I think when we look at a bunch of things that before were putting pressure on take rate, and now we're seeing the opposite occur.
So with $250 million of revenues growing at 80% plus I mean, as we think about venmo.
Is.
This year, we can see the revenues growing another 50% plus.
As their average revenue per active.
Continues to grow and so I think when we look at a bunch of things that before we're putting pressure on take rate.
And now we're seeing.
The opposite occur I think that.
Speaker 4: That obviously bodes well, at least on the pressure on take rate, if not the stabilization of it.
That obviously bodes well at least on the pressure on take rate if not the stabilization of it.
Great. Thank you very much.
Yep.
Speaker 1: Thank you. Your next question comes from the line of Lisa Ellis from Moffat, Nathan Son, your line is now open. Good afternoon, guys.
Thank you. Your next question comes from the line of Lisa Ellis from Martha maintenance on your line is now open.
Good afternoon, guys. Thanks for taking my question.
Alright, well, it's been a couple of tough quarters here coming out of a pandemic you highlighted of course detailed this shift from M&A gross ARPA growth, but beyond that.
Speaker 9: All right, well, it's been a couple of tough quarters here coming out of the pandemic. You've highlighted, of course.
Speaker 9: the shift from NNA growth to ARPU growth. But beyond that shift, just taking a step back, what are some of the other strategic and operational adjustments?
Just taking a step back what are some of the other strategic and operational adjustments you've been making downloads where you are making.
Speaker 9: been making now over, you are making in order to adjust to this new world and re-accelerate growth as you look out later into 2022.
In order to adjust to this.
I'll, then reaccelerate growth as you look out.
Later into 2022.
Yes.
Speaker 4: You know, Lisa, there's sort of a little bit of a conflation between end of pandemic and us entering into the.
You know Lisa Theres serve a little bit of inflation between end of pandemic and entering into the.
Speaker 4: you know the uh... i have the uh... ebay transition
The eye of the EBA.
E Bay transition.
Speaker 4: which happened, you know, concurrently. So you're coming out of that, you're lapping very strong growth quarters for us, and we're going into eBay and the pandemic is beginning to end and people are conflating.
Which happen.
Concurrently.
So coming out of that you are lapping very strong growth quarters for us and we're going into ebay Independencia Mick is beginning to and if people are conflating.
Speaker 3: a lot of that, which is why I was trying to point out that.
A lot of that which is why I was trying to point out that.
Speaker 4: you know the core business, XEBAY has been pretty consistent as we've looked over the last several quarters. And...
The core business ex ebay has been pretty consistent.
As we've as we've looked over the last.
Several.
Orders and clearly.
Speaker 4: You know, the lapping is, you know, is gonna have an impact, although a lessening impact in the first half of this year until we move into the back-out.
The lapping is is going to have an impact although a lessening impact in the first half of this year until we move into the back half I would say the other big thing Lisa.
Speaker 4: I would say that the other big thing, Lisa, that
Speaker 4: we've talked about quite a number of times, is sort of the ascendancy of digital wallets, of financial super apps in the.
We've talked about quite a number of times is sort of the.
Ascendancy of digital wallets of financial Super apps in the.
Speaker 4: in checkout. There have been numerous studies. JPM just put out one payments, just put one out, where you're seeing digital wallets taking increasing share, I check out.
In checkout.
You know there have been numerous studies.
J P. M. Just put out one payments just put one out where youre seeing digital wallets take increasing share at checkout.
Speaker 4: And clearly, there is no other digital wallet close to us in terms of scale, and there's overwhelming consumer preference for PayPal in those wallets. And our super app is showing.
Clearly there is no other digital close to us in terms of scale and there's overwhelming consumer preference.
For Paypal in those wallets and our Super App.
<unk> is.
Is showing.
Extraordinarily promising.
Speaker 4: early results. Now, we only rolled that out fully in the middle of October across all of iOS and Android. So, you know, we're three or four months into it. But what are we seeing? We're seeing double the average revenue per active account when somebody uses our app versus just checkout. When somebody uses the app, their propensity to churn is 25 percent less.
Early results now, we only rolled that out fully in the middle of October across all of iOS and Android, so three or four months into it.
But what are we seeing were seeing double the average revenue per active account when somebody uses our app versus just checkout when somebody uses the app.
They are their propensity to churn is 25% less.
The discover ability and first time users of people coming into the App crypto is up 40% in app donations are up 300%.
Speaker 4: The discoverability and first time users of people coming into the app crypto is up 40%.
Speaker 4: In app donations are up 300%. You know, people coming into our shopping tab is up 35%. People going from the shopping tab, two merchants to shop is up over 700%.
People coming into our shopping tab is up 35% people going from the shopping tab to merchants to shop is up over 700%.
Speaker 4: And so we are really encouraged by what we are seeing on the app. And by the way, the app.
And so we are really encouraged by what we're seeing.
On the App and by the way the App.
Speaker 4: You know, only about 50% of our base has the app right now. So it still has.
Only about 50% of our base has the App right now so it still has quite a bit of ways of go to penetrate.
We want to spend marketing dollars on.
Moving people into that App.
Speaker 4: And inside the app, like things like bill pay, like you and I have talked about many times, you know, we're seeing a 200% increase in first-time users there. We wanna make sure that people can discover the services because every time they add another service, it grows ARPA by 25%. And so we're gonna focus heavily on digital wallet. We're gonna continue to focus on checkout.
And inside the App like things like Bill pay like you and I've talked about many times, we've seen a 200% increase in first time users that we wanted to make sure that people can discover the services because every time they add.
Another service gross ARPA by by 25% and so we're going to focus heavily on digital wallet, we're going to continue to focus on checkout because that.
Speaker 4: Because that, you know, check out is the bread and butter of PayPal and we have a best in class experience and we feel there are numerous ways we continue to improve that. We're going to increase by now pay later capabilities, which is on a tremendous role and also move into a focus set of international markets from leveraging the license extension. We just got in China for an incremental five years.
Check out is the bread and butter of Paypal and we have a best in class experience and we feel there are numerous ways. We continue to improve that we're going to increase buy now pay later capabilities, which is on a tremendous role and also move into a focused set of international markets from <unk>.
Leveraging the life extension, we just got in China for an incremental five years.
Speaker 4: you know, leveraging off the payday acquisition in Japan and really looking at markets like Mexico and potentially Brazil to accelerate. So a number of things that we're very focused on. And the final thing that I'd say that John mentioned in his script and I did in mine as well, is that we think that there is the opportunity for significant increased operating leverage.
Leveraging off the <unk> acquisition in Japan, and really looking at markets like Mexico and potentially Brazil.
To accelerate so a number of things that we're very focused on and the final thing that I would say that John mentioned in his script and I did in mind as well is that we think that there is the opportunity for significant increased operating leverage utilizing our scale and having a.
Speaker 4: utilizing our scale, and having our OpEx growth move back more towards normalized growth that we had in pre-pandemic, which we think will help.
Our opex growth move back more towards normalized growth that we had at pre pandemic, which we think will help expand margins as we go forward.
Speaker 4: expand margins as we go forward. And that scale is clearly going to enable.
That scale is clearly going to enable us to leverage improved unit economics going forward and so those are kind of the operational changes, where we're focused and why we have such confidence that as we go through the year, you'll see acceleration of revenues and earnings.
Speaker 4: to leverage improved unit economics going forward. And so those are kind of the operational changes where we're focused and why we have such confidence that as we go through the year, you'll see acceleration of revenues and earnings exiting at 20%.
At 20%.
Very helpful. Thank you.
You bet.
Speaker 1: Thank you. Your next question comes from the line of Jason Coup for Roug from Bank of America. Your line is now open.
Thank you. Your next question comes from the line of Jason Kupferberg from Bank of America. Your line is now open.
Thank you guys. Appreciate it. So I know you said that you are positioned to achieve the medium term revenue and EPS targets over the last three years of the five year guidance period. So.
Speaker 10: Thank you, guys. Appreciate it. So, I know you said that you're positioned to achieve the medium-term revenue and EPS targets over the last three years of the five-year guidance period. So, are we to assume that you expect to be below those levels when we look at the five-year CAGR basis in its entirety? And I guess, you know, if not, if you still think you can achieve these targets on the five-year basis, what would really drive the necessary increase in engagement? Thank you.
Are we to assume that you expect to be below those levels. When we look at the five year CAGR basis in its entirety and I guess, if not if you still think you can achieve these targets on the five year basis, what would really drive the necessary increase in engagement.
Thank you.
Sure Jason it's good to speak with you I appreciate the clarifying question. So look when you anytime you put out.
Speaker 5: Sure, Jason, it's good to speak with you. I appreciate the clarifying question. So look, when you, anytime you put out a.
Our longer range plan over multiple years, it's rare that anyone ever assumes a business cycle in there and not that we are exactly going through a business cycle, but we're certainly seeing some macroeconomic pressures on our business that were not contemplated at the time that we did our guidance. So you are correct in that we have.
Speaker 5: a longer range plan over multiple years, it's rare that anyone ever assumes a business cycle in there.
Speaker 5: And not that we're exactly going through a business cycle, but we're certainly seeing some macroeconomic pressures on our business that we're not contemplated.
Speaker 5: at the time that we did our guidance. So you are correct in that we have confidence that we can achieve those growth rates of 20% revenue and 22% earnings growth in the out years beyond 2022. But because we have not done that in the first two years of that, you're correct mathematically. That Caggar is much more, that compounded annual growth rate is much more challenging. But when you step back and you think about,
<unk> that we can achieve those growth rates of 20% revenue and 22% earnings growth in the out years beyond 2022, but because we have not done that in the first two years of that Youre correct mathematically that CAGR is much more that compounded annual growth rate is is much more challenging, but when you step back and you think about.
The core earnings power of the business the core growth opportunities that we have with E. Commerce is still is still going to grow we're still seeing a pull forward of around that we're still seeing the.
Speaker 5: the core earnings power of the business, the core growth opportunities that we have. Let's e-commerce is still going to grow. We're still seeing a pull forward around that. We're still seeing.
Speaker 5: uh... increase in digital payments the primacy of the digital wall all these things
The increase in digital payments the primacy of the digital wallet all of these things benefit us and I would say even benefit us even more because of the scale and brand that we have and so we shouldnt conflate like changes in real disposable income of people with Digitization trends, which benefit our business I would argue that our competitive.
Speaker 5: benefit us, and I would say even benefit us even more because of the scale and brand that we have. And so we shouldn't...
Speaker 5: changes in real disposable income of people with digitization trends which benefit our business. I would argue that our competitive positioning has never been stronger, and so we're very focused in 2023, 2024, and 2025 on demonstrating that we can achieve those growth rates.
<unk> has never been stronger and so we're very focused and $2023 24, and 25 of demonstrating that we can achieve those growth rates.
Okay I appreciate the clarification.
Uh-huh.
Thank you. Your next question comes from the line of David <unk> from Evercore ISI. Your line is now open.
Speaker 1: Thank you. Your next question comes from the line of David Togut from Evercore ISI. Your line is now open.
Speaker 11: Thank you so much. This was touched on a bit earlier, but given the 2022 headwinds you've discussed, what are some of the structural challenges that we're going to have to deal with?
Thanks, So much this was touched on a bit earlier, but.
Given the 2022 headwinds you discussed what are some of the structural changes you see sustaining as we enter two.
Speaker 11: as we enter 2023. For example, you've called out 20% plus expected revenue growth as you egg.
<unk> 2023 for example, you've called out 20% plus expected revenue growth as you exit 2022, and then related to that with the pivot.
Speaker 11: Related to that, with the pivot to increase focus on growing engagement, what's the timeline of new applications we should watch for in the
Increased focus on growing engagement whats the timeline of new applications, we should watch for in the expansion of the Paypal Super apps.
Let's see where to start.
Speaker 5: Well, maybe I'll start with the first part of your question, David, on some of the structural changes. And we've covered this a little bit in a couple of questions.
Well, maybe I'll start with the first part of your question David on some of those structural changes.
And we've covered this a little bit a couple of questions, but we continue to see a movement, particularly in checkout.
Speaker 5: We continue to see a movement, particularly in checkout.
Speaker 5: or gravitation towards digital wallets versus other ways to pay.
Or gravitation towards digital wallets versus other ways to pace and in fact in some studies that would suggest that Paypal is second only to debit in front of credit in terms of preference from consumers and as I noted earlier like Youre, beginning to see more and more preference for brand ecosystems, and we think that's only going to.
Speaker 5: And in fact, in some studies, it would suggest that PayPal is second only to debit in front of credit in terms of preference from consumers.
Speaker 5: And as I noted earlier, you're beginning to see more and more preference for brand ecosystems. And we think that's only going to become more relevant as we go forward, which is...
<unk>.
Become more relevant as we go forward, which is part and parcel to why we're emphasizing our digital wallet strategy. So much because when someone is using our app is using our digital wallet, they're much more likely to be engaged with us in other parts of our ecosystem, including offline transactions and so all of these things I think are.
Speaker 5: Part and parcel to why we're emphasizing our digital wallet strategy so much because when when
Speaker 5: Someone is using our app, is using our digital wallet. They're much more likely to be engaged with us in other parts of our ecosystem, including offline transactions. So all of these things, I think, are structural changes related to the pandemic.
Structural changes related to the pandemic that.
Speaker 5: you know, getting the timing precisely correct on when we reach that pivot or that step function change is sometimes difficult, but I don't think anyone would argue that we are continuing down that trend and it's only been accelerated during the pandemic.
Getting the timing precisely correct on when we reach that that.
That pivot toward that step function changes, sometimes difficult, but I don't think anyone would argue that we are continuing down that trend and it's only been accelerated during the pandemic.
I would just add to it a couple of things one obviously, we feel like supply chain issues will work their way through.
Speaker 3: add to it a couple of things. One, obviously we feel like supply chain issues will work their way through. You know, this actually is impacting, you know,
This actually is impacting.
Speaker 3: Quite profitable revenue streams for us like cross-border. You know, when we look at...
Quite profitable revenue streams for us like cross border.
We look at <unk>.
Speaker 4: export out of China, you know, that's double-digit negative and it's typically double-digit positive for us. And that will turn its way around.
Export out of China.
It's doubled.
Digit negative and it's typically double digit positive for us and that will turn its way around.
Speaker 4: going forward. So we know some of these things are temporal and will change over time, but we wanted to be measured in the guidance that we put out.
Going forward.
We know some of these things are temporal and will change over time, but we wanted to be measured in the guidance that we've put out for this year and on the digital wallet, we put out.
Speaker 4: for this year. And on the digital wallet, we put out a ton of new functionality out there. We just started to ramp.
A ton of new functionality out there.
We are just started to ramp the high yield savings product that we're introducing with synchrony that started at the end of January .
Speaker 4: The high-yield savings product that we're introducing with Synchronig, that started at the end of January , we're aiming to be 100% ramped with that. By the end of Q1, early Q2, we're
Aiming to be 100% ramped with that by the end of Q1 early Q2.
Speaker 4: You know, I have quite a number of people on the waiting list for that. And we want to really spend a lot of our efforts this year enhancing each of those various products and services to create best-in-class value propositions around every single one of them. I think we have a really comprehensive.
I have quite a number of people on the waiting list.
For that and we want to.
<unk> really spend a lot of our efforts this year enhancing each of those various products and services to create best in class value propositions around every single one of them I think.
We have a really comprehensive.
Speaker 4: good first step of our digital wallet. I think each of these areas can be linked better to each other. The value propositions can improve. We'll add incremental features over time. But really, our opportunity this year is expand our app penetration because we see what happens when that occurs. And then when people are in the app, introduce them to more and more services.
Good first step of our digital wallet I think each of these areas can be linked better to each other the value propositions can improve will add incremental features over time, but really our opportunity. This year is expand our app penetration because we see what happens.
<unk>.
When that occurs and then when people are India introduced into more and more services because that has a tremendous amount of leverage in the business model.
Speaker 4: because that has a tremendous amount of leverage in the business model.
Thank you very much.
You bet.
And we have time for one last question from <unk> <unk> from Timothy <unk> from Credit Suisse. Your line is now open.
Speaker 1: And we have time for one last question from Timothy Chado from Credit Trees. Your line is now open.
Great. Thank you for taking the question when we think about your revenue growth, we like to think about what venmo could contribute and then we'd like to think about what the onus is on sort of the rest of the business. If you will I know you mentioned that memo did roughly $250 million in Q4, and I think it was around that 900 for the full year of Daniel alluded to this earlier in terms of growth for next year.
Speaker 12: Great. Thank you for taking the question. When we think about your revenue growth, we like to think about what Ben Moe could contribute. And then we like to think about what the onus is on, sort of the rest of the business, if you will. I know you mentioned that Ben Moe did roughly 250 million in Q4 and I think was around that 900 for the full year. Daniel alluded to this earlier in terms of growth for next year.
Speaker 12: What could you tell us in terms of what is implied for next year's or for fiscal 2022 in terms of Venmo growth and revenue monetization and how that might look into 2023 and beyond as well?
What could you tell us in terms of what is implied for next year's or for fiscal 2022 in terms of venmo growth in revenue monetization and how that might look into 2023 and beyond as well.
Yes.
Speaker 4: I think this year, you know, we're contemplating 50% plus revenue growth for Venmo on top of what it did this year. Obviously, they're continuing to add incremental services. Eventually, you're going to see Venmo have a lot of the capabilities that the PayPal Super App has because that
This year.
<unk>, 50% plus.
Revenue growth.
For Venmo on top of what it did this.
This year.
Obviously, they are continuing to add incremental services eventually youre going to see venmo.
A lot of the capabilities that the Paypal.
<unk> has because that.
Our consumer base.
Speaker 4: who loves Venmo and wants to live more and more of their financial life on the app. We have over 83 million people using Venmo right now in the United States.
Venmo wants to live more and more of their financial life on on the App, we have over 83 million people using venmo right now in the United States think about that as a percentage of the population. Yes wanted like out of every three and a half people in the U S is using venmo right now we obviously.
Speaker 4: Think about that as a percentage of the population. You know, that's one like out of every three and a half people in the US is using Venmo right now. We obviously have plans to take that overseas. We're going to be rolling out Venmo with Amazon, with Starbucks.
Half.
Our plans to take that.
Overseas.
We're going to be rolling out pay with venmo with Amazon with Starbucks.
Speaker 4: With DoorDash, I mean, there are quite a number of very high profile merchants that are going to be implementing Pay With Venmo on top of all of the things that they did last year. And so, we've got, you know,
<unk> door Dash I mean, there are quite a number of very high profile merchants.
We are going to be implementing.
Pay with Venmo.
On top of all of the things that.
They did last year.
And so we've got.
A lot of promise yet to go as I mentioned a few.
Speaker 4: A lot of promise yet to go, as I mentioned, I feel like we're in the beginning stages of the monetization progress, the team is executing.
Like we are in the beginning stages of the monetization progress team is executing.
Speaker 4: extremely well against both their objectives, but really importantly, against their roadmap as well. And so I think you just continue to see Venmo grow. And by the way, when it grows, obviously it's ARPA grows, and as I mentioned in my remarks,
Dream, we well against both of our objectives, but really importantly against the roadmap as well and so I think you just continue to see venmo grow and by the way when it grows obviously its ARPA growth and as I mentioned in my remarks, it starts to add too.
Speaker 4: starts to add to our ability to grow take rates, or at least that adds to an upward pressure on take rate as opposed to a downward.
So our ability to grow take rates or at least that adds to an upward pressure on <unk>.
Take rate as opposed to a downward one.
Speaker 3: I think that was our final question. I do want to thank everybody for all of your great questions. We really appreciate it. Realize there's a lot of information that we put out today. We want to thank you for your time as well. And we look forward to speaking with all of you soon, meeting with you in person. And again, thank you for your time. Take care. Bye bye.
I think I think that was our final question.
I do want to thank everybody for all of your great questions. We really appreciate it realize theres a lot of information that we put out today, we want to thank you for your time as well and we look forward to speaking with all of you soon meeting with you in person and again. Thank you for your time take care Bye bye.
This concludes today's conference call you may now disconnect.
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