(Bloomberg) — PayPal Holdings Inc. climbed after executives said a surge in digital payments on its platform in the second quarter marks an accelerating and permanent shift away from cash in the wake of the coronavirus pandemic.
The technology giant, which has been signing up consumers spooked by the virus, said Wednesday it now expects revenue to climb 25% this quarter while payments volume surges 30%. It sees full-year revenue climbing 22%.
“This is our time,” Chief Executive Officer Dan Schulman told analysts on a conference call. “We intend to seize the moment.”
Lockdowns to prevent viral infections, and the ensuing shift to online commerce, spurred people to learn how to make digital payments. That helped boost the number of net new active accounts to 21.3 million. The company said it now expects to add 70 million active accounts in the latter half of the year.
“The big competition for e-commerce was cash, and there was inertia around moving to online and people not being familiar with it,” Schulman said in an interview. “Now that they’ve experienced it — and people don’t want to handle cash anymore — there’s been an explosion of digital payments.”
Total payment volume jumped 30% to $222 billion in the second quarter, topping the $208 billion average of analyst estimates and helping the company notch record revenue. Throughout the quarter, the company consistently saw the type of spending it usually only sees in the five days between Thanksgiving and Cyber Monday, Schulman said.
PayPal shares rose more than 5% at 6:44 p.m. in extended New York trading after hitting a record high earlier in the day. The stock has climbed 71% this year, compared with the 17% advance of the S&P 500 Information Technology Index.
Payments volume on Venmo — the firm’s digital wallet that became popular among millennials for splitting restaurant bills or the cost of vacation rentals — jumped 52% to $37 billion. With the pandemic stifling social interactions, users turned to the wallet to pay for online fitness classes or other forms of digital entertainment, executives said Wednesday.
The firm added about three times as many merchants to its platform than during a typical second quarter, which gave it confidence that consumers’ widespread adoption of e-commerce is more permanent than originally thought.
“What at first felt like a potentially short-lived phenomenon resulting from initial panic and pantry packing and even stimulus checks has become a much more durable and profound behavioral shift,” Chief Financial Officer John Rainey said during the conference call.
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