PayPal (PYPL) 2 Aug 232023 Q2 Earnings call transcript

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to PayPal Holdings' Earnings Conference Call for the Second Quarter 2023. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

like Senior host CFO. Vice ahead. now Ms. today's Please introduce Rabinovitch, Gabrielle President to would for your call, go I and Acting

you, second quarter for XXXX. thank PayPal's Thank conference of afternoon, Welcome earnings the us. to you for call Good Sarah. joining and

available CEO. our webcast, today me are commentary. website. and call also being and This both Relations call a the slide call Schulman, our is conference our Joining providing Dan presentation and presentation the President on Investor We're on to accompany is

In discussing some our company's will refer performance, non-GAAP to we measures.

these You measures this can find the reconciliation measures presentation the of GAAP directly accompanying in the non-GAAP comparable most call. conference to

and guidance XXXX are based quarter our that We will year forecasts statements for and make include, full for assumptions current on forward-looking without limitation, These the uncertainties. statements involve third our and XXXX. are risks planning expectations, assumptions and

margin sale KKR Our rates, anticipated foreign to exchange operating share our impact and comments from to loans repurchase related of activity.

may results these differ from actual Our statements. materially

You risks, Investor SEC affect can filed on on the other XX-Q XX-K most on our available and and about annual Form recent Form uncertainties information results in could quarterly our with that Relations report factors website. and our more find report

any undue disclaim should obligation as in this to of forward-looking this You presentation place reliance expressly statements. update not is XXXX. X, today's any on All We information date, information. August

to With let that, Dan. turn over call the me

are and our our our in for expansion XX% joining the above operating quarter. team guide. full in everyone, guidance, guidance on Revenues line for thanks, PayPal solid of as proud top and and Gabe, And another with the the end to EPS the call. grew midpoint delivered $X.XX Thanks, non-GAAP us year. today's for I'm margin non-GAAP of we reiterating we of EPS came

appears substantially XXXX. our e-commerce when stabilized digits, in mid-single above have the we Encouragingly, growth to estimates entered

growth nearly to the monthly industry our with volumes in accelerated QX month growth of June, X%, accelerated the to roughly and of in in our the and X.X% over checkout grew checkout growth end pandemic. line again branded July, volume the since in Our rate branded highest

branded our by initiatives. strengthen will strategic back year, from volumes traction expect throughout half of key supported the We checkout the

course, a environment. fluid face we Of still macroeconomic global

However, see it encouraging quite inflation come to continue is rates to core down.

would will leader As in accelerate market support believe see the cools, e-commerce spending. inflation growth e-commerce rise, our we we any payments, of expect which digital and uptick growth. spending possibly will to as overall And discretionary the in accelerate

to grew X.XX% year. this in items those a us $X.X QX lapping QX billion. basis by outsized an to last year. that approximately growth and note quarters of each in QX It's on that those rate X% approximately currency-neutral pressure by certain to instructive Revenues benefit are in items provided revenue Consequently, our we

these our growth in Excluding would XX%. items, been have QX and between X%

last of the same mentioned we than we second bit a growth and to our expect as revenue the given trends, quarter, better half. roughly the the maybe first As recent year be in half

basis. I we the currency-neutral X% currency-neutral highlight the between TPV a low X% QX growth growth to strong grow very and would for revenue and start of into a the currency-neutral a teens. our be approximately XX% with X% July expect to And that We growth on to basis. year, revenue accelerating revenues was quarter anticipate on

managing continue expenses. operating discipline in good We exercise to

year-over-year. non-GAAP XX% the expenses nontransaction-related fell For quarter,

was basis up ago. operating As a from XXX result, points our a non-GAAP year XX.X%, margin approximately

operating full margin for non-GAAP at XXX points. expect the increase year to basis by least our We

drive As productivity meaningful we we and look XXXX, to ahead the of into XXXX to rest improvements. expect

come and our product even cheaper. a as future things see processes, cost significantly continuing do where with AI quality, enable and advances faster against experiences savings our we to priorities. three Our strategic in we us better, and infrastructure These invest initial overall

we our see next need to results, We And understand need what look are in clear to And do transaction see see that we long margin signs our towards can growth you that dollars deliver our medium to as exactly quarters. XXXX. against labor. of to term, objective we grow over sustainably we we notable our the yield the will that are over We initiatives fruits ensure to in beginning earnings. we as our know the beginning to traction several

line As double-digit to QX. accelerate low I top mentioned, we to expect growth our by

margin target buybacks while expect share in operating increase to to connection of begin lap on us to significant create EPS income. We for the That the increases with dollars we mid-teens our XXXX, we transaction remainder to low enables to our even leverage. enjoyed our interest expenses growth continue as

I'd solutions our merchant PSC like investing three strategic in are wallets. we energy, our to priorities and branded turn which to and resources our checkout, our now digital

They interrelated. to As for our past, market the are in us well three of I've our share are dollar mentioned as as these of accelerate and increase margin the e-commerce essential critical growth. all

are As and innovations time new our improving we June significantly our market, meeting, into accelerating our investor to market. the discussed scaling meaningfully in we product testing A/B

AI infrastructure consistently We This set of performance our development of and process. and indicators, tools talent and in significant against on road new investments are the using our successes now software delivering schedule. in our measurements and early is map result hiring platform enhanced

ramp metrics, our experiments continue benefits incremental seeing improvements successful and gains to in checkout growth. we changes We Every half our the leads of cumulative the to with first launched the more the to branded velocity effect in those are our across key including customer noticeable test year. in experience test XXX of product leads than

meaningfully For to the now, our accelerated preapproved with of instance, amounts pay introduction traction buy our later has consumers.

checkout authorization has will branded log-in the lead of are work in onboarding extend drive over that Our In rollout in Europe, onboarding value. our the and this month, and further U.S. our competitors. cohorts [ph] experience and engagement improved greatly lifetime we with monthly experiences new and expanding driven will Paske the new which higher simplify rates

to than the across better the simultaneously both fully unique that equal any Our checkout goal to differentiated and gap year. We drive and PayPal of within We we'll in for is our with AI to quarter to experiences close value sets, power their utilize to aim only those be actionable wallet the competitor every companies or and log-in able continually experiences to scaled and be believe propositions customers. Venmo. and differentiated data drive next insights

we with later assistant. an are this We year. be to introduce a of experimenting that of and internally this part PayPal We envision app, version AI-driven our plan it consumer will already

are XX% with deep of Many rates companies Braintree now our currency-neutral nearly in world largest basis. so. our strategic are in We either growth on continue to with us a to see capabilities business impressive traction the tech negotiations our do the PSP using or in

continue making We internationally Vault, of the in-person our the proprietary we are process out in our interest checkout deep of payments. understanding AI progress receive the in of and And noticeable value-added next-generation leverage our our network of services, will models. development with exceptional and which rolling scale expanding two-sided to high-margin, solution, network

rollout the pleased payments. more of with Complete be PayPal initial couldn't I

channel PSP partners the solution Our for merchant SMB market. and

continues completed tremendous seeing the substantial sales in to that platform We grow. of of deals interest and pipeline a a backlog are with

its channel partners Importantly, about are our enthusiastic major capabilities.

end partners be with Recurly, have Shopify, ShiftX, latest enable the capabilities strength the with only to more checkout access Wix of also SMB Adobe, not by year. implemented platform additional the of meaningful channel number experiences. but demonstrates our of WooCommerce channel This our XX Stacks PPCP, We and Payments, than will scheduled already leading like LightSpeed, live UltraCare, partners to a merchants

excitement energy, teams and the leadership is as and sense of distinct enthusiasm There success remarkable in signs among see of clear we a our reinvigorated market.

age made investments the a of past customers, advantage best-in-class years to infrastructure of AI. of and for leveraging are our have a We to over able we now experience in take scale modern our many the deliver the

like my number have and talent end build well about to recruited external succession groups I'd opportunity. product, plan. to a talking order AI in and technology maximize success engineering both large complement our We in throughout teams learning CEO our as remarks upon and internal our successfully machine to as our our of

We to qualified of are are our with we go growth. into of in several whom the outstanding excited as of process. highly final PayPal stages chapter the very lead and next candidates, all

to work on eager to as them PayPal amazing my the transition a in welcome them support PayPal's role with next team Board. to CEO to seamless I'm the onboarding I and on

momentum. we of Many hopefully confidence As on good headwinds you tell, right tailwinds. turning and are we are energy into we the have now a faced with path can the lot of that

high We excellence. of are executing degree a with

in will our successes We an to handle already our are PayPal have to a poised point customers compound business which only strong and can deliver on in making model for the and and over time. position, our is shareholders. to numerous a we real continue increasingly difference firm market,

over the you. Thank And call to turn that, Gab. with let me

Thanks, start of and executing PayPal Dan. dynamic guidance customers solid serving We're environment. reporting thanking commitment our our delivered entire and priorities. our in at our I'd to with revenue to high team PayPal quarter for earnings like a expectations. their the consistent by another the end continued per range share

year growth aspirations. the with guidance the for gave are our results and steady Our progress full we tracking long-term against reflect

operating while delivering invest initiatives, continue our commitments. to in We in expense discipline on key our demonstrating

strategic plan investment maps to community we road June, our delighted In meeting. our about were long-term share more and at product

track, and to to PSP product drive we profitability the ability we our our our across Importantly, on gain greater continue checkout accelerate discussed are in branded volumes and launches conviction services.

receivables as quarter, KKR. future existing sell we During were multiyear Later agreement announce originations Pay our both well a pleased to as to to European now Buy the

During will our results. this financial discuss externalization of my the on remarks, I impact

details update We have included investor additional our presentation. in also

highlight the the outlook performance. year, discussing like quarter Before to remainder second our for I'd of our

As on primarily X% Braintree Transaction driven and at billion, a basis $X.X X% Dan and to X% checkout. to currency-neutral mentioned, increased revenue PayPal billion. spot by branded $X.X revenue grew

in in services. $XX contractual lapping which year payment year, and year, Headwinds growth $XX relative QX and in to million de the legacy last the PayPal last gains compensation this less the merchants was minimis impact consolidating quarter of million from migrating included hedge from to

consumer Other to balances performance This grew XX% due customer growth store value-added and from was to a million. predominantly income products. credit $XXX interest on services extent, lesser increased revenue to revenue

fees, in hedges, contractual in revenue the from decline by exchange headwind year-over-year. basis grew in foreign as accelerating quarter, recorded driven assessments lower revenue revenue two lapping thirds the and and elevated Transaction decline basis, Approximately part increased of X% volatility, currency-neutral merchants revenue currency X.XX%. take international declined last year. by a currency from transaction a driven gains X%, this international and sequentially points rate foreign X%. U.S. XX international to are from a On decline which In second was increased

QX. from merchant While pressure improvement mix our second take checkout rate, was branded quarter continued to the an

take X.XX%, X to total same take rate. as factors declined rate basis by Our transaction points the affected

Transaction X rate expense came driven was primarily offset last as rate TPV year. Braintree points, a by and partially PayPal QX in core basis points of increase benefits by growth volumes, than basis at XX in in Venmo. This higher

X loss exposure the to was dollars a the expense which last as transaction year, rate improvement basis grew sizable decrease Transaction Overall, this basis year second drove solvency TPV declined points due merchandise of point year. The with versus for loss a comparable XX%. year. primarily loss an no XX%. atypical quarter Transaction in last X.X this a dollars was quarter,

million, TPV. mix of of risk held On or contributed the offset now from credit by Credit the losses $XXX held driven this Later for dollar Buy activities quarter XX%. in the reserve of by a portfolio basis to basis, of $XXX $XX release points from also build and Provisions Pay to million million performance. European partially our ongoing a investment. for sale of mitigation X a were were rate losses Our reclassification increased volumes

portfolio The PayPal portfolio. was discount of Paylater The the entirely this U.S. for resulted as sale. benefit well by our increased as value operating the growth from held classified as fair in release business expected increased loans in provisioning losses income offset reserves on our from portfolio

PayPal discussed business last our in portfolio levels across Like portfolio. seeing a this the than overall to remedial seen we performance. represents – of consumer net to XX% portfolio credit and COVID pre have working address our loans we some our said, our have taken receivables. we're as capital delinquency of portfolio. we That This quarter, actions broader normalization credit deterioration less industry, And

as and we originations improvement new book the in We've remainder tightened rigor with the cohorts. We'll managing be through already year. the similar have seen move of

XX% a decline held in X.X% a result year-over-year a we decline QX to $X.X receivables, of pay billion later and sequentially. As designating in receivables with for assets credit sale, net $X.X ended billion

The increase decline ratio. second XX% in QX margin Transaction the In increased dollars ratio coverage increased sale of our transaction X% QX. to from X.X% an volume-based to in aggregate, receivables expenses XX% in to an due This of to and accounting also was in to margin contributed for in XXXX. reserve $X.X held relative quarter XX% grew the billion, XX.X%. increase

the While our in last margin slowed and grow our our transaction decline quarter, initiatives on time. strategy we're declined considerably progress the to quarter from support over QX of of improved margin we're performance against transaction encouraged executing second and the the margin longer-term rate both transaction dollars. by making will that We're year,

a allowed nontransaction-related in declined expense delivered and marked categories third our a non-GAAP compression we've transaction QX offset contributing leverage. the On our managing Ongoing cost us across non-GAAP significant margin in than with structure operating that GAAP meaningful more XX%, with basis. row discipline expansion each reductions basis, operating both leverage. a of on operating expenses quarter in expense operating principal to margin our

more resulted X principally Strong slightly basis the highest margin XXX guidance and income operating delivered that is gave growth performance less XX% in is below loss credit XX.X%, in attributable which years. we've than income the where increased quarter. growth expense operating This points expected for in earned Non-GAAP $X.X we in than the revenue was billion. to expanded non-GAAP to portfolio, to provisions. we operating our This

with midpoint cash, which second quarter for investments cash range. of equivalents XX% billion The non-GAAP sale from net ended cash by $XX.X quarter of the was increased negative million. billion. $XXX held We and quarter, cash the outflows loans the to of resulting originations For $X.X guidance reduced our EPS for operations the the in free quarter, of flow flows in cash for $X.XX,

the in and closes, European the of recognized proceeds back will this cash book the from this flows Later year, decline. sale when be operations offset BNPL

free So the to outlook expect generate cash profile our is free quarterly affect $X while change our of the there we and timing flow. will to to year, the of accounting no treatment cash approximately flow, for in billion continue

In share the quarter, in $X.X million repurchases. we completed

full program. now allocate to our For $X buyback year, to billion approximately the we expect

improve will help our externalization efficiency. our credit announced recently Our and capital optimize balance sheet

desire approach our share count the our capital more X%. our Given to share return in and repurchases. Since we've shareholders the confidence of we a end to declined aggressive business, to diluted XXXX, have taken has

remainder I to of our discuss now like for XXXX. the would outlook

expansion for As share. we're the a of based approximately quarters revenue on XXXX, our and for Dan year we've results shared, first for second from first aggregate, the operating In on X% half of year, earnings per reaffirming growth margin the delivered basis. of the our non-GAAP currency-neutral and the guidance

seeing line growth revenue performance, the given year expect in with not slightly this if be back of in momentum half ahead, the we're We the the to business. in

of our meet on basis year at points addition, operating delivering non-GAAP expense the to to XXX guidance committed least track improvement. are and we're In for margin

$X.XX, our pressure continue XX% XXXX. deliver portfolio, credit performance strengthening per while We're of non-GAAP guidance productivity full by and from from to realization driven to our approximately growth also share gains. of ongoing absorbing earnings reiterating our representing checkout business incremental expect year We initiatives given

the third expect to spot rates. For billion basis $X.X X% to at we a approximately spot quarter, and both on approximately current currency-neutral grow revenue

advantages, be ubiquity unique proud $X.XX solid of us at to the results XX.X% global portfolio scale our differentiated range. $X.XX, PayPal's in continue earnings growth drive including to our of and to competitive the forward. we're representing approximately share In we of operating and this expect summary, midpoint non-GAAP of addition, our per range quarter. In assets of the

and and relentless guided our for experiences our strengths we're core the building our on future, by PayPal in the We're committed focus best to possible creating investing for customers.

objectives momentum position beyond. customer us growth year engagement to revenue and trends well Our our and achieve this

the in we Given remain environment, uncertainties macroeconomic the

creation with are for the we Sarah, ahead. control And your capital questions. on optimize things to ensure that, with resiliency. Dan I managing long-term happy focused allocating can value to take and we please go discipline and and

Thank of question you. from first comes [Operator Instructions] . line the Your

open. is Your line

on e-commerce want upfront. talked to a I Dan, know We're ask it a lot thanks questions a on Health. industry in general. lot. And you just Hey, about the I getting question of e-commerce

I'm quarter talking like So this other Thanks. to about given help. talked how changing what about should are you half from our seeing? your about, outlook tailwind inflation growth exit you're July? It which second the goods maybe for previously. rate ago? trends versus mentioned thinking also for seems services think an curious there's you're you like versus easing is you here economists Or would and shift a something like I Is be some for that the room about a upsetting

It's hear voice, the Yes. to and Thanks, good thanks your Tien-Tsin. question. for

of seeing see the the on quarter as We're seeing the my shape beginning different sort we shift lot I results the think strong now, results clearly a In And inside headwinds view to mentioned are right results. of and to went our an the as for point. slightly July story the of is really inflection sure. begin a quarter of then seeing towards July our into in the tailwinds. and exit remarks, we're we trajectory I

definitely substantially least would be bias think might thought mid-single slight the We e-commerce to we it at year above I've growth I thought We is when now. that accelerating. in one it year-over-year. of we is that, say E-commerce That's will see a what digits got flat the where accelerate. entered those. we And continue right

is to pieces it fashion, into being zero from range high that. services goods and low We right we into coming that, travel and retail of it's middle shift the where probably from of a driven there out in got XX%. think You've think a and to of by

see expect inflation spend will rebound, discretionary as we to more help would clearly, cools, drive e-commerce. and that And

So of the slowing. one faced we headwinds growth e-commerce was

and Now clearly it's accelerating will us. again, meaningful for that be

and really don't seeing beginning in for merchants That's to protected Gabi our accelerate sure It's again. they high-margin for to value be PayPal meaningful be proposition know, right but that also We're buying thing payment consumers cross-border. That's obviously is they very nicely cross-border. a mentioned, from seems perfect make It's will now. trust for for as us because, improvements, obviously us, them. business extremely and that accelerating that, that one,

for not Braintree introduction that to there. momentum us seeing call. lot later really could from in and market. to now a the services strength about of we're I hold. some was reception continues a got which talk important for a tremendous to We've reasons, numerous better value-added the start PPCP, go of in have our can strength, take

wants obviously, Somebody that. to about accelerating. And is ask checkout branded

initiatives That since are to to seen see And of as continue highest year QX. quarter. of in our going really in -- as we the pandemic. happen that got another We've the taking experiments to many X% we've strengthen go is are the expect the XXX-plus last through hold we end the that

And day, adding to up guess momentum. in we're I we when Net the that's to at what of a And adding that. our at now all high look at end so that's the X-year Promoter Score,

double there's momentum a the that. clearly and just want to right so now, in down And business we lot on of

than that quarter obviously same feel you ask But do now. XX lot better did we I from think So question that's a just continue we when ago. to going a days today

from line Your next the Research. Darrin of Wolfe Peller comes question with

line is Your open.

saw we but versus sound, obviously was growth revenue. less transaction Revenue profit a guys. little Thanks, dollars still Hey, pronounced

a I may decreased year-over-year. have think it actually bit

differences. help far to transaction that us trends sure the an Gabriel, about and if and grow-overs understand given the branded some second so growth quarter Greentree. as talked one-time continues the branded I'm would the But I between or in know and profit the you in just be mix you of have impact hedging goes, profit And growth as half gross moving parts the could great. And

bet. You

items my That essentially growth our business, due results grew in seeing. remarks, prepared which when that margin of encouraged the In bet, by quarter, line several out lapping. For underlying we performance with we're You created called the headwinds I we're said, in to QX. transaction dollars look the quarter is at very the to X%, stronger

that the addition, held benefits year. some In of quarter actually reserves the from for well had as we well we that in lapping as sale last large merchant as from reclassification release exposure from saw

the in so basis, actually these normalized benefits And the several a the more faster X%. adjust margin on we when for drag dollars all see and the than transaction both points we quarter items, growing reported

by by encouraged transaction When noise about do benefits really actually In expect expect we services the QX, from some as from longer to in of trends cross-border back adding the half the PSP profile TM to is initiatives we profile we we're the that in side. e-commerce business. what then margin will get the growth. strengthening some be by branded transaction Dan starting as of And the improvement. acceleration lapping, the term, well still acceleration through value-added future of in the the we'll certainly that by see see to our think We're the performance. our we're improving see improved referred pressure on profit we over to And see as on the QX, benefited an checkout

helpful. really That's

could third, of move needle quarter events, but starting initiatives it some these So they sounds are them. fourth like

in now. are TM than trajectory exit to much right a year expect from the We where stronger a position we

Guys. Okay. Very good. Thanks.

Your question Morgan from comes the line James Faucette with Stanley. of next

is open. line Your

that adding Thanks. looking in those and for will or branded. to I Can surprising a part margins to kind this of component what follow bit little of a little is could latter at now structural to you on industry. any the improving of Darrin's how look drag in wanted like, if role are improve which about you're bit a that initiatives given on I year? bit services throughout may up seems margin that play unbranded the in timing margin tends talk be dilutive margin unbranded the incremental that transaction the past talked to overall, know be I a that know structure you've little about right to question. a just

at a take I'll Yes. James. Thanks for crack the that, question.

nearly business actually from older our in migrated -- strength. flows, past of PSP about onto as Our overall billion of Gabriel our PPCP this TPV PSP continue we We go coming to was off deprecating some things XX% TPV quarter. And quarter. as strength to that's despite, $X our does PayPal of from the our legacy talked about mentioned, Pro. in stacks

And so it's year. a quarter, in but a end that drag the going done of to bit with of the the by be we're

continue Allstate that a to we are And latest largest, win imperative be we It big and PayPal, have that with because in fueling marquee PSP across most us our AI accounts for merchants booking.com, We in our whether important is experiences checkout accounts winning now the feeding pay to which flows, captured business, next-generation the winning It's really of later. world engines. data what are our XXX% strategic by these will the be meta, the insurance, is Venmo allows us. checkout.

the and fueling our in it's importantly, most industry the ability And of best-in-class industry. lowest loss kind in the have to authorities rates

In terms the there, that be now. to seeing going -- of traction a out are that putting higher-margin we we're services of on right lot

opportunity we instance, into us. for an been always moving That's area For in-store. are of

risk-as-a-service, these well to We X,XXX will disputes, good making in-store XX are X,XXX and automation. with significantly in payouts, continue marquee there in We're implemented to we give now fully systems over some like push really, do quite services Chen over progress that. our clients in selling merchants POS one things locations, be Tiktok, of begin are or our -- value-added it customers We're or now, meta whether adopt I'll example. that right seeing the adopting that you have just and largest bigger

and LatAm that orchestration XXX our off where a with X like started much countries basis seeing customers, orchestration just for in rate doing largest we're We higher additional we're margins doing improvement. point

implementing, of seeing this got I it partners kind already product XX for margin we're you're more U.S. by about the another the goes And is that market by Yes, us. year-end. of EU a year-end middle win-win of have as as another then, or talked the channel partners implemented this. down XX much higher of all PPCP, we've course, in in and partners that doing So

a seeing scaling So we're tremendous that. amount on of

onto the assessment the enabled U.S. them here all SMB to in be million We've them. for platform. done risk for X.X already migration right -- us basically that we've platforms PPCP, able do a also into to the one-click seamlessly They're merchants to on transition

large every we're higher I see over volume help. time. some certainly also margin, go a and will feel on obviously to to helped... hope that. they those PPP. So That's will of of kind and as XXXX quarter, cumulative total value-added exit moving amount year into develop we as think high into And the will will going Clearly, we add with services start I branching that

Thanks.

of line El Your next the from comes with question Assal Ramsey Barclays.

is Your line open.

It separately, can little the just impact expected in QX? manage a the In then credit Give terms than was maybe you sounded steps factors of operating bigger a about of to more us you're talk color margin it performance, were there any overall taking the plan. And that the besides business? credit like differently. health had that on you bit

Absolutely.

about predominantly was basis a items expanded driven slight miss. miss and it points was really XXX guidance So increased pressure operating that from no by our that contributed margin PayPal to other for This XX.X%. of to There's to our the XX%, business quarter, by we loans. approximately

to point to a beginning the drag was approximately margin and and Overall, transaction of PayPal basis expected this business the XX quarter. what at we is margin, loans Xx about operating

and of business, really pre-covid Like seeing levels broader consumer impact relatively But merchant to our and charge-off as of it our back relates real we're was some really the of it performance. a a in delinquency trends So good across rest reversion portfolio to diversified the position. -- credit credit, industry, stable we're seeing we're

The us performance continues continues where be largest strong. our solutions, growth our Buy-Now-Pay-Later area to be to very for

partnership going us, business. KKR, be the are be to sustained of given off-balance forward, and funded support the Of of originations sheet our for the that course, with growth going majority we'll able to

less credit historically seen consistently We've the represents improve where of PayPal book. and the been performance. overall the really the net business We've seen side, portfolio year, receivables. this have is expected performance than our On within XX% part we This widened of steps our we to portfolio loan in has taken last performance strong And risk appetite. not this box deterioration. our

to total originations. down margin and into XX% the while to strength expect us book of the seeing pressure about then but That move significantly the through overall maintain abate to the year, credit as allowing back of we're business We this the next continue absorbing Today, the operating we tightened half year. year we and momentum really in and receivables, we're this our our is pressure. for EPS said, is guidance

helpful. Thanks Appreciate it. VERY so much,

next question of comes with of from Jason the Your America. Kupferberg line Bank

is line open. Your

come I wanted back to growth. TPV to branded

had you June. So in month the of X.X%

X% You acceleration you're July, further were expecting in the of year. the balance during over

you here PayPal's on most just much initiatives visibility of needle of the can and more better branded drivers macro? ongoing is in talk about checkout among moving and the own How materially XXXX? that specifically much improvement? with it how is initiatives branded those is So the traction Like which checkout

accelerate that to confidence we like the continue I'll important we're really to checkout pleased, obviously, into crack growth. take It's is. going And an at that, initiatives place have good are it that to a are that Thanks the question. putting for see Jason. branded one drive we

to digital here. I And we we do the in are leader as of of of if XX% leaders, e-commerce Internet grow the have say, merchants but macro, terms around team over the going of of and are clearly As I that improving our due that I think initiatives, as in a exactly first effort to what time, with that. delineate payments clearly all, all is driving what putting for in and of checkout a million-plus is resource what we Tianjin's is adds terms improving look, not because to is growing, happening XX scale lot it off have X,XXX there, into It's experience. top anybody out checkout entire that we're retailers. We my And done e-commerce e-commerce, in advantage one market to mentioned, question general, hard the because around about they've of growth. first that to market

advantage auto we site, advantage. than see up points XX%. sales We a go And their by the small industry they a XXX better checkout PayPal in up rates online put have have When performance in businesses their average. trust basis almost on to

coming those means or another going do in the in to that or third What We're building go in Investor that But has benefit tests AB dramatically. So actually is our we we've so innovation out of through in on our We did -- improved first XXX the things market we those Day -- XXX quarter. in have so A/B our we run X, the and tests here amount quarter. of upon. in of acceleration incremental quarter. about XXX are of the general, XXX XX% positive A/B into putting in wallets we're like the And mentioned improvements did metrics running coming tests them. are $XXX June going we in million checkout second through. we're as as amount create we the to that digital

X And some of basis difference. X points are those or

Some powerful, can our together, points. all when those increase that those seeing DPA we And of extraordinarily and you or it's by XX put in are XX basis results. of definitely

to now merchants of pleased integration. XXX report We hold at like ago, or integrations. latest quarter We by our to on XX that merchants had XXX end latest see of latest to checkout the native top our talked to a XX XX gain aspiration about checkout had when our integrations, move app X merchants beginning lot and we we're our also We our on mobile the that in a I'm be of or are that know of top are share. our the an we year.

-- progress about not not the that. like We're making just really good we're we're basics. So doing around

authentication, improved We taking friction conversions our some XX% going go availability. that checkouts tasks, will very has And milliseconds actually those we're the out important take of passwordless. about you now ex conversion as by year-over-year. we Latency the can are authentication for methodologies continue XX% as approving That's really of that has be EU, us. Pass which of well. beneficial and the in rates up at SCA Paskes to are we're of now because into SCA other to Every which couple using on that. rollout passwordless strong customer is And we're EU, now the keys, increases push

doing, really we've preapproved the so that U.S., And we're way, push we're that other our see you for in initiatives out to big the by rolled going that pre-introduction of hard. all the then the buying amount And -- million XX to customers.

quarter. overall We to we're to TPV of amounts. Buy Later preapproved now of our of XX%. and this in XX people are preapproved our now of seeing Pay out than million it XX% to We're rewards didn't up those have and to into the XX% up beginning QX. XX% TPA EU We number by saw those that million in another goes the rewards terms when We're And using awards, are rewards more roll first-time back. X% from over using $XX the use XX% it the users in increase our up, people our going using a -- taking cash QX they their increase

that branded that we are difference. the for beginning a and to point So planned see in continue highlight be we're of continue results things increased and We've lot making it to be out to and got QX, hope growth that big these able to to doing checkout. of the what in hope are things to some a we're

line Your next ISI. question David of from Togut with the Evercore comes

preliminary And quantifying provide XXXX? an any the Could you carry for takeout you progress into plan OpEx have update thoughts made? will your cost XXXX, reductions do on how you've

with -- talked our consistent full in expect start down for on the jump I'll probably David. to Thanks, QX what surgical Look, and this. cost we're that then structure. discipline year. we coming of XXX our basis the side XX%. end by pressure absorbing least through mentioned, year. And by therefore, Gabi when margin move at about incremental the the up some as that we'll on operating numbers expansion think that of of going Yes. XX% in kind we and by our credit to about that will to Jens We we're do still decline in and continue points

pumping growing driven just about of doing just that not about line the expansion margin obviously I is just but this that as is discipline PayPal. You're that cost enhancements of XX% now of the every company single efficiencies, as to would by system we've this XX% is impact to function the some been at say we're of AI experimenting that in inside from getting demonstrated. top Look higher couple more engineering seeing but that about innovation amount We're and increases velocity now. well of -- with tools are lower it's our developers MBS the And X-year because through being question more I doing both Amazon. not efficiently. our seeing at innovation. our will every we're a we've things hundred of Microsoft done it faster cost, highs. just going There's trade-offs. you're using It's no and accelerating productivity. performance. look as at the Google, about And And we seeing not right

PayPal we will I as can early like consumer amazing assured really into anticipated that Just been -- the imagine rewards. can AI unexpected and of do. Obviously, them fraud things more more how to protecting always known to them to and get able we that. to an internally to inside of to much we protect like assistant how efficiently going AI proposition chatbot. it going our what think our But think checkout, we advanced using can that's that's look pretty are transform be this it terms the app. us early It's we've more value We've customized we metrics to think things our fraud well. do that drive well it's improvements back alerts can our instruments that future. that with that market I foreseeable transactions, us for to enabling in at financial as customers more and look that product all them, really add is result enabling feed into productivity exciting And that

going improvements So be for value to productivity us, not proposition thing but a AI us. drives importantly, really improvements is that only for

we're on years productivity we'll been so I We're thing. quite surgical disciplined our to over And pleased come. see very in We've it, think improvements the with it. cost and

Yes.

for OpEx our As in decline Dan said, XX% on we're other year. for the a track

is the back half low first began year. digits, half call down The course, take some out XX.X%, of of begin kind XX%. lap cost of the we of to In that savings to last year, we double the it,

consolidation said, experiences in it's gains, the productivity building sort delivering migration us decline over around better that time. coming too to other And declines be we're in high we'll just doing. that our work efficiently OpEx And so digits of a and customers the the the so bit, Dan from and single allows more what to and then, also platform on scale

our expect better our should for to to you look deliver so continue platform. customers ways And efficiently and to us experiences scale to see them on

Your from line. comes question the next

and we from it Sorry, Bryan for have time Keane of with question, one line last the comes Bank. Deutsche

talk going to going that's there of enhancements be wallet about wallet wallet, Can improve initiatives going forward? big you Question wanted doing to to value of a here. the ask and the that offers. I piece just the you're and is digital the including prop about consumer some the of the

use has XX% because of both engagement increasing number drive for our greater It's less Thanks of ARPU, today, sure. it's to user question. most XX% one we feel TPV -- important users the the I churn. obviously, a our active the Yes, typical app consumers monthly who going and initiatives mean, greater XX% ARPA, wallet. the app user digital

to from purchase, of more designed And it's the -- PayPal an your point, that, put scaled We've enable the so that. uses to today the compromised. our app, customers. and can idea on the can of can FI shopping fraudulent kind better to can designed that is to directly We so well be And alert. we to protect XX% I you designed can give tremendous wallet. early our about to the full app you We base payments, just experience buy tracking the their in funding before into you really now your include the to The go are your utilize deals let can like which of which fraud choices, biop card and package this things discovery, card wallet split again see experimentation includes post refunds see funding the just velocity different that has we're We offers signals new but know management, know others. that you that's flexible mentioned the sources won't later, instantaneously. that that the that all X and consumer to let amount tender features to to simultaneously a reissued and widest of of array been there. the XX% to coming doing, is into returns purchase enables like

that us. and to And seeing we're come so early open the these to app, causes more defend them the response positive they open but it this, app, more do the them that to the they with really causes from alerts consumers

I something XX% tremendous think will improvement. on I resource These because a is users are mentioned the seeing be that we're the be up we'll in interest into quarter-over-quarter rewards cashback putting gigantic that and some it.

of to a your are Android. As up hats using uplift us. Those doing they're want PayPal off XXx any to in your seeing like for the so to clients improvement towards those I somebody because that's and a we're e-commerce and and orders. mentioned, PayPal savings technology all their to in We thanks, who innovation. It Things basically look things questions. into them our that, place and later XX% $XX not Gmail quarter ARPA by everybody up later. I to first AI even mentioned, for now one And account to team it. all much just scrapes at to advanced app improvement into I TPA. -- with some their our across start have XX% app. rate. mentioned that. is goes everyone, Package best-in-class who of you we'll about tracking, great consolidate moving experimentation for come. a We're as of making I appreciate really to And XX% don't think a that's on more later things sign $XX system account year PayPal. job savings, million be engagement I forward to up logging and I now and app a my checkout speaking those does They ramped iOS well. XXX% have your as schedule, for There's AI through your a a great X.X% thank like the our come the this time, interest with just doing they're our lot for When preapproval, EU. that, the this our experiences of improved hitting look constant really don't we

So take you. care. Thank

call. conference today's Thank This you concludes joining. for

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