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PayPal profit misses estimates as growth slows

PayPal Holdings Inc (PYPL.O) on Tuesday narrowly missed Wall Street estimates for quarterly profit, as the online payments firm failed to match up to its blistering pace of growth a year earlier, sending its shares down nearly 12% in extended trade.

Digital payments companies emerged as one of the biggest pandemic winners as their services were extensively used for online transactions and money transfer by stuck-at-home consumers.

That pace of growth is starting to slow as people resume their regular routines and use other modes of transactions for shopping and other purposes.

Total revenue rose 13% to $6.9 billion, in line with analysts’ estimates, but slower than the 25% growth recorded in the comparable quarter.

Profit fell to $801 million, or 68 cents per share, for the quarter ended Dec. 31, compared with $1.57 billion, or $1.32 per shares, a year earlier.

On an adjusted basis, it earned $1.11 per share, compared with analysts’ expectations of $1.12 per share, as per IBES data from Refinitiv.

The San Jose, California-based company added 9.8 million net new active accounts during the past quarter and processed a total of $340 billion in payments, up 23% from a year earlier.

Its peer-to-peer payment service Venmo processed a total of $61 billion in payments during the fourth quarter, up 29% from a year earlier.

The company teamed up with Amazon.com in the previous quarter and had said that users in the United States would be able to pay for purchases with Venmo at checkout.

For the current year, PayPal sees its annual payment volumes to rise between 19% and 22% at current spot rates.

Reporting by Sohini Podder in Bengaluru; Editing by Anil D’Silva

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