May 6, 2020 / 8:37 PM / a month ago

PayPal sees strong second quarter as online spending surges (May 6)

FILE PHOTO: The German headquarters of the electronic payments division PayPal is pictured at Europarc Dreilinden business park south of Berlin in Kleinmachnow, Germany, August 6, 2019. REUTERS/Fabrizio Bensch

(This May 6 story refiles to fix a typo in headline)

(Reuters) - PayPal Holdings Inc (PYPL.O) said it expects a strong recovery in payments volumes in the second quarter as social distancing drives more people to shop online, even as lockdowns start to ease, sending its shares up 8% in extended trading.

Online retailers are seeing demand rise, boosting digital payments. PayPal said on Wednesday it added a record 7.4 million net new customers in April.

“Our products and services have never been more needed and more relevant,” Chief Executive Officer Daniel Schulman said on a call with analysts.

In the reported quarter, PayPal’s profit plunged 87.4% as it boosted credit loss reserves, but it still beat market expectations.

“In March, the deteriorating environment resulting from COVID-19 further impacted PayPal’s business, affecting both volumes and revenue generated from travel and events verticals as well as impacting credit income,” the company said.

PayPal processed $191 billion in payments in the first quarter, up 18% from a year earlier, but missed analysts’ estimates of $194.23 billion.

Net income fell to $84 million, or 7 cents per share, in the quarter ended March 31, from $667 million, or 56 cents per share, a year earlier. (bit.ly/2SHfpY2)

Operating income was reduced by a $237 million increase in credit loss reserves, the company said. Excluding this and other one-time items, it earned 83 cents per share. Analysts were expecting a profit of 75 cents per share.

Reporting by Bharath Manjesh in Bengaluru; Editing by Arun Koyyur

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