(Reuters) – PayPal Holdings Inc on Monday raised its annual profit forecast to above Wall Street estimates, buoyed by its higher quarterly profit as margins improved on cost-cut measures and as consumers undeterred by inflationary pressures keep shopping online.
While a cost-of-living crisis has now begun to squeeze budgets, particularly of lower income households, consumer spending has remained remarkably steady in the face of a looming economic slowdown.
The company’s payments volume rose 12% on a forex-neutral basis to $354.5 billion in the first-quarter ended March 31.
The upbeat forecast echoes expectations of card giants Visa and Mastercard that have remained largely upbeat about spending volumes on pent-up travel demand and resilient consumer spending.
The company said it now expects full-year adjusted profit to grow about 20% to $4.95 per share, above analysts’ average estimate of $4.88 per share, according to Refinitiv IBES data.
The company has said in the past that it is focused on lowering expenses with executives cautioning that inflation was impacting discretionary consumer spending.
Adjusted operating margin in the first-quarter came in at 22.7% compared with 20.7% last year.
The payments firm said in January it would lay off 7% of its workforce, or about 2,000 employees in the backdrop of a high interest rate environment that has exacerbated fears around an upcoming recession.
PayPal’s revenue rose 10% on a forex-neutral basis to $7.04 billion in the first-quarter.
The payments firm earned a profit of $1.17 per share on an adjusted basis in first-quarter, compared with 88 cents last year.
PayPal was one of the biggest winners during the COVID pandemic when people locked at home used its platform while shopping online. However, the company’s growth slowed through the past year as countries around the world lifted restrictions and macroeconomic conditions deteriorated.
(Reporting by Manya Saini in Bengaluru; Editing by Vinay Dwivedi)