Earlier today, we announced the results for the first quarter of our 2018 financial year. We ended 2017 with tremendous momentum – setting new benchmarks for net new actives, revenue, and customer engagement – and I’m pleased to report that we built on that foundation and are off to a great start for the year.
Once again, we delivered strong financial performance and strong customer growth and engagement. A few highlights include:
Delivering Strong Financial Results
- We generated $3.69 billion in revenue in Q1, growing at 24% on a spot basis, and 22% on a currency-neutral basis.
- We delivered $829 million in non-GAAP operating income*, up 29% year over year, driven by a 90 basis point increase in our non-GAAP operating margin*, which was 22.5% for the quarter.
- As a result, we delivered $0.57 of non-GAAP EPS*, up 29% year over year.
Driving Customer Growth and Engagement
- We added 8.1 million net new active accounts in Q1, up 35% over the same quarter in 2017. This brings our total base to 237 million active accounts, including 19 million merchant accounts.
- Engagement continues to increase, growing by 8% in Q1 to 34.7 transactions per active account.
- And, in the quarter, our growing and more engaged customer population drove payment volume growth of 27% on a currency-neutral basis to $132 billion.
Extending Mobile Leadership and Commerce Innovation
- In Q1, PayPal processed approximately $49 billion in mobile payment volume, representing 52% growth year over year.
- Of that volume, $12.3 billion came from Venmo, which grew by more than 80% over this period last year.
- The ability to pay with Venmo is now deployed at more than 2 million merchants across the U.S., with major brands such as Grubhub, Seamless and Williams-Sonoma installing dedicated Pay with Venmo buttons.
- We concluded the quarter with 92 million consumers using One Touch at 8.6 million merchants, including 78% of the IR 100.
In addition to our results, we also made great progress pursuing our mission to democratize financial services for consumers and businesses around the world.
Credit is, and will continue to be a strategic part of PayPal’s offering to businesses. It is a central way that we help small and mid-sized businesses compete, grow and thrive. I’m pleased to announce that PayPal Working Capital has now provided access to more than $5 billion in working capital to more than 150,000 merchants around the world since the program’s launch in 2013. To build on this success, we
closed our acquisition of Swift Financial in September 2017.
In the quarter, we also launched new services to give our customers more flexibility in how and where they can spend, manage and move their money on the PayPal platform. As the world becomes increasingly digital, too many consumers are challenged by gaps in the current financial system to find convenient and affordable ways to manage their financial health. We recently introduced the
PayPal Cash Mastercard aimed at giving greater financial flexibility to underserved and unbanked consumers in the United States. We are working closely with partners across the financial ecosystem to introduce what will be a comprehensive value proposition for the tens of millions of U.S. consumers that currently rely on shadow banking services, like check cashers and payday lenders. It is a central tenet of our mission to give underserved people around the world better access to the opportunities afforded by the digital economy, and I am very pleased that we are undertaking the first steps on this journey.
We also recently announced a partnership with M-PESA, the transformative mobile payments system in Kenya. Through our relationship, Kenyans can now seamlessly move money between their M-PESA and PayPal accounts, removing barriers that have prevented Kenyan consumers and businesses from fully participating in the global digital economy. Kenyan consumers can now shop at the millions of global businesses that accept PayPal and Kenyan businesses can sell to PayPal’s consumers around the world. With almost 28 million M-PESA customers in Kenya, we see this as a meaningful step forward in working with partners to drive the democratization of financial services.
Finally, we have formalized a signed
contract with eBay to extend our branded relationship through July 2023. As we’ve shared previously, this gradual transition in our relationship with eBay was anticipated by both parties, and was outlined in the original operating agreement. Consequently, it does not change either our short or medium term financial guidance. We are pleased to have the opportunity to extend our strategic relationship with eBay, while at the same time, significantly expanding our ability to partner with some of the world’s fastest-growing marketplaces.
This was an incredibly busy quarter and is a great start for 2018. We are starting to truly benefit from our scale and expand our immediate and long-term market opportunities through our commitment to our customers, our powerful platform, and our partnerships with many of the best and biggest names in finance and technology. We look forward to introducing more capabilities, services, and partnerships so that our customers can continue to thrive in the digital economy.
* Non-GAAP operating income, operating margin and earnings per share are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see PayPal's Q1 2018 Press Release.