PayPal Holdings, Inc. Net Income jumped on 70.9% and EBITDA Margin showed almost no change
02/03/2021 • About PayPal Holdings, Inc. (
$PYPL) • By InTwits
PayPal Holdings, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- PayPal Holdings, Inc. is a fast growth stock: 2020 revenue growth was 20.7%, 5 year revenue CAGR was 18.3% at 2020 ROIC 12.7%
- PayPal Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 3.2%
- CAPEX is quite volatile: $8m in 2020, $4m in 2019, $3m in 2018, $3m in 2017, $2m in 2016
- The company has highly profitable business model: ROIC is 12.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 20.7%. Revenue growth showed acceleration in 20Q4 - it increased 23.3% YoY. EBITDA Margin showed almost no change in 2020.
SG&A as a % of Revenue increased slightly on 0.81 pp from 17.5% to 18.3% in 2020.
Net Income margin increased on 5.7 pp from 13.8% to 19.6% in 2020.
Investments (CAPEX, working capital and M&A)
PayPal Holdings, Inc.'s CAPEX/Revenue was 4.0% in 2020. CAPEX/Revenue decreased slightly on 1.1 pp from 5.1% in 2017 to 4.0% in 2020. It's average CAPEX/Revenue for the last three years was 4.4%. CAPEX as a % of Revenue declined at -0.54 pp per annum in 2016-2020.
Return on investment
The company operates at high and attractive ROE (22.8%) while ROIC is a bit lower (12.7%). ROIC decreased slightly on 1.2 pp from 13.9% to 12.7% in 2020. ROE increased on 7.5 pp from 15.2% to 22.8% in 2020. ROE stuck to a growing trend at 2.9 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 1.1x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA surged on 1.6x from -0.5x to 1.1x in 2020. Debt jumped on 77.7% while cash dropped on 34.8%.
PayPal Holdings, Inc. has no short term refinancing risk: cash is higher than short term debt (3,329.2%).
Valuation and dividends
PayPal Holdings, Inc.'s trades at EV/EBITDA 72.6x and P/E 78.9x.
Management team
PayPal Holdings, Inc.'s CEO is Daniel H Schulman "Dan". Daniel H Schulman "Dan" has 5 years tenure with the company. PayPal Holdings, Inc.'s CFO is John D Rainey. John D Rainey has 5 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
PayPal Holdings, Inc. ($PYPL) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 10,842 | 13,094 | 15,451 | 17,772 | 21,454 | 20.7% |
| SG&A | 1,997 | 2,283 | 2,764 | 3,112 | 3,931 | 26.3% |
| EBITDA | 2,310 | 2,932 | 2,970 | 3,761 | 4,638 | 23.3% |
| EBIT | 1,586 | 2,127 | 2,194 | | | |
| Tax | 230 | 405 | 319 | | | |
| Net Income | 1,401 | 1,795 | 2,057 | 2,459 | 4,202 | 70.9% |
| Stock Based Compensation | 398 | 733 | 853 | | | |
Balance Sheet
|
|---|
| Cash | 1,590 | 2,883 | 7,575 | 7,349 | 4,794 | -34.8% |
| Accounts Receivable | 214 | 283 | 313 | | | |
| Accounts Payable | 192 | 257 | 281 | | | |
| Short Term Debt | 0 | 1,000 | 1,998 | 104 | 144 | 38.5% |
| Long Term Debt | 0 | 0 | 0 | 5,368 | 9,581 | 78.5% |
Cash flow
|
|---|
| Capex | 669 | 667 | 823 | 704 | 866 | 23.0% |
| Acquisitions | 19 | 323 | 2,124 | | | |
Ratios
|
|---|
| Revenue growth | 17.2% | 20.8% | 18.0% | 15.0% | 20.7% | |
| EBITDA growth | 11.6% | 26.9% | 1.3% | 26.6% | 23.3% | |
|
|---|
| EBITDA Margin | 21.3% | 22.4% | 19.2% | 21.2% | 21.6% | 0.5% |
| EBIT Margin | 14.6% | 16.2% | 14.2% | | |
| SG&A, % of revenue | 18.4% | 17.4% | 17.9% | 17.5% | 18.3% | 0.8% |
| SBC, % of revenue | 3.7% | 5.6% | 5.5% | | |
| Net Income Margin | 12.9% | 13.7% | 13.3% | 13.8% | 19.6% | 5.7% |
| CAPEX, % of revenue | 6.2% | 5.1% | 5.3% | 4.0% | 4.0% | 0.1% |
|
|---|
| ROIC | 10.3% | 12.9% | 12.8% | 13.9% | 12.7% | -1.2% |
| ROE | 9.8% | 11.7% | 13.1% | 15.2% | 22.8% | 7.5% |
| Net Debt/EBITDA | -0.7x | -0.6x | -1.9x | -0.5x | 1.1x | 1.6x |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | | | |
| Employees | 18,100 | 18,700 | 21,800 | | | |
| Revenue/Employee, th. $ | 599 | 700 | 709 | | | |
PayPal Holdings, Inc. ($PYPL) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4,618 | 5,261 | 5,459 | 6,116 | | 11.9% | 22.2% | 24.7% | 23.3% |
| EBITDA | 728 | 1,289 | 1,315 | 1,306 | | -6.7% | 33.9% | 38.1% | 22.5% |
| Net Income | 84 | 1,530 | 1,021 | 1,567 | | -87.4% | 85.9% | 121.0% | 209.1% |
Balance Sheet
|
|---|
| Cash | 7,854 | 6,353 | 6,112 | 4,794 | | 74.0% | 29.4% | -11.1% | -34.8% |
| Short Term Debt | 122 | 129 | 133 | 144 | | -94.2% | -95.0% | 315.6% | 38.5% |
| Long Term Debt | 8,575 | 9,545 | 9,531 | 9,581 | | 2,012.1% | 2,044.9% | 75.0% | 78.5% |
Ratios
|
|---|
| EBITDA Margin | 15.8% | 24.5% | 24.1% | 21.4% | | -3.1% | 2.1% | 2.3% | -0.1% |
| Net Income Margin | 1.8% | 29.1% | 18.7% | 25.6% | | -14.3% | 10.0% | 8.2% | 15.4% |
Peers in Data Processing & Outsourced Services
Below you can find PayPal Holdings, Inc. benchmarking vs. other companies in Data Processing & Outsourced Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.4% | 8.9% | -3.3% |
|---|
| PayPal Holdings, Inc. ($PYPL) | - | 20.8% | 18.0% | 15.0% | 20.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (32 companies) | 39.3% | 39.3% | 41.0% | 41.0% | 36.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.2% | 20.6% | 19.3% | 22.2% | 18.2% |
|---|
| PayPal Holdings, Inc. ($PYPL) | 21.3% | 22.4% | 19.2% | 21.2% | 21.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.0% | 3.0% | 3.0% |
|---|
| PayPal Holdings, Inc. ($PYPL) | 6.2% | 5.1% | 5.3% | 4.0% | 4.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| PayPal Holdings, Inc. ($PYPL) | 10.3% | 12.9% | 12.8% | 13.9% | 12.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| PayPal Holdings, Inc. ($PYPL) | -0.7x | -0.6x | -1.9x | -0.5x | 1.1x |
