PayPal (PYPL.US) draws a "performance growth cake": building a closed-loop ecosystem with long-term profit growth of up to 20%.

the United States, digital payment giant PayPal (PYPL.US) announced a heavy profit growth roadmap for the next few years at its investor day. With the new management team continuing to push forward the process of business integration, PayPal's transaction business profit margin and earnings per share are expected to improve in the coming years, especially with the company forecasting an adjusted long-term earnings per share growth rate of up to 20%. The company's management team revealed at the investor day on Tuesday that they expect adjusted earnings per share to achieve low double-digit growth levels (10%-13% range) by 2027, with the long-term earnings per share growth rate reaching 20%. In comparison, PayPal's earnings per share growth rate from 2020 to 2024 was only 12%. Following this positive news, PayPal's pre-market stock price surged by nearly 4%. Regarding PayPal's core competitive strength in the transaction business profit margin the net revenue generated per transaction after deducting costs the management team expects to maintain high single-digit growth levels (7%-9% range) in the next two years, and may even surpass the important growth threshold of 10% in the future. "We are defining 2024 as our transformation year, where all planned reform measures will be implemented as scheduled," said PayPal CEO Alex Krys in an interview. "Now is the best time to show the market our strategic vision." It is understood that this latest statement from PayPal's management comes at a crucial turning point as the company shifts its strategic focus from a "growth at all costs" model (sacrificing profits for market share) to a key transition towards sustainable profitability. Despite noticeable fluctuations in PayPal's earnings data over the past few quarters, especially with the significant slowdown in non-branded payment processing services last year, the company's streamlining and acceleration plans have started to show results. This California-based financial technology company owns the Venmo personal payment platform and the Braintree merchant-centered Information Services Group, Inc. system, and issues its own stablecoin, PayPal USD. Krys pointed out, "The market still sees our company as the sum of past acquisitions and product lines. What we need to demonstrate is the synergistic effect of the ecosystem." The financial technology giant also announced at the investor day that it will fully integrate retail merchant services into the "PayPal Open" unified platform, providing a full ecological service through a one-stop solution. "When all capabilities come together, we will create a business operating system that competitors will find difficult to replicate," emphasized Krys in the interview. "We are now creating a commercial platform that provides a differentiated experience. When you integrate everything together, our individual competitors hardly have this kind of experience." This move is seen as a crucial step to compete in the increasingly intense competition among digital payment technology companies such as Stripe and Block, as well as buy-now-pay-later platforms like Klarna and Affirm. Stripe Inc. is PayPal's strongest competitor in the digital payment processing field, while Block Inc. also has a popular C2C payment platform. Krys specifically pointed out that PayPal has established a unique leading advantage in cryptocurrency payments. Currently, hundreds of millions of PayPal and Venmo users worldwide can directly buy and sell cryptocurrencies through their digital payment accounts, and tens of millions of merchants can make and receive payments in crypto assets such as Bitcoin through their business accounts. "The instant conversion capability for cryptocurrency payments that we have achieved is unparalleled. No competitor can match it. We recently enabled hundreds of millions of users and tens of millions of merchants to use their cryptocurrencies for everyday purchases." The financially revived financial technology giant PayPal is expected to enter a new cycle of performance expansion In terms of performance, PayPal, a financial technology giant focused on digital payments, has been financially revived since the second half of last year. Since the rapid rise in inflation in 2022 led the Federal Reserve to start an aggressive rate-hiking cycle, with US interest rates long hovering near historical highs, internet payment companies such as PayPal saw their performance growth slow down and even enter a decline phase as consumer spending significantly declined. However, at the same time, under the leadership of PayPal CEO Alex Krys, the company focused on increasing operating profit margins through restructuring, significant cost reductions, and workforce downsizing, especially as inflation cooled down, interest rate cuts were anticipated, and resilient consumer spending supported the US economy in its approach to a "soft landing." Since the second half of 2024, PayPal's performance has entered a sustained recovery phase. With human society entering the AI era in 2024, the application channels for digital payments under the dominance of financial technology have greatly expanded. Moreover, with the rapid penetration of blockchain technology, the bustling cryptocurrency investment wave following Trump's election victory, financial technology (Fintech) has once again become a focus area for Wall Street investment institutions. Especially as Trump nominates many politicians supporting the accelerated development of cryptocurrencies to enter the new US government cabinet, the positive trend on the policy expectations for cryptocurrencies and blockchain further stimulates the investment frenzy in the global financial market for financial technology. Analysts at Citigroup, a Wall Street major Bank, predict that "financial technology" will enter a "vibrant new stage" in 2025, continuing the prosperous development curve stable since the fourth quarter of 2024. Despite the industry's ups and downs in the past five years since the outbreak of the COVID-19 pandemic, enjoying unprecedented benefits from the remote and home office wave during the pandemic, the industry also faced the total retreat of the investment frenzy brought by the "super recovery" of the global real economy after the pandemic. However, the potential long-term growth drivers of business digitalization, modernization, and empowerment across industries remain unchanged. The Citigroup analysis team points out that the regulatory restrictions on the financial industry by the Trump-led US government may be further relaxed, leading to potential new opportunities for financial technology.Financial technology companies that benefit from the theme of the "Trump administration loosening financial industry regulations" include Marqeta (MQ.US), Visa (V.US), Mastercard (MA.US), Akamai (AKAM.US), Q2 (QTWO.US), Jack Henry (JKHY.US), Fiserv (FIS.US), Fidelity National Information (FIS.US), PayPal (PYPL.US), and Square (SQ.US).Hola, cmo ests hoy?