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When Alex Chriss took over in September as PayPal’s chief executive, he promised to shake up what he saw as a complacent payments engine. Now, the company is starting to see some tangible results from Chriss’s moves, though the new boss isn’t entirely satisfied. “We know there is much more we can do and at greater speed,” he said early Tuesday as he presented the company’s second-quarter results.
One of Chriss’s biggest initiatives since his arrival from Intuit Inc. has been Fastlane, a guest-checkout platform that speeds up online transactions by filling in saved details like shipping and card information. The service is set for rollout to U.S. merchants next month, said Chriss, who is banking on the technology to help reignite growth for PayPal. “I’m excited to see the progress we’ve made in branded checkout,” he said. “It’s where we want to be, which is taking share [at] checkout.”
The decision to lay stress on Fastlane’s development came as PayPal worked to undo a decision by Chriss’s predecessor. Former CEO Dan Schulman, whose retirement opened the door for Chriss’s arrival, had placed his bets on unbranded business managed through the company’s Braintree processing unit. But now management is feeling more confident about Braintree, as well. “We’re more positive than we were in June on Braintree profitability,” noted Jamie Miller, a veteran finance executive who took over as chief financial officer last fall.
Meanwhile, Chriss is planning a beefed-up marketing program. “In the first half of the year, we needed to spend on innovation,” he said. Now, he added, “it’s time to tell the world about it. I’m excited to ramp up our go-to-market spend.” He did not specify any marketing spend figures. This effort will be crucial with the holidays approaching, he noted, adding PayPal has not built branded checkout into its guidance for analysts. “It will take years to get everybody onboard,” he noted. “We want to get started as fast as possible, and get as many merchants as we can for this holiday season.”
Chriss added the company is feeling more positive about Venmo, PayPal’s peer-to-peer payments service, which also features a debit card. “P2P is an essential for us. We are returning it to growth,” he said. “There’s more cross-border activity.” Venmo volume grew 8.2% year-over-year in the quarter, to $73.3 billion. PayPal’s total P2P volume, which includes the business it started with in 1998 as well as Venmo and its Xoom platform, totaled $100.8 billion, up 6% year-over-year.
For the quarter, PayPal notched $416.8 billion in payment volume, up 11% year over year. Revenue came to $7.89 billion, an 8% increase. Its closely watched transaction margin shrank 19 basis points to 45.8%, though this moderated a slide that saw a 213-point drop in the first quarter.
“We are stronger today than we were six months ago,” Chriss said. “This is a long game. It will be measured in quarters and years.”
