PayPal Holdings, Inc.

Good day, ladies and gentlemen, and welcome to PayPal's first quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference, you may press star, then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Ms. Gabrielle Rabinovich, Head of Investor Relations. Please go ahead.

Thank you, Andrew. Good afternoon, and thank you for joining us. Welcome to PayPal Holdings Earnings Conference Call for the first quarter 2019. Joining me today on the call are Dan Schulman, our President and CEO, Bill Reddy, our EVP Chief Operating Officer, and John Rainey, our Chief Financial Officer and EVP Global Customer Operations. We're providing a slide presentation to accompany our commentary. This conference call is also being webcast. and both the presentation and call are available through the investor relations section of our website. We will discuss some non-GAAP measures in talking about our company's performance. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in the presentation accompanying this conference call. In addition, please note that beginning with the first quarter of 2019, we reclassified certain operating expenses within our consolidated statements of income. These changes have no impact on the company's previously reported consolidated net income for prior periods. On April 9, 2019, we furnished an 8K to the SEC that details these reclassifications. In addition, management will make forward-looking statements that are based on our current expectations, forecasts and assumptions, and involve risks and uncertainties. These statements include our guidance for second quarter and full year 2019 and the impact and timing of our acquisitions. Our actual results may differ materially from these statements. You can find more information about risks, uncertainties, and other factors that could affect our results in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC and available on the Investor Relations section of our website. You should not rely on any forward-looking statements. All information in this presentation is as of today's date, April 24, 2019. We expressly disclaim any obligation to update the information. With that, let me turn the call over to Dan.

Thank you, Gabrielle, and thanks, everyone, for joining us on today's call. I'm pleased to report that PayPal had a strong start to the year. In the first quarter, we generated $4.13 billion in revenue, in line with our expectations. This represents year-over-year growth of 12% on an FX-neutral basis, or approximately 19% revenue growth normalized for the sale of our U.S. consumer credit receivables. For the first quarter, we delivered 78 cents of non-GAAP EPS, 8 cents of which came as a result of our recent MercadoLibre investment. Excluding that gain, We delivered 70 cents in Q1, up 23% year over year, outperforming our expectations. Once again, a highlight of the quarter was our growth in both net new actives and engagement. We added 9.3 million net new actives in the quarter, up 15% year over year. We now have 277 million active accounts on our platform, with approximately 255 million consumers shopping at 22 million merchants. We are on pace to exceed 300 million active accounts by year end. We added 40 million net new actives in the past 12 months, an all-time record. That is over two times our trajectory from just two years ago. And even as we add record net new actives, our customer engagement continues to grow. Engagement grew by 9% to 38 transactions per active account. This increasing use of our platform helped to drive 161 billion of TPV in the quarter, up 25% on an FX neutral basis, consistent with the past two quarters. Total payment volume excluding eBay grew 29% on an FX neutral basis, outpacing the overall payments market as we continue to gain share. eBay had negative TPV growth of 4% this quarter and now represents just 9.7% of our overall TPV. Our merchant services TPV growth rate has accelerated over the past two quarters, offsetting a 700 basis point decline in eBay's TPV growth rate during that same period. Mobile continues to fuel our growth with over 66 billion of mobile TPV in Q1, and OneTouch with 136 million consumers and 12.1 million merchants. remains the clear market leader in mobile checkout with almost two times the conversion of competing wallets. Venmo continues its significant momentum. At the end of Q1, over 40 million active Venmo customers drove significant increases in volume growth and monetizable transactions. Venmo total payment volume increased 73% year over year 21 billion and we remain on pace to drive nearly 100 billion in TPV through Venmo in 2019. As user growth continues to accelerate, merchants are increasingly turning to Venmo as a way to attract a valuable and engaged consumer base. For example, in the first quarter, we launched a customer engagement partnership with Chipotle. engaging customers through Venmo payouts to drive awareness for their new rewards program. In less than one week, they surpassed their launch campaign objective with one million signups. And this is just the beginning of brands leveraging Venmo to drive engagement and conversation within the social feed. In January, we reported that Venmo had an annualized revenue run rate going into 2019 that exceeded $200 million. I'm very pleased to report that our annual revenue run rate coming out of Q1 is now over $300 million. And with over 40 million active users growing substantially each and every quarter, We fully expect to see that annualized revenue number continue to grow. In addition to Venmo, Core peer-to-peer continues to experience strong growth. P2P is a large source of net new active users on our platform, as well as a significant driver of lifetime value. Total P2P volume was 42 billion, growing 41% year over year. Over the past several years, we've announced more than 40 partnerships with leaders across the tech and financial services industries. These partnerships have enabled new experiences for customers and have helped to connect the business and consumers across new platforms and marketplaces. Last month, we extended our partnership with Facebook to support the payments infrastructure for Instagram shopping. starting in the US, which will allow users on the platform to pay in context using their PayPal account or with other financial instruments. We are building deep platform integrations with Facebook, which also include product experiences within Facebook Messenger and donations. Instagram Shopping is an important expansion of our strategic relationship as we work to create new experiences for our joint customers. We continue to help consumers and businesses get faster access to their money. We are rolling out the ability to complete instant transfer to bank accounts for consumers and businesses in the US with international expansion expected in the near future. For too long, digital payments offered a faster and better technology But in many cases, it actually made getting access to money slower. We've launched multiple initiatives over the last few years to give people and businesses more ways to instantly move money using their PayPal account. Through our partnership with JPMorgan Chase, PayPal is one of the first companies to introduce real-time payments for both consumers and merchants. as part of our ongoing effort to offer our customers faster and flexible access to their funds. Our $750 million investment in MercadoLibre was a meaningful development in our drive to increase our international scope and scale. We expect to significantly expand our footprint with a strong global partnership. Our aspiration is to be the global digital payments platform of choice for merchants and consumers around the world. Our full suite of services and products are intended to bring everyone into the digital economy. Ricardo Libre is one of the largest online commerce and payments ecosystems in Latin America. Our two companies share a common vision. We both want to help small businesses compete globally and offer innovative financial solutions to help people that may be underserved by the traditional financial system. By working closely together, we can jointly leverage our scale and platform capabilities to help drive inclusion and access to the global digital economy. As part of our investment, our teams are working hard to develop a robust commercial agreement that brings together our respective payments capabilities to unleash incremental value to our combined 500 million plus customers around the world. We look forward to sharing more about our plans to work together as we finalize our agreement. I'd like to end my remarks by reiterating our commitment to our values and to being a role model corporate citizen. I strongly believe that companies must stand up and take responsibility to address the issues that face every global citizen. In a few days, we will release our annual global impact report, highlighting the progress we've made in driving social impact, managing our environmental footprint, and supporting our employees and their communities. We had a strong start to 2019, and we remain confident in the annual targets we outlined during our last earnings call. We will continue operating in a disciplined manner, leveraging our wide range of unique assets, strategically investing both organically and inorganically with the goal of strengthening our two-sided platform. We look forward to delivering another strong set of results this coming year. And with that, I'll turn the call over to John.