PayPal Holdings, Inc.

Good day, ladies and gentlemen, and welcome to PayPal's fourth quarter and full year 2019 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. 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 fourth quarter and full year 2019. Joining me today on the call are Dan Shulman, our President and CEO, 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, 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 the first quarter and full year 2020, our medium-term guidance, and the impact 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 websites. You should not rely on any forward-looking statements. All information in this presentation is as of today's date, January 29, 2020. 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 taking the time to join us on today's call. I'm pleased to report that PayPal had a strong quarter, ending 2019 with record results across key customer and financial metrics. Over the past year, we meaningfully improved and expanded the PayPal platform. We strengthened our value proposition for consumers and merchants, expanded our international scope and scale, and announced transformative strategic acquisitions, investments, and commercial agreements. For the year, we delivered $17.8 billion in revenue That's up 19% on an FX-neutral basis, adjusted for our receivable sale to synchronate. In the fourth quarter, we generated $4.96 billion of revenue, growing 18% on an FX-neutral basis. A strong revenue growth combined with disciplined expense management enabled a 28% year-over-year increase in our non-GAAP earnings per share to $3.10. Excluding net unrealized gains on our strategic investments, we delivered $2.96 of non-GAAP EPS, up 25% on a year-over-year basis. On that same basis, in Q4, We delivered 84 cents of non-GAAP EPS, growing 28%. For 2019, our overall payment volume grew 25% on an FX-neutral basis to $712 billion. Excluding eBay, TPV grew 29% on an FX-neutral basis to $649 billion as we continue to grow market share. In Q4 alone, we processed just shy of $200 billion of TPV, a new record for us. We processed more than 12 billion transactions in a year, including nearly 3.5 billion transactions in Q4 alone. eBay's TPV continues to decline, shrinking by 4% on an FX-neutral basis. Consequently, we anticipate that eBay will be approximately 6% of our total TPV by mid-year. We added 9.3 million net new actives in the quarter, ending the year with 305 million active accounts on our platform, up 14% year-over-year, including 24 million merchants. In 2020, we expect to add approximately 35 million net new active accounts inclusive of our acquisitions, and this does not include any one-time impact on NNAs associated with the acquisition of Honey. I'm pleased to report that engagement continues to consistently increase. For the first time this year, engagement grew by double digits, increasing by 10% to 40.6 transactions per active account. Mobile transactions are a major driver of our growth, representing 44% of TPV. One-touch adoption is now at 199 million consumers and 14 million merchants. Venmo processed $29 billion in volume for the quarter, growing 56%. And for the year, volume increased to $102 billion. We ended the year with Venmo's customer base exceeding 52 million active accounts, driving its current revenue run rate of more than $450 million. Last quarter, we announced that Venmo had signed a deal with Synchrony to provide a Venmo credit card, and I'm pleased to announce that Visa will be our exclusive network partner for this new product. We also recently announced our first-ever Venmo Rewards Program with select merchants for Venmo debit card holders. These merchant-funded rewards are deposited directly into a customer's account so that they can be used in-app with merchants or transferred to a bank account or debit card, providing consumers with ease and choice. Last year, we saw brands like Netflix, Pepsi, and Chipotle use Venmo payouts to reward their customers and pay them via Venmo. We are excited to introduce new, monetizable, value-added services to our Venmo platform over the course of 2020. We continue to see strong demand for our payouts capabilities, enabled by our hyperwallet acquisition. Digital payouts are attractive to multiple industries, including the insurance industry, where consumers are demanding faster payments. In the quarter, we began delivering claims payments on behalf of insurance providers like Chubb Insurance, Asurion, and Combined Insurance. In addition, United Airlines is now leveraging our platform to pay passengers all over the world for baggage claims, and Walmart is using our capabilities to pay merchants on its marketplace. I expect to see continued growth in our payouts products. Earlier this month, we close the acquisition of Honey. The addition of Honey and its complementary capabilities to the PayPal network will significantly transform our relevance and drive engagement with our consumers and merchants at the earliest stages of their commerce journey. Our integration activities are off to a strong start. Our early joint marketing activities have already produced nearly 100,000 downloads of the Honey browser extension. And on day one, our customers could use their PayPal credentials to log into Honey. I continue to be impressed by the caliber of the Honey team, and I couldn't be happier to welcome them to PayPal. We are deepening our relationships with financial institution partners around the world. We recently announced the ability for Citibank institutional clients to make payments directly into their customers' PayPal wallets. In December, we finalized a deal with FIS, which will enable us to scale our pay-with-rewards capabilities across thousands of financial institutions in the United States. And U.S. banks is currently integrated functionality to support both account linking and pay with rewards capabilities. We continue to expand our platform capabilities around the world. We recently expanded our relationship with Uber and will be processing their payments in Europe, Brazil, India, and across the Middle East. In December, we also signed a commercial agreement with MercadoLibre that has the potential to drive a meaningful increase in our international scope and scale. As part of the agreement, PayPal will be made available as a payment option in the Mercado Pago online checkout for people in Brazil and Mexico, which opens the door for PayPal consumers to shop at hundreds of thousands of new merchants. PayPal will also be accepted in the MercadoLibre marketplace for cross-border purchases. In return, we will offer Mercado Pago as a payment method at PayPal merchants around the world, allowing approximately 50 million Mercado Pago users in Brazil and Mexico to pay with their preferred digital wallet. And we will expand Zoom's presence by allowing Mercado Pago users to receive remittances directly into the Mercado Pago wallet. I'm pleased with our growing partnership and look forward to continued collaboration with Marcos and the Melly team. In addition to the continued international expansion of Zoom, in Q4, we launched the ability for Zoom customers to send money to recipients in the U.S. through strategic alliances with Walmart and Euronet. Customers in the U.S. can now use Zoom to quickly send money for cash pickup, typically within minutes, at nearly 5,000 locations across the country. This is a positive step in our mission to make the movement and management of money quick, easy, and affordable for everyone. In December, we closed our acquisition of GoPay. becoming the first foreign payment platform to be licensed to provide online payment services in China. This transaction has the potential to dramatically increase our total addressable market opportunity. Digital payments in China are expected to grow from $1.5 trillion to $3 trillion over the next four years. and the number of users is set to grow to well over 1 billion. Last week, we announced a wide-reaching partnership with UnionPay International. UnionPay International has issued over 130 million cards outside of mainland China and is part of the China UnionPay Group, which has over 7.5 billion cards on their network. As part of the agreement, our mutual customers will be able to add UnionPay cards to their PayPal wallet in more than 30 countries, allowing UnionPay customers to seamlessly shop at PayPal's 24 million merchants globally. In addition, China UnionPay will enable Chinese merchants to accept PayPal in person where CUP cards are accepted. Our two companies will collaborate to accelerate both online and offline acceptance of PayPal for Chinese merchants. This is a landmark agreement and will have global impact for our joint customers. We look forward to partnering with other Chinese financial institutions and technology platforms to expand both cross-border and in-country digital payments. Our efforts to drive social impact and create value for all of our stakeholders continues to evolve and expand. This past year saw a record volume of funds raised by the PayPal community for charity. For the full year of 2019, the PayPal community donated more than $10 billion to charity, including over $1 billion in the month of December. On Giving Tuesday, we raised a record $106 million. The world's secular trend towards digital payments and commerce continues to rapidly grow. Our total adjustable market is significantly expanded with the acquisitions of Honey and GoPay and our commercial partnership with MercadoLibre. In 2020, our growth investments are focused on our recent acquisitions, growing our infrastructure in China and other international markets, Venmo modernization, and our in-store point-of-sale initiatives. Our ability to drive and benefit from these trends and initiatives is reflected in our strong results and our expectations for 2020. We are very excited about the year in front of us, Our brand reputation and trust are stronger than ever. We obviously need to execute, stay vigilant, and remain steadfast customer champions. But we have our sights set high, and we aim to aggressively expand our capabilities and geographic footprint. And I'm confident that our efforts will drive our market leadership and growth over the foreseeable future. And with that, I'll turn the call over to John. Thanks, Dan.