PayPal Holdings, Inc.

Good afternoon. My name is Gabriel, and I will be your conference operator today. At this time, I'd like to welcome everyone to PayPal Holdings Earnings Conference Call for the fourth quarter and full year 2020. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. I would now like to introduce your host for today's call, Ms. Gabrielle Repinovich, Vice President, Corporate Finance and Investor Relations. Please go ahead.

Thank you, Gabriel. Good afternoon, and thank you for joining us. Welcome to PayPal's earnings conference call for the fourth quarter and full year 2020. Joining me today on the call are Dan Schulman, 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 on the Investor Relations section of our website. In discussing our company's performance, we'll refer to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in the presentation accompanying this conference call. 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 2021. 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 place undue reliance on any forward-looking statements. All information in this presentation is as of today's date, February 3, 2021. We expressly disclaim any obligation to update this information. With that, let me turn the call over to Dan.

Thanks, Gabrielle, and thanks, everyone, for joining us today. I'm pleased to report that PayPal just completed the strongest year in our history, achieving record growth in net new active customers, volume, revenue, operating income, earnings, and free cash flow. Consumers and businesses of all sizes are have embraced a new digital era, erasing the distinction between online and offline. A digital first world is no longer our future, it's our current reality, and it will forever change the way we interact across almost all elements of our lives. At the beginning of the pandemic, consumers in lockdown had no choice but to do all of their shopping online. Today, the vast majority of consumers state that post-pandemic, they will continue to shop online at their current elevated levels because it is more convenient, easier, and saves time. Retailers are rapidly adapting to a new landscape, adjusting their strategy from encouraging consumers to visit their stores to optimizing for home delivery The pandemic has accelerated a digital wave of change across almost every industry by three to five years, unleashing a profound and permanent structural transformation. Our results in Q4 highlight these trends. In the quarter, we added 16 million net new active customers. including an incremental 1.4 million new merchants. For the year, we delivered a record 73 million net new actives, ending the year with 377 million active accounts, up 24%. We now have over 29 million merchants interacting with nearly 350 million consumers. In 2021, we expect to add another 50 million net new active accounts. Equally important, our daily active users remain elevated versus a year ago, up 29% from Q4 of 2019. Our expanding scale and increasing engagement drove a record 4.4 billion transactions in the quarter, up 27%. Our total payment volumes in Q4 were $277 billion, up 36% on an FXN basis. Our TPV, excluding eBay, was up a record 40% as we continue to gain market share. eBay TPV grew at 1%, and exited the year at just under 6% of our total volume. For the full year, our TPV was up 31% to $936 billion. In Q2 of 2020, our quarterly revenue surpassed $5 billion for the first time. In Q4, we surpassed $6 billion for the first time, with our quarterly revenues growing by 23% to $6.116 billion. For the year, our revenues grew by a record 22% on an FX neutral basis to $21.45 billion. Our non-GAAP EPS grew a record 31% to $3.88, and our free cash flow increased by 48% to $5 billion. Venmo continued its strong performance with Q4 TPV of $47 billion, up 60% year over year. Venmo's customer base grew by 32% in 2020, ending just shy 70 million active accounts. This continued momentum reinforces our conviction that revenues will approach 900 million in 2021. In early January, eligible customers were able to cash their stimulus checks within the Venmo app for the first time. Later this month, our Venmo credit card will be available to 100% of our base And in the coming months, we will launch the ability to buy, hold, and sell crypto via the Venmo app. And finally, our revamped paid with Venmo experience will launch in Q2, offering a best-in-class checkout experience. Today's digital reality is rapidly accelerating the need for a digital wallet that encompasses payments, financial services, and shopping. This year, our digital wallet will change more than it has ever changed before, significantly increasing its functionality within a single integrated and beautifully designed app that should meaningfully increase consumer engagement. In 2020, we made significant progress in expanding the functionality of our PayPal and Venmo wallets. We added the ability to buy, sell, and hold cryptocurrencies, the option to buy now and pay later, direct deposit, check cashing, and bill payment capabilities. We introduced Venmo and PayPal QR codes for in-store purchasing, as well as our Venmo credit card. This year, we expect to work with our financial industry partners to introduce even more functionality, including budget and savings tools, investment alternatives, including but not limited to crypto, and enhanced bill pay options. We also intend to fully integrate the entire suite of Honey's shopping tools, including wish lists, price monitoring, deals, coupons, and rewards for use in the physical and digital worlds. I'm very pleased with the early reception of our PayPal and Venmo QR codes, which are now accepted at over 600,000 retail locations. In 2020, we signed 29 large enterprises, including CVS, Foot Locker, Nike, Five Below, Levi's, Bloomingdale's, Macy's, and Uniqlo. Our early in-store results are encouraging. Merchants are experiencing double-digit increases in average basket sizes with consumers who frequently use our QR codes. And we are seeing a 19% increase in TPV from consumers who use our QR codes. Across all of our in-store efforts, including QR, tap and pay, and cards, we processed over $20 billion of TPV with almost 10 million consumers using PayPal in-store. We also saw an exceptional response from our crypto launch. Even with high initial expectations, the volume of crypto traded on our platform greatly exceeded our projections. We are excited to build upon this early success by allowing customers to use their crypto balance as a funding source whenever they shop at our 29 million merchants. We anticipate the rollout of that capability to begin late this quarter, and we hope to launch our first international market in the next several months. These initial steps are just the beginning of an extensive roadmap around crypto, blockchain, and digital currencies. We are already working with regulators and central banks to reimagine and shape the next generation of the financial system as consumers no longer want to handle cash. We all know the current financial system is antiquated, and we can envision a future where transactions are completed in seconds, not days, a future where transactions should be less expensive to complete, and a future that enables all people to be part of the digital economy, not just the affluent. We are significantly investing in our new crypto, blockchain, and digital currencies business unit in order to help shape this more inclusive future. I would also highlight the rapid growth of our buy now, pay later functionality. We saw tremendous and growing demand throughout the quarter, and witnessed the fastest start to any product we have ever launched. Millions of consumers transacted at hundreds of thousands of merchants in Q4 alone. As with QR codes, we are seeing a meaningful halo effect on overall transactions and TPV, including over $750 million of TPV in our first quarter out of the gate. It's exciting to see that each new service we launch drives incremental increases in our overall consumer lifetime value. Consequently, I would expect that our engagement levels will increase beyond our historic run rates. I'm proud to see that the PayPal platform was especially leveraged during the pandemic for philanthropic giving and community support. enabling over $17 billion for charities and those in need. And we also put our $535 million commitment to black and minority-owned businesses and communities into action. We have already invested over 50% of those committed dollars, and we plan to report on their impact as results come in. We have entered the next chapter in PayPal's history. The efforts of our employees, along with the investments we have made over the past five years, have transformed our technical and compliance infrastructure, enabling rapid product development. We released more products and services in 2020 than in any previous year, and we will step up that pace in 2021. Merchants and consumers are turning to PayPal in record numbers as we accelerate into the digital age. Our opportunities over the next five years have never been greater. We remain focused on democratizing financial services, assuring that everyone has access and can thrive in the new digital paradigm. We intend to shape that future and, in doing so, become one of the world's leading digital payments, financial services, and commerce platforms. I look forward to expanding on this vision during our investor day next week. With that, I will turn the call over to John. Thanks, Dan.