Earnings: Q2 Results for The Bancorp, Discover, Mastercard, PayPal
Several major payments companies released second-quarter earnings this week, including The Bancorp, Discover, Mastercard and PayPal. Overall, payments volume is on the rise and partnerships are proving particularly important for PayPal, which has been on tear with recent strategic announcements.
The Bancorp Inc. on July 27 reported net income of $18.9 million, or $0.34 earnings per diluted share, for the quarter ended June 30, 2017, compared with a net loss of $31.4 million, or $0.83 loss per diluted share for the quarter ended June 30, 2016.
The holding company for the largest prepaid issuer in the U.S.—The Bancorp Bank—also reported net income from continuing operations for the quarter ended June 30, 2017, at $17.6 million, or $0.32 earnings per diluted share, compared with a net loss of $17.8 million from continuing operations, or $0.47 loss per diluted share, for the quarter ended June 30, 2016.
“The first quarter of 2017 was a turning point for our company and our second quarter demonstrates that we have turned the corner on our financial performance,” said CEO Damian Kozlowski. “Our run-rate earnings continue to improve, reflecting further revenue momentum and the positive results from our ongoing restructuring and expense management efforts.”
The earnings report follows an announcement from The Bancorp about a new leadership team to strengthen its operations and risk management.
Discover Financial Services reported net income of $546 million or $1.40 per diluted share for the second quarter of 2017, compared with $616 million or $1.47 per diluted share for the second quarter of 2016.
Total loans grew $6.1 billion 8 percent from the prior year to $78.0 billion while consumer deposits grew $3.6 billion (11 percent) from the prior year to $37.7 billion. Payment services transaction dollar volume was $50.1 billion, up 12 percent from the prior year.
“We delivered profitable loan growth, strong revenue growth and positive operating leverage, which helped to offset normalizing credit costs,” said David Nelms, chairman and CEO of Discover. “Our new capital plan includes higher dividends and planned share repurchases, and we expect to continue to deliver a leading yield to our shareholders.”
Mastercard, Mobile Momentum
On July 27, Mastercard Inc. reported second-quarter net income of $1.2 billion, or a record $1.10 per diluted share. The Purchase, N.Y.-based payment network reported a net revenue increase of 13 percent for Q2 to a record $3.1 billion.
Second-quarter adjusted gross dollar volume and purchase volume both were up 9 percent, compared with the second quarter a year ago. As of June 30, 2017, the company’s customers had issued 2.4 billion Mastercard and Maestro-branded cards.
“Our momentum continued as we delivered record revenues and earnings per share this quarter,” said Ajay Banga, Mastercard president and CEO. “This growth is driven by our focus on providing products and solutions that help our issuers, merchants and partners gain real value beyond the transaction. Our investments in Fast ACH, B2B payments and advanced security technologies increasingly position us as the one-stop shop for our partners’ electronic payment needs.”
Meanwhile, PayPal Holdings Inc. reported revenue growth of 18 percent to $3.136 billion for the second quarter ended June 30, 2017. GAAP earnings per diluted share growth rose 27 percent to $0.34, according to the company.
PayPal also reported the addition of 6.5 million active customer accounts, an 80 percent increase over Q2 2016. Overall, it ended the quarter with 210 million active customer accounts, including 17 million merchant accounts.
Payment transactions were up 23 percent to 1.8 billion and total payment volume was $106 billion in the quarter. Approximately 34 percent of payment volume came through a mobile device and mobile payment volume increased 50 percent over the same period last year to approximately $36 billion.
Venmo, the company’s social payments platform, processed $8.0 billion in total payment volume, growing 103 percent over Q2 2016.
“The accelerating and extensive scale of our two-sided global platform creates a strong foundation for PayPal’s growth, enabling consumers and merchants to transact in new contexts and across operating systems, technologies and platforms,” said Dan Schulman, president and CEO of PayPal. “Our strong results reflect PayPal’s transformation from a single product to a platform company, from a vendor to a strategic partner to both merchants and ecosystem players, and from a checkout option to an increasingly more central way for consumers to manage and move their money.”
The company highlighted a slew of recent strategic partnerships it says are broadening the relevance of its platform and increasing PayPal’s addressable market. On July 26, PayPal announced a partnership with Baidu to enable Chinese consumers to pay with Baidu Wallet and PayPal at PayPal’s millions of merchants outside of China.
Recent deals with banks include Bank of America, Citi and JPMorgan Chase. PayPal also extended its Visa partnership into Europe and recently partnered with Samsung Pay for U.S. acceptance, while another deal with Apple offers consumers in 12 countries the ability to use PayPal for iTunes, Apple App Store, iBooks and Apple Music purchases. Yet another partnership with Google enables Android Pay users on Google’s Chrome mobile web will be able to pay at millions of online merchants that accept PayPal, using their PayPal account and fingerprint authentication.