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PayPal stumbles in first earnings after splitting from eBay

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In its first earnings after splitting from former parent eBay, digital payment service PayPal reported mixed results on Wednesday.

PayPal said third quarter revenue rose 15% to $2.26 billion, slightly slower than the $2.27 billion that analysts had expected. However, its adjusted profits rose 31% to $377 million, or 31 cents per share, exceeding estimates of 29 cents per share.

PayPal’s shares (PYPL) fell nearly 5% in after hours trading to $34.87.

Under pressure from activist investor Carl Icahn, eBay (EBAY) decided last fall to spin-off PayPal this summer into an independent company. It was intended to help PayPal focus on its core payments business, which was growing at a faster rate than eBay’s marketplace.

PayPal said that total payment volume on its payments service in the third quarter grew 27% to $70 billion. The company also said that it processed 345 million transactions from mobile devices, up 38% from the previous quarter.

It said added 4 million active customers from the previous quarter for a total of 173 million.

The biggest growth in the company’s payments services came from Venmo, an app that lets people send money to each other from debit accounts. Venmo sent $2.1 billion in payments through its app in the third quarter, double from the previous year. But while Venmo is seeing massive growth, it’s the one app in PayPal’s portfolio of payments services that doesn’t make revenue.

Overall, PayPal’s net profits rose 29% to $301 million.

Although it’s only been a matter of months since PayPal has become an independent, public company, CEO Dan Schulman hasn’t shied away from making bold moves. Just prior to the separation, PayPal acquired money transfer company Xoom for $890 million. In August, the company bought Modest, a startup that helps merchants create mobile apps for their stores.

For more on eBay and PayPal’s split, watch this video: