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As digital payments systems have grown, so have the opportunities for bad actors to do—and pay for—bad things. PayPal, which hosts more than 20 billion transactions each year, uses AI to identify payments that enable criminal behavior. The goal is to “create a safer platform for our customers and a safer digital world for all,” company executive Aaron Karczmer told Fortune in an emailed statement. The technology detects purchases related to terrorist activities, drug sales, human trafficking, money laundering, and more. PayPal, which generated $27.5 billion in revenue last year, then works with law enforcement to investigate suspected crimes.

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WMAC-2022-49-Paypal

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Modern Boards 2022 PayPal

Fintech giant PayPal scored high on our rankings for age dispersion, board independence, and board expertise. John Donahoe, president and CEO of Nike, is PayPal's board chairman. The company counts current president and CEO Dan Schulman among its directors, as well as Ann Sarnof, CEO of WarnerMedia Studios &amp; Networks Group; Enrique Lores, CEO of HP; Gail McGovern, CEO of the American Red Cross; and the former CEOs of Freddie Mac and AT&amp;T. Belinda Johnson, former COO of Airbnb, and Rodney Atkins, a former IBM executive, are also board members. 
 
PayPal has in recent years increased its efforts to invest in underserved communities. The company has spent $510 million since 2020 to fund Black- and Latinx-owned financial institutions and to back early-stage VC funds led by Black and Latinx managers, with the goal of closing the racial wealth gap. 
 
Editor's note: This writeup has been corrected to include Nike CEO and president John Donahoe.

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CTW.1122. PayPal

Like so many other business leaders last winter, PayPal CEO Dan Schulman didn’t believe Vladimir Putin would actually send Russian forces into Ukraine. “I thought for sure there would be politics that would intervene,” Schulman recently told Fortune. So when infantry and tanks barreled across the border toward Kyiv on Feb. 24, Schulman and his team faced a distressing surprise, and a flood of tough tasks. 
 
Job one was making sure employees and customers’ balances were safe on both sides of the border. (Russia and Ukraine together accounted for about half of 1% of PayPal’s revenue in 2021.) The company quickly shut down its Russia operations. But far more urgent was the challenge of extending a lifeline to the swelling numbers of Ukrainians displaced by the war. Refugees would need humanitarian aid; and both those who left and those who stayed would need to access money even as their banks were shuttered, hacked, or destroyed. PayPal and its partners would have to quickly vet a swath of pop-up Ukraine-focused charities; verify the identities of those who said they were displaced; and put fraud protections in place for users who were now hundreds or thousands of miles from their homes. 
 
Experience and global reach made those tasks less daunting. PayPal has long-standing relationships with central banks and regulators worldwide, including in Ukraine. Its donation platform, PayPal Giving, had already been used by some 400 million customers and merchants before the war broke out. Under normal circumstances, building a person-to-person payment network that could reach hundreds of thousands of people would take nine months to a year; PayPal had one up and running in Ukraine in nine days. “I told the team, like, let’s move mountains,” Schulman recalls. 
 
PayPal has certainly moved an enormous amount of much needed money. Through late September, its customers used the platform to raise more than $600 million for relief efforts in Ukraine. PayPal has also helped Ukrainian citizens receive and send another $330 million in person-to-person payments and money transfers. And it has tallied almost 300,000 new Ukrainian account sign-ups since the war began. Someday those may become paying customers, but that’s a question for a more peaceful day: PayPal is waiving all money transfer and remittance fees for Ukrainian accounts through Dec. 31.

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WMAC 2021-50-PayPal

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F500-2021-134-PayPal

The momentum of customers embracing digital payments propelled PayPal up 48 spots on this year's list. In fact, 2020 was the strongest year in PayPal’s history so far, with 72.7 million net new accounts, total payment volume of $936 billion, revenue growth of 20.7%, and profit growth of 70.9%. For crypto converts, the company recently added a way for users to buy, sell, and hold crypto in their Venmo app.

Collectively, the ranked companies produced a three-year average shareholder return of 33%, vs. 19% for the S&P 500.

FGC-2021-PayPal_Honey_Macys_Coupons

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Future 50-2020-PayPal

The former subsidiary of eBay has definitely come into its own in its past five years of independence. Poised to reap the benefits of consumers’ growing reliance on digital payments, PayPal has excelled during the coronavirus pandemic, growing revenues nearly 20% in the first three quarters of the year—exceeding even its average three-year growth rate of 18%. Now one of the largest small-business lenders, PayPal is also expanding its offerings to include buying and selling cryptocurrency, both through its flagship product and its peer-to-peer payments app, Venmo.

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F500-2020-182-PayPal-Holdings

The online payments company is available in more than 200 markets around the world and owns mobile payment service Venmo.

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03.CTW20.Paypal

Last fall, the digital payment company spent tens of millions of dollars to raise its workers’ wages and lower the costs of their benefits. This spring, as the pandemic led to tens of millions of layoffs, CEO Dan Schulman (at left in photo, with PayPal employees in Omaha) pledged that all PayPal jobs would be safe from COVID-related cuts. The company also played a major role in bolstering other people’s security: It helped some customers get faster access to their coronavirus stimulus payments, by waiving the 1% fees it usually charges to rapidly cash payroll and government checks. 
 
In a crisis, “if you put your employees first and you put your customers first, then nobody forgets that, and you come out of this in a really strong position,” <a href="https://fortune.com/2020/04/20/paypal-ceo-dan-schulman-coronavirus-digital-payments-venmo-money/">Schulman told Fortune </a>in April. PayPal’s subsequent performance has borne out his argument. The company in July reported its strongest quarter ever as an independent company: Second-quarter revenue jumped 22% from a year earlier, to $5.3 billion, with profit nearly doubled, to $1.5 billion.

Collectively, the ranked companies produced a three-year average shareholder return of 19%, vs. 11% for the S&P 500.

Fastest Growing Companies-2020-78-PayPal

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PayPal is a leading global payments platform that enables individuals and businesses to send, receive, and manage money online and in person. The company offers a suite of digital payment solutions, including online checkout, mobile payments, peer-to-peer transfers, and merchant services, serving both small businesses and large enterprises. PayPal owns Venmo, a widely used peer-to-peer payment app, and provides risk management, analytics, and financing tools to help businesses grow. The company has embraced blockchain technology, launching its own stablecoin in 2023.

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Q4 2024

PayPal Holdings (PYPL): Company Profile, Stock Price, News, Rankings

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PayPal Holdings

paypal holdings

Good morning, and welcome to PayPal's 4th Quarter and Full Year 2024 Earnings Conference Call. My name is Sarah, and I will be your conference operator today. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winoker, PayPal's Chief Investor Relations Officer. Please go ahead.

Thanks, Sarah. Welcome to PayPal's Q4 and full year 2024 earnings call. I'm joined by CEO, Alex Kris and CFO, Jamie Miller. Our remarks today include forward looking statements that involve risks and uncertainties. Actual results may differ materially from these statements.

Our commentary is based on our best view of the world and our businesses as we see them today. As described in our earnings press release, SEC filings and on our website, Those elements may change as the world changes. Now over to you, Alex.

Thanks, Steve, and thank you to everyone for joining us this morning. PayPal had a successful 2024, delivering strong operating and financial results. The improvements we've made to branded checkout, P2P and Venmo, plus the progress we've made on our price to value strategy are beginning to show up in our results. We set out at the beginning of 2024 to make it a transition year, to narrow our focus and to make sure we are executing the initiatives that matter the most to the growth of our business. 1 year later, I'm proud that we've laid a strong foundation for durable growth.

We drove branded checkout transaction margin dollar growth in each quarter. U. S. Branded checkout growth accelerated in the 4th quarter to exit the year at a high point as our new checkout innovations are scaling to customers. Driven by a renewed focus on pricing to value, Braintree has meaningfully contributed to our transaction margin dollar growth over the last three quarters.

Venmo monetization is making great strides with over 20% growth in Venmo debit card and Pay with Venmo monthly active accounts. Put simply, the PayPal team executed well during our transition year and made strong progress on our transformation. The investments we made throughout 2024 allowed us to perform well during the holiday shopping season and finish the year strongly. Total active accounts returned to growth in 'twenty four as we enhanced our value proposition and brought innovation to market. Total payment volume grew 10% to nearly $1,700,000,000,000 We delivered $32,000,000,000 in revenue, up 7%.

We reached an inflection point for transaction margin dollar growth, which increased 5% excluding the benefit of interest on customer balances. Our non GAAP earnings per share increased 21% year over year. We generated $6,800,000,000 in free cash flow and completed $6,000,000,000 in share buybacks. For 2025, we expect another solid year of transaction margin dollar growth and strong free cash flow, which Jamie will discuss. As we look ahead to 'twenty five, I want to share the areas we're most focused on.

First is innovation. With the leadership team in place and the velocity with which we're executing, we've proven we can bring innovations to market. In 2024, we rolled out new branded checkout experiences, launched PayPal Everywhere, introduced Fastlane and expanded PayPal Complete Payments. We are not stopping there and we'll continue to innovate to solve our customers' biggest challenges. The second is product adoption.

2025 will be focused on scaling adoption of our innovations. We have world class products and solutions and will continue educating customers about all we have to offer. In 2024, we completely revamped our marketing and go to market playbook. We're just scratching the surface, so you can expect more ahead. 3rd is partnerships.

Last year, we formed significant partnerships to drive Fastlane adoption and bring more value to 20 is efficiency and effectiveness. In 2024, we reduced headcount by 10%. We made deliberate investments in AI and automation, which are critical to our future. This year, we are prioritizing the use of AI to improve the customer experience and drive efficiency and effectiveness within PayPal. We expect to make meaningful progress on all four of these areas in 2025.

Let me walk you through how this focus will drive our results this year and beyond. In 2025, our key strategic initiatives will be to win checkout, scale omni, grow Venmo and Accelerate SMB. Our teams are organized around these priorities and tracking progress daily. Starting with Win Checkout, our number one priority. With our upgraded experiences, we now have the leading checkout solution on desktop and mobile.

When fully implemented, the upgraded experiences reduce latency by more than 40% and drive more than 100 basis points of conversion lift on average, consistent with the early results we've shared. These upgrades are now live for more than 25% of U. S. Checkout traffic, which is up from 5% last quarter. We have a lot of room to grow here as adoption increases in the U.

S. And then expands globally. On top of the benefit of higher conversion, these new experiences improve the presentment of our branded marks and solutions like buy now, pay later, which can help to expand our share of wallet. BNPL customers spend 30% more on average and merchants see higher sales after adding BNPL messaging to their sites, which is critical with one more sale can make all the difference. In 2024, we drove approximately $33,000,000,000 in DNPL total payment volume, growing 21% from the prior year.

Consumers and merchants trust the PayPal brand and experience. We have a lot more we can do with BNPL in the next year. Merchants continue to show strong interest in Fastlane. In the Q4, we focused on selling Fastlane to large brands that can drive future volume. I'm excited to share that we have signed NBCUniversal, Roku and StockX and are working on implementation.

We now have nearly 2,000 merchants up and running with Fastlane. We expect an inflection point in adoption when we expand our go to market efforts and bring Fastlane to even more merchants through Audient, Global Payments and Pfizer this year. From early data, what's exciting is that 25% of Fastlane users have never had a PayPal account before and more than half have a PayPal account but haven't been active in the last 12 months. To say that simply, 75% of Fastlane consumers are new or dormant PayPal users. This means that Fastlane not only improves conversion for our merchants, but also introduces more shoppers to PayPal and enables us to reengage inactive users.

We shared that one of our strategies is to build deeper relationships with our largest merchants as we renegotiate deals to reflect the value we provide. A key part of that is adding value added services that improve the experience for our mutual customers. We built a suite of world class value added services and continue to introduce new ones. In the 4th quarter, we launched FX as a service, which is automated currency conversion and it's already live for Meta. We also actively scaled the use of network tokens for automated billing capabilities, which is live with merchants, including Instacart, Mint Mobile and Poshmark.

The expansion of our value added services is a key driver of the transaction margin dollar growth we are delivering. Next, let's talk about our initiative to expand beyond e commerce to become truly omnichannel. We launched PayPal Everywhere in September, which is driving significant increases in debit card adoption and opening new categories of spend. We added more than 1,500,000 first time PayPal debit card users in the Q4 and debit card TPV was up nearly 100% in Q4. Our most active reward categories are gas, groceries and restaurants.

These new capabilities are driving deeper relationships with our users and more PayPal volume overall offline and online. The average debit card actives generate 5 times the transaction activity and 2 times the average revenue per account compared to users who only use branded checkout. This is leading to habituation. Power users, which are PayPal consumer accounts transacting more than 100 times per year, grew more than 9% year over year in the Q4. So we are seeing strong momentum today with our omnichannel push, but we're just getting started.

We plan to expand our PayPal Everywhere value proposition to several European markets this year, including launching NFC capabilities in Germany. Moving to our progress to grow Venmo. Our task is twofold. 1st, continue to improve the social P2P payment experience that made Venmo averse, increasing engagement and bringing on more users. 2nd, drive adoption of our monetized products, including the Venmo debit card and Pay with Venmo.

In the Q4, we continued improving the Venmo experience by giving our users more of the capabilities they've been asking for, like scheduled sends and improved search. With these steady improvements to the experience, we see engagement increasing. Our engaged Venmo user base grew 4% in the quarter, reaching more than 64,000,000 monthly active accounts. On monetization, we increased the average revenue per active Venmo account in 2024 and we plan to build on that growth in 2025. Monetized Venmo monthly active accounts beyond P2P and instant transfers grew more than 20% in the 4th quarter, driven by the adoption of Venmo debit card and Pay with Venmo.

Venmo debit card monthly actives grew more than 30% and Pay with Venmo monthly actives grew more than 20%. We continue to expand Venmo's acceptance with major brands like Instacart and MoonPay and Venmo in the Q4. And as we recently announced, JetBlue became the 1st airline to accept Venmo for flight bookings. So while we are still early in monetizing Venmo, we have a proven playbook that is resonating with customers. This gives us confidence as we move to 2025 and beyond.

Finally, I'd like to cover our efforts to accelerate growth for SMEs. We are moving from a disparate set of payment products to building an end to end suite of solutions that solves more small business needs. PayPal Complete Payments was the 1st step towards an integrated suite of solutions and we continue to make progress driving adoption with 45% of SMB processing and checkout volume now on this platform. Merchants on PPCB benefit from our upgraded branded checkout experiences. Key to our success in growing with small businesses on our platform is our expanding set of connected and value added services, which move us beyond a payment provider to a growth partner and help us retain customers throughout their business life cycle.

Take for example our merchant financing solutions. Entrepreneurs come to us for payment services as they start their business. As their business grows, they need access to capital to buy inventory, invest in marketing and hire. PayPal Working Capital is a financing solution purpose built for early stage companies. As the business matures, PayPal Business Loan offers more traditional merchant financing to match the increasing complexity and multi channel nature of larger businesses.

Our business financing solutions increase loyalty and engagement, driving the PayPal flywheel. Merchants typically increased their PayPal volume by 36% after adopting PayPal working capital and 16% after taking a PayPal business loan. Our merchant lending originations were $3,000,000,000 in 24, demonstrating our leadership and that there's plenty of room to grow to support our customers. This is just one example of the services we offer that help SMBs change the trajectory of their businesses. Expanding this ecosystem of value added services is a focus in 2025 and beyond.

To close out, I want to thank the PayPal team for their focus on delivering for customers every day. I am proud of how far we have come in the last year. It was an important transition year for PayPal. We created strong momentum that sets up well for 2025 and beyond. We are now executing a game plan that we have confidence in and I'm excited to share more at our Investor Day later this month.

Thanks, Alex. Moving to Slide 7, PayPal delivered another solid quarter of results to end the year. While there's still more work to be done, the team is making progress building on the firm foundation that we have established. As we enter the 2nd year of the company's transformation, our teams are energized and moving quickly. We remain focused on better serving our customers as we seek to drive durable, profitable growth.

Looking at the high level financial results in the Q4, revenue grew 4% on both the spot and currency neutral basis. For the full year, revenue grew 7% on both the spot and currency neutral basis. Transaction margin dollars grew 7% in the 4th quarter or 6% excluding the benefit of interest on customer balances. Outperformance compared to our guidance was driven by higher contribution from branded checkout and Venmo, credit performance and interest earned on customer balances. For the full year, transaction margin dollars grew 7% or 5% excluding the benefit of interest and customer balances.

Non GAAP earnings per share were $1.19 in the quarter, up 5%. We ended the full year with $4.65 of non GAAP earnings per share, up 21%. These full year results benefited from a return to transaction margin dollar growth fueled by our transformation efforts, expense discipline, the higher interest rate environment and a strong capital return program. Turning to Slide 8, our operating metrics reflect another quarter of steady progress. Total active accounts increased by nearly $3,000,000 from the 3rd quarter and nearly $9,000,000 from last year to $434,000,000 Monthly active accounts also continued to show steady progress, up 2% year over year to $229,000,000 with contributions from PayPal consumer accounts and Venmo.

Transactions per active account excluding PSP processing grew 4%. Moving to Slide 9, total payment volume grew 7% on a spot and currency neutral basis to $438,000,000,000 For the full year, TPV grew to nearly $1,700,000,000,000 up 10% on a spot and currency neutral basis. Looking at the TPV breakdown by product, we see strength starting to build in some key areas. PayPal P2P accelerated for the 6th consecutive quarter to 6% growth. Venmo also accelerated by 2 points to 10% growth.

Steady incremental product improvements combined with reinvigorated marketing campaigns are starting to make an impact. Global branded checkout volumes increased 6% on a currency neutral basis in the 4th quarter. This was about a 50 basis point acceleration from the prior quarter. Underlying this growth, we were encouraged to see U. S.

Branded checkout volume improve in the Q4. Part of this increase can be attributed to a healthy spending environment and specific vertical exposure. In the U. S, we are focused on scaling our modern best in class experiences. From a merchant perspective, we continue to see the greatest strength across large enterprises, platforms and marketplaces.

Winning checkout remains our most critical priority. Our goal is to drive more consumer engagement and a higher PayPal selection rate, which should accelerate TPV over time. Turning to PSP. As discussed throughout the past year, we moved rapidly within our Braintree business to prioritize healthy, profitable growth and intentionally let go of unprofitable volume. In line with this strategy, PSP processing volume grew 2% in the 4th quarter compared to 11% in the 3rd quarter.

Our conversations with merchants have become more holistic, moving beyond price and share of card processing to a deeper appreciation of our customers' needs and how we can add value through our full suite of solutions. We expect a handful of large Braintree merchant renegotiations to result in a headwind to revenue growth of about 5 points in 2025. Shifting away from this volume pressures gross revenue, but is accretive to transaction margin dollars and will result in more than 1 point benefit this year. We expect this benefit to build over time as we drive more value added services. Over the next few quarters, we will continue to work through renegotiations, at which point we should reach a new baseline to drive faster volume and revenue growth.

Moving to more financial detail on Slide 10. Transaction revenue grew 4% on a spot basis to 7.6 $1,000,000,000 driven primarily by branded checkout and Venmo. Other value added services revenue in the quarter grew 5% to $778,000,000 This acceleration was driven largely by a return to growth in credit revenue. We continue to see solid performance across our credit portfolio. As Alex shared, we have begun to modestly grow merchant originations and expect credit to be a positive revenue and profit driver in 2025.

Transaction take rate declined by 4 basis points to 1.73 percent driven largely by mix. Venmo monetization was a slight benefit offset by merchant mix within branded checkout and Braintree, faster growth in payouts and foreign exchange. Turning to transaction margin dollars, the largest contributors were Branded Checkout, Venmo, interest on customer balances, a return to growth in credit and Braintree. Transaction margin percent increased by more than 100 basis points for the 2nd consecutive quarter, reflecting our focus on price to value and profitable growth. As planned, we increased our level of strategic investment in the quarter, growing non transaction operating expense by 10%.

This growth included marketing spend deferred from the first half of the year and efforts to support the rollout of new products and initiatives. Non GAAP operating income grew 2% in the quarter to $1,500,000,000 Non GAAP operating margin declined 34 basis points to 18%. PayPal generated $2,200,000,000 of free cash flow in the quarter, bringing full year free cash flow to $6,800,000,000 This is meaningfully ahead of the $5,000,000,000 we planned for at the start of the year and includes some benefit from lower cash taxes, which we expect to be a headwind in 2025. In the quarter, we completed $1,200,000,000 in share repurchases, bringing full year share repurchases to $6,000,000,000 Finally, we ended the quarter with $15,400,000,000 in cash, cash equivalents and investments and $11,100,000,000 in debt. Moving to guidance on Slide 11 for the Q1 and full year 2025.

For the Q1, we expect flat to low single digit revenue growth on a currency neutral basis, which is heavily impacted by the Braintree renegotiation efforts I discussed earlier. This also includes about a 1 point headwind from lapping last year's leap day. We expect transaction margin dollars to be between $3,600,000,000 $3,650,000,000 which represents 5% growth at the midpoint. We are planning for low single digit non transaction OpEx growth in the quarter. And we expect to deliver non GAAP EPS in the range of $1.15 to 1 $0.17 or approximately 7% growth at the midpoint.

Moving to the full year, we plan to continue guiding revenue 1 quarter at a time. We believe this approach has served the company well during our transformation, enabling healthy long term decision making that prioritizes driving faster transaction margin dollar growth. Over time, we are focused on accelerating both revenue and profitability. For the full year, we expect transaction margin dollars of approximately $15,200,000,000 to $15,400,000,000 representing approximately 4.5% growth at the midpoint. In 2024, we had a 2 point benefit from interest on customer balances.

For 2025, our guidance includes about $150,000,000 or about a 1 point headwind due to interest rate cuts. Excluding interest on customer balances, we expect transaction margin dollars to grow by at least 5% compared to 4.6% growth in 2024. In the Q1, we expect minimal benefit from growth of interest on customer balances and then a headwind for the remainder of the year. One other factor to keep in mind is that in 2024, we saw a one point benefit from transaction loss improvements. We are planning for some normalization in transaction loss during 2025 as we roll out new products.

Our focus in 2025 is to strike the right balance between investment productivity, seeking to fund long term investments largely through savings generated from better tech and automation deployment. We expect full year non transaction operating expenses to increase in the low single digit range. There will likely be some unevenness quarter to quarter due to the timing of initiatives, marketing spend and comparisons to the prior year. As a result, we expect 2nd quarter OpEx growth to be higher than in other periods. We expect to deliver full year non GAAP EPS in the range of $4.95 to $5.10 representing about 8% growth at the midpoint.

This includes negative impact from lower interest rates and just over a 2 point increase in our expected non GAAP effective tax rate. Our guidance also includes approximately $6,000,000,000 in share buyback and we expect full year free cash flow of approximately $6,000,000,000 to $7,000,000,000 I'd like to wrap up by thanking the PayPal team for their continued focus and dedication. The progress we made in 2024 gives us a strong foundation to build on as we move into the 2nd year of PayPal's transformation. One of our primary focuses this year will be driving adoption of recent innovation and scaling better customer experiences. It will take time for some of our efforts to build and drive financial impact, but we are confident in our roadmap and in our execution plans.

And we're excited to share more with you at our Investor Day on February 25. With that, back to you, Alex.

Thanks, Jamie. To summarize, in 2024, we executed the transition plan we laid out. We have positioned PayPal to compete and win and delivered strong results along the way. I'm very proud of our team and the impact they made during a year of intense change. The momentum we have created sets us up well for 2025, which is about scaling adoption.

It is still early in our transformation, but our objective is clear. We are evolving PayPal from a payments company to a commerce platform that helps merchants win every sale and helps consumers shop smarter. Steve, let's go to Q and A.

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask just one question so we can get to as many people as possible. Sarah, please open the line.

Thank you. Your first question comes from the line of Andrew Schmidt with Citi. Your line is open.

Hi, Alex and Jamie. Good to see the next stage of the transformation here. I wanted to dig just dig in on branded volume growth. Maybe you could just unpack the Q4 performance, particularly in the U. S.

How did it sort of trend relative to your expectation in terms of share of checkout? And then as we think about 2025, what are the right expectations to set for branded volume growth? And I know you mentioned a few things that are drivers there, new checkout integrations, reinvigorating consumer side. Maybe just remind us what are the biggest unlocks and the timeframe to see those come into play? Thanks so much.

Yes. Thank you, Andrew. Let me kick off and then hand it over to Jamie. So first, let me just remind us of the context of what we walked into at 24 unbranded checkout. I talked about it throughout the course of the year as our number one priority and most of it was focused on how do we improve the customer experience.

We felt good about the desktop experience, but clearly gaps in mobile. And that was innovation that the team really executed on throughout 'twenty four, tested a number of different pay sheets, a number of different vaulted experiences. And then by the time we got to 24, felt really good about the innovation we were rolling out. And as we started to roll out, just as a reminder, our one time checkout improvements is 400 basis points on conversion. Our vaulted improvement is 100 basis points on conversion.

And so and the biggest impact is really on our mobile and our small business base. So really excited about the innovation that's now rolling out. As we talked about in Q3, we had just started to roll out. We'd ramp that to about 5%. Throughout Q4, we continue to execute on our rollout and got that up to 25% by the end of the year.

So as we exit 'twenty four, I'm feeling really good about the quality of the innovation, our ability to roll it out and impact customers. And as we look to 'twenty five, we now have, I believe, the best in class experience on desktop, on mobile and starting to see knock on effects of things like our buy now, pay later attach, which is up 20% with this new pay sheet. So from an innovation perspective and a customer impact perspective, feeling really good as we go into 2025.

Yes. And Andrew, good morning. Just to add on there with respect to the U. S, we did see sequential improvement in branded checkout in the U. S.

In the 4th quarter and that was about 3 points of growth quarter over quarter, really due to market dynamics, but also specific key vertical exposure around travel, crypto, gaming, etcetera. Alex mentioned, we're still early in the ramp of our modern checkout experience and that is certainly something that as we get into 2025, we are very, very focused on. Our biggest priorities are really around innovation, driving those improvements in checkout experience. And you mentioned also giving consumers more reasons to choose. So some of the things we've done throughout the year around really improving the app experience, adding rewards, adding different elements to how people can find contacts and things like that.

All of that is around engaging the consumer in a different way. And as we talk about internally, really getting the flywheel continuing to move between our consumers and our merchant experience. So from a 2025 guide perspective, we still expect branded checkout TPV to grow about mid single digits, and to have consistent growth from last year into this year with some acceleration with our initiatives on top of that.

The next question comes from Ramsey El Assal with Barclays. Your line is open.

Hi. Thank you for taking my question this morning. As expected, unbranded volumes decelerated again as you pursue the price to value strategy. Can you give us your updated thoughts on your sort of confidence level timing and toolkit to reaccelerate unbranded volume growth at the higher baseline profitability levels as we move forward here?

Yes, let me just touch on thanks for the question, Ramsey. Let me touch on just how these conversations are evolving. So first, again, this has been our strategy throughout the year. I'm encouraged to see just another quarter of branded, unbranded Braintree contribution to TM Dollar Growth. The conversations are continuing to be strategic in nature, which is exciting for us.

We're having not just processing conversations, but now they're sort of evolving into 2 steps. 1 is the value added services that we're bringing to market. I mentioned some of these FX as a service, risk as a service, chargeback automation, orchestration, all of these are things that we're now able to price to value and monetize as part of a best in class unbranded offering. In addition though, we're really starting to differentiate ourselves in these conversations by being able to bring customers to the conversation. And so again, as I sit down with CEOs of some of our largest customers and really talk about what are their greatest needs, it goes well beyond just processing.

It really goes to how do we bring more customers to bear. And this is really the first time that we're leveraging the 2 sided network that PayPal has and being able to say, hey, we have 100 of millions of consumers around the world. We now have an ads platform. We have reward platforms. We have the ability to enable our unbranded processing customers to create rewards and offers inside of our PayPal app to be able to drive additional growth for them.

And so these become really fun conversations to be honest because we're now having holistic not just processing but end to end how do we leverage their marketing dollars, how do we leverage their ability to acquire customers and our 2 sided network.

Yes. And with respect to forward trends on this, we do expect similar dynamics the next few quarters, some volatility. I mean, this is not something that just happens in a perfect line and we still do have some large agreements over the next couple of years that we will work our way through. But the revenue growth should build as we lap some of these larger agreements fluffing off over time. For 2025, we expect the renegotiations to be about a 5 point revenue growth headwind.

But the other important point here is that it's a 1 point accretive on the TM dollars growth in 2025. So I think an important dynamic there that as you mentioned, we're very intentionally driving.

The next question comes from Jason Kupferberg with Bank of America. Your line is open.

Good morning guys. I just wanted to come back to the branded TPV topic. I think you mentioned U. S. Accelerated 3 points in the quarter, if I caught that right.

I guess that would imply international slowed. So perhaps you can quantify that and then maybe give us a sense of how that mid single digit global branded volume outlook for 2025 splits between U. S. And non U. S.

And just a little bit of color on how the transaction margin profile differs between U. S. And international branded? Thanks guys.

PayPal Holdings (PYPL) Q4 2024 Earnings Call Transcript

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