(Bloomberg)—PayPal Holdings Inc. said consumers flocked to its service in the final months of the year as they hurried to finish their holiday shopping and started using the company’s wallets to buy and sell cryptocurrency.
The firm added a record 72.7 million active accounts in 2020, more than it forecast just three months ago, with the addition of 16 million accounts in the fourth quarter alone. That helped overall revenue climb 23% to $6.12 billion during the quarter, topping analysts’ estimates.
“PayPal has never been more relevant and needed than we are right now,” CEO Dan Schulman said in an interview. “Clearly, the world has leapfrogged by three to five years into the next digital era, and there is no going back from here.”
The company was one of last year’s big winners, with many consumers turning to its service for online shopping while sheltering in place during the Covid-19 pandemic. PayPal said total payments on its network climbed 39% to $277 billion in the final three months of the year, more than the $267 billion forecast by analysts in a Bloomberg survey.
PayPal shares rose 6.5% to $268.24 at 8:25 a.m. in early New York trading. The stock has gained 116% in the past year, outpacing the 39% advance for the 75-company S&P 500 Information Technology Index.
Venmo, PayPal’s popular person-to-person service, processed $47 billion in payments, up 60% from a year earlier and more than the $45 billion analysts expected. The company expects the app to generate roughly $900 million in revenue this year.
The company said activity on its network remains high after it added the ability for consumers to buy, hold and sell cryptocurrency using its wallets in recent months. Customers who took advantage of the feature to purchase digital currencies began logging into PayPal at two times the rate they were prior to using the service, the firm said in a presentation on its site.
In the first quarter, PayPal is planning to allow consumers to use cryptocurrencies to fund a purchase made at any of the 29 million merchants on its network.
“These initial steps are just the beginning of an extensive road map around crypto, blockchain and digital currencies,” Schulman said on a conference call with analysts Wednesday. “We are significantly investing in our new crypto, blockchain and digital-currencies business unit.”
Late last year, PayPal also introduced a feature that allows consumers to split up large purchases and pay them off over time. That added $750 million in total payments volume in the fourth quarter alone. In the U.S., almost 3 million customers tried the product, which is part of the increasingly popular trend of buy now, pay later offerings.
“Since I’ve been here, I’ve never seen a product launch with that kind of scale so quickly,” Schulman said. “Not to dismiss any of my other favorite kids — they all had great years — but buy now, pay later was probably the biggest surprise.”
The company said revenue in the first three months of the year is set to climb 28%, more than the 22% analysts are forecasting. Adjusted profits are likely to jump 50% in the first quarter.
Still, the company warned growth could begin to slow in the coming year. Total payments volume is likely to climb by a percentage in the high 20s, compared with 31% growth in 2020. Revenue for the year is set to increase 19%, while the company expects to add 50 million more active accounts.
“As we look out over the next year or two, our digital wallet will start to transcend both online and offline,” Schulman said in the interview, noting the company processed $20 billion of in-store payments last year. “It will start to expand beyond payments into financial services, into shopping tools like wish lists and price monitoring and deals and offers.”