PayPal's Venmo app is growing fast, and the company is leaning on it with a bigger debit card push and richer credit card rewards after cutting about 2,000 jobs.
Venmo is carrying PayPal through a slow stretch. In its third-quarter report on Tuesday, PayPal said money moving through Venmo grew at a mid-teen rate, while its older PayPal checkout business barely moved. For Venmo users, that likely means more prompts to get its debit and credit cards.
The number of people actively using the Venmo debit card jumped about 55% to 6.7 million monthly accounts. Of those, 1.6 million used the card for the first time during the quarter. Meanwhile, volume at the PayPal-branded checkout, the button many shoppers click online, has grown only 1% to 2% over the past four quarters, CEO Enrique Lores said.
Overall, revenue rose 2% to $8.6 billion and total payments volume climbed 6%. Net income fell 14% to $1.07 billion. Analysts were lukewarm. RBC called the report mixed, and TD Cowen called it ok, with no surprises.
PayPal bought Venmo in 2013 as part of its Braintree deal. Venmo is popular with younger people for sending money to friends, but PayPal has long struggled to turn that popularity into revenue. A debit card is one way to do it, since people who spend with the card give the company more chances to earn money.
The Venmo credit card, introduced in 2020, has not done as well as the debit card. On Oct. 5, PayPal revamped its rewards. The card now offers up to 4% cash back on certain dining and entertainment purchases, with a bump when the cardholder uses it to split a payment.
Lores took over in March and is the third CEO in three years. PayPal has cut management layers and eliminated about 2,000 jobs this year while adding artificial intelligence tools to automate some work. It expects $1.5 billion in savings over several years and plans to put some of that into the parts of the business that are working. PayPal's stock has dropped 76% over five years. In July, it reportedly rejected an offer from Stripe.
Lores called this a multi-year transformation and said there is much more work to do. The report does not say how many people hold the Venmo credit card, so it is unclear how much the new rewards will change its results.
If you use Venmo, expect more offers for its debit and credit cards, and compare the rewards to your current card before signing up.
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