A conference that could be the start sign

During the BofA technology conference, PayPal was represented by Alex Chriss. This was an incredibly insightful conference and is highly advised to listen to for all PayPal holders. The interview started with Chriss stating that he took over at PayPal eight months ago and that his first priority was to create a world-class leadership team. With this leadership team, the next objective was to continue with innovation and the velocity of innovation, as he continued the focus on profitable growth and focus on the customer. This was of course not all that was said, so let’s see what was most notable from the interview.

• Monetization

Chriss explained how they have grown a lot in the unbranded check-out (this is mainly Braintree), but that it now is time to take all the innovation, value-added services, and proof points into the markets and price to value, in order to drive profitable growth with the processing as well. This sounds like he wants to put a brake on the slipping take rates, and stabilize them.

Venmo is another place where monetization needs to happen. It is a great product but as Chriss says, the customers are looking for something to replace the bank experience, money in, money out. The issue is that the money goes out too fast and doesn’t really come in quick enough because it has been made too difficult to get money on the platform. PayPal is looking for multiple ways to make sure that customers keep their money on the platform in order for PayPal to get make money from it.

On the money-making part, Chriss and the team is continuously taking a top-to-bottom loop at the products in the portfolio to determine which products have to go, and which products can stay. This could mean that some products are dropped that may be important for some customers, but simply don’t make sense from a business perspective.

• Other Comments

Finally, I want to touch on the fact that Chriss casually dropped the notion that a mid-size airline CEO gave him a note that he has never seen a more exciting conversion lift than they are currently seeing with Fastlane. This is extremely bullish for that innovation, and what he said is that they are currently in beta, which is important for two reasons. The first is to test the product and see if the improvements in conversion they expect are true, the second reason is to create demand for the product so it can have a good launch when it will be released in the second quarter.

• My opinion on it

This interview was one in which we sw Alex Chriss from the first earnings call, but a 2.0 version. The determination in his voice, the certainty about how to move forward and how to create value was incredible. This is reflected in the stock price because this was the “Shock The World Event” that was originally scheduled 6 months ago. One last gem Chriss dropped was how they expected low double-digit EPS growth for Q2, and they now seem to be slightly ahead of this mark.

I’m going to say it here, this could very well be the event that has shifted the trajectory of the stock. In fact, if this won’t shift the stock, I don’t know what will. The bottom has been set in my opinion, given no black swan events happen.

You can listen to this 30 minute conference yourself here, or read the transcript here

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