Payments Infrastructure
Enterprise

5

PayPal
Power Score: 78.06 Momentum Score: 43.53 (3) HQ: San Jose, CA CEO: Dan Schulman

Economics

Valuation: $342.2 billion (+64% YoY)

Amt. Raised: $215 million

Politics

Lobbying Spend: $986,303

Industry Orgs: ETA

People

Headcount: 33,977 (+13% YoY)

Engineering Headcount: 8,436 (+22% YoY)

Big Tech Experience: 2.9%

Open Roles: 3,321

Innovation

R&D Spending: n/a

Patents Applied For: 117

Patents Owned: 1,507

Acquisitions: Paidy (September 2021); Happy Returns (May 2021); Curv (March 2021)

Leadership

Exec Team Exits: No

Diversity Data?: Yes

ESG/CSR Data?: Yes

On Power

Few companies feature as heavily in the modern history of Silicon Valley as PayPal. Famed (or, based on his recent biography, infamous) investor Peter Thiel merged his startup with Elon Musk to build PayPal into an early success story. The company acted as the foundation of trust that powered the early ecommerce era. It went public in 2002 and shortly thereafter got acquired by eBay at a $1.5 billion valuation. Under activist pressure, eBay agreed to spin out PayPal as an independent company in 2015.

PayPal is now worth six times as much as its former parent thanks to timely expansions in peer-to-peer consumer payments (Venmo), digital wallets and merchant payment features — investments that paid off at the onset of the pandemic. The company boasted 403 million total active accounts at the end of Q2 2021, which included 32 million active merchant accounts.

On Disruption

Venmo has been a key component of PayPal's disruptive potential in recent years. As of PayPal's Q2 2021 earnings, Venmo had over 75 million customers and accounted for nearly $60 billion in total payment volume. PayPal as a whole posted $311 billion in total transaction volume that quarter, but Venmo's grew at a faster rate (58% year-over-year) than the overall company (40% spot growth year-over-year). The growth of Venmo isn't just about new user adoption, but also additional product features. For instance, Venmo had recently added functionality for direct payments to vendors. It also redesigned its app this year and launched crypto payments.

While Venmo has certainly been an engine for growth, PayPal as a whole has entered a growth period since the onset of the pandemic. Its market cap swelled nearly 65%, from $208 billion last year to $342 billion this year. It added over 3,000 employees to the team over the course of the preceding year, representing nearly 13% growth in total headcount. The engineering team grew even faster than the overall company, with 22% headcount growth in the last year.

Tea Leaves

PayPal has long made clear that it sees the digital wallet as a growing opportunity. For PayPal, becoming the go-to digital wallet for consumers is the first, necessary step toward becoming their go-to financial super app. While PayPal has a sizable lead in the digital wallet race, Apple has been gaining momentum in recent years, particularly among more affluent users, according to PYMNTS.com. Apple's tap-to-pay feature has helped narrow the gap for in-store payments, since it allows iPhone users to easily access their wallet app. The feature highlights a long-term problem for PayPal, as it fights for real estate against Apple and Google in an increasingly mobile-dominated payments ecosystem.

They Said It

"What a super app wants to do is turn all of those separate apps into a connected ecosystem where you can streamline and control data and information between those apps, between the act of shopping, the act of paying for that … And then you have this common platform and common data that allows machine learning and artificial intelligence to kick in and give personalized recommendations to those consumers." —PayPal CEO Dan Schulman in a February 2021 interview

Return to the Payments Infrastructure Power Index here.

https://roar-assets-auto.rbl.ms/documents/12167/PowerIndex_PowerSheets_FT_Payments_PayPal_2021-1014.pdf
Payments Infrastructure
power-index/fintech/payments-infrastructure/