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PayPal execs say monetization of Venmo is nearing 'tipping point'

PayPal Holdings Inc. executives said the company appears to be nearing a "tipping point" with regard to monetization of its Venmo product, a mobile-based payments service.

CEO Daniel Schulman said on an Oct. 18 earnings call that the company's Venmo product added a record number of net new active users in the third quarter, representing the third straight quarter for a record-breaking figure. And the customers that are using the product are increasingly participating in transactions that are monetizable for PayPal.

"While it is still early, our monetization efforts appear to be reaching a tipping point: 24% of Venmo users have now participated in a monetizable action," compared to 17% in the previous quarter, Schulman said.

Schulman also pointed to the most common uses of the Venmo card product as proof of the product's traction among consumers. He said the top two uses for the card product since its launch have been supermarkets and restaurants.

"These daily use cases demonstrate how we are rapidly gaining omnichannel ubiquity and becoming a part of our Venmo customers' everyday spend," Schulman said. He also pointed to the platform's $1 billion of instant transfer volume in September as proof that it is gaining traction.

The performance from Venmo contributed to a robust outlook for PayPal's next quarter and the next year. For the fourth quarter, the company expects year-over-year revenue growth of 13% to 15%. For the 2019 year, the company expects earnings per share to grow by approximately 20%, a number that includes dilution of 8 cents per share to 10 cents per share from acquisitions announced in 2018.