PayPal tops Q3 earnings estimates under new CEO Alex Chriss

PayPal (PYPL) reported third-quarter earnings that topped analyst estimates on both the top and bottom lines. The fintech company reported adjusted earnings of $1.30 compared to an estimate of $1.23. Revenue of $7.42 billion was slightly better than the expected $7.39 billion. The company also announced that Jamie Miller will be the company's new CFO. Miller was previously CFO at EY.

Moshe Katri, Wedbush Securities Managing Director of Equity Research and IT Services & Payments, joins Yahoo Finance Live to discuss PayPal's margin pressures and new CEO Alex Chriss' potential plans for the

"[Chriss] has a great background on monetizing the SMB [small & medium businesses] space, so in my view, that's probably going to be one of those areas where they are going to expand on the merchant side of the business," Katri explains.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- So first blush, what is sort of your impression here of what we're hearing from PayPal?

MOSHI KATRI: , Probably consistent to what we've seen in the prior quarters. Revenues probably a bit better than expected, TPV looks OK. The major issues that have been actually impacting the stock, there are really 2-3. And I think you can probably see them in the numbers right now.

One is the margin compression that you've seen, especially coming in from their Braintree, which is a merchant processing platform that caters to large enterprises. That's doing really well, but it has lower yield and it's impacting margins. So that's number one.

Number two, competitive pressures or concerns regarding competitive pressures mainly from the likes of Apple Pay and Adyen. And then lastly, what's going on with e-commerce trends, and they've been normalizing from pre-pandemic levels, where we've seen growth exceeding 20%. And now we started the year with low single digits, and now we're kind of somewhere between that 5% to 10% level.

So all that is still kind of here, and obviously what we-- hopefully-- what we'll hear from the new CEO is what he is planning to do in terms of monetizing this tremendous asset that PayPal has on both sides of the platform. You know, they cater to 30 million plus merchants, and then on the other hand, they cater to about half a billion consumers. And we just need to do a better job on monetizing both from a platform at PayPal.

- And Moshi, you mentioned the new CEO, Alex Chriss. In your opinion, what are his priorities? And what do you think his priorities should be?

MOSHI KATRI: Yeah. He has a great background on monetizing the SMB space. So in my view, that's probably going to be one of those areas where there are going to expand on the merchant side of the business. And on top of that, typically, the yields that are related to the SMB space are much higher, versus the yields that are related to the large enterprise space.

So that could be accretive from a margin perspective down the road. That could also help accelerate revenue growth down the road as well. I think that's going to be probably the immediate part of what he's going to do down the road on the monetization front.