Venmo revenue grows 20%, with debit card payment volume soaring

Venmo, long a centerpiece of PayPal's growth story but often criticized for its lack of monetization, is becoming a bigger contributor to the business.

PayPal said Tuesday in its first-quarter earnings release that revenue at Venmo increased 20% year-over-year in the first quarter, though the company didn't provide a dollar figure. PayPal acquired Venmo in 2013 through the acquisition of parent company Braintree.

While it's long been a popular consumer service for sending money to friends, Venmo's ability to drive meaningful revenue has been a major question mark for investors, especially as competition from rivals like Zelle and Square Cash has intensified.

Venmo's total payment volume rose 10% from a year earlier, but revenue grew twice as fast, reflecting the business opportunity. Venmo only gets revenue from specific products like Pay with Venmo at online checkout, Venmo debit cards, and instant transfers, but not from peer-to-peer payments.

Ahead of the earnings report, Jefferies analysts noted that Venmo revenue growth appeared to be "accelerating sharply" and flagged its rising contribution to branded checkout as a key area to watch. Compass Point analysts similarly said that while competition from Zelle and Square Cash remains fierce, Venmo's traction with debit cards and online checkout could "open up new monetization avenues" if adoption trends continue.

The company added nearly 2 million first-time PayPal and Venmo debit card users during the quarter, and total debit card payment volume across PayPal and Venmo climbed more than 60%. Meanwhile, Pay with Venmo transaction volume surged 50% year over year, and Venmo debit card monthly active users grew about 40%.

PayPal reported better-than-expected earnings for the quarter but missed on revenue. The company reaffirmed its full-year guidance, citing macroeconomic uncertainty.

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