PayPal Holdings, Inc. (PYPL) Earnings Call Transcript & Summary

Hi, everyone. I'm Jason Kupferberg, the payments and IT services analyst at Bank of America, and we are very excited here for our last session of our 2-day payment symposium to be hosting Darrell Esch, who is the Head of Venmo at PayPal. And obviously, a lot of exciting things going on at Venmo. So Darrell, thanks for taking the time with us. I appreciate it.

Thanks for having me, Jason. Always fun to come talk about the business.

We're going to do a fireside chat format here with Darrell. [Operator Instructions] And we're going to run this session for 45 minutes. So why don't we just jump in? And Darrell, tell us about your background. I think maybe some in the audience know you better than others, the evolution of your various roles at PayPal and then your career path at Bank of America prior to that. Would love to hear the back story first.

Sure. I've been at PayPal for 11 years now. I joined back in 2010. And when I came in, I actually came in and running our checkout and our consumer products, one of which was a predecessor, I suppose in a way, to the job I have at Venmo now. And it was back in the day when we still called it e-mail payments. So I had the e-mail payments product with PayPal back in 2010. After that, I spent a few years in those product teams and then moved over to something which was much more consistent with my background before that in banking. I took on the credit business at PayPal, and I moved over to do a start-up with a program called PayPal Working Capital. So we do a small business lending program, and that led to term loans and the like. And then eventually, ultimately, ran all of the consumer and business credit programs globally at PayPal. And then about a year ago, I made the move over to be the GM of Venmo. And that was after -- all after about 20 years in banking, 15 of which were actually at Bank of America where I did things like running the debit card program and branded credit cards and business lending at BofA.

Okay. Thanks for that. So just reflecting back on Analyst Day in February, where you had an important role there in terms of talking about what's going on at Venmo. And I thought one of the most interesting things that you mentioned is that you plan to actually bring more features and functions to Venmo in 2021 than in the total 11-year history of Venmo. So maybe just talk about how Venmo has changed over the last few years. And what's positioned your team to kind of ratchet up the level of innovation, while you've obviously been navigating a pandemic.

Yes. It's been 3 primary things I would say to that. And the biggest one is that we're no longer just Venmo. We are Venmo and we are PayPal. And so it started probably 3-ish years ago that Venmo started its migration to the PayPal risk platform. So that was the first material move is consuming common platforms and capabilities, leveraging what the enterprise could bring to bear rather than inventing everything itself and building everything all on its own track. So that started, as I mentioned, maybe 3 years ago. But in the year that I've been in, we've really amped that up. And everything we do is as a one team enterprise, and we are migrating towards common platforms. And it's come to life and things, like even the credit card, where we're able to bring our Venmo credit card to launch by leveraging the PayPal relationship with Synchrony that was in place. Likewise, PayPal has already launched crypto. I know we'll talk about that, I expect, somewhere along the way. But we're leveraging some of the build that PayPal did. So that's thing #1 is that we're not just doing it all as Venmo. We're consuming capabilities and expertise and compliance expertise, risk expertise and the like from PayPal. The second is more tactical and that we've really moved towards continuous release cycles. So gone are the days of you get a site, a release once a month or even a release every couple of weeks. And so from a technology perspective, we are much more closely aligned now to continuous release cycle. So we're able to get code out faster as a result. And then part of the -- third one is being part of PayPal. Just that culture of focused execution. And Dan, our CEO, Dan's drive really to drive execution, discipline and excellence, that's part of it, too, I would say, just the cultural transformation around execution excellence.

So maybe if you can just talk to us a little bit about your kind of your highest priority product initiatives. And what's the expected time line for when each of those are expected to go live.

So the big things right now, Venmo, of course, is known for its P2P capability. And historically, it was really a P2P play. And we're in that process. My comments around more product coming and ramping this year than in the first 11 years is that we're moving more towards a number of different product groups around commerce and a little bit of financial solutions, and then, of course, expanding P2P. But some of those things are recent launches and things that we've just really ramped up and made available to the base. So the credit card -- the Venmo credit card is one, and that just started. We started it in the fall, but we really just made it available to the full base just in the last, I guess, about 45 days or so. And then we've also added a new capability of business profile, where historically, Venmo was all P2P. And we now have an ability for business customers to open a Venmo profile and enabling -- effectively enabling P2B. So we have a P to business capability now. And that also we just made generally available in the last month. And then a couple of other things that have come already this year that we're just launching are more growth enablers. One is feed tiles. So the ability to actually promote products inside of the app where it might sound funny that we didn't have one up until just a few months ago. But we're now, as you go into the app, you may be exposed. You may not see it every time, but you may see a promotional banner talking about one of the services or capabilities that we're offering inside of the app now. And then similarly, we just launched another great growth capability which is a referral platform. So that ability for Venmo friends to refer their friends to bring in. We think that with the tiles -- feed tiles and the referral program are going to help us continue to grow what's been an amazing track record of growth. But those are the things that we've already brought to life this year. And so we're new in the year. And then coming soon, we've got things like -- buy, sell and hold crypto; modifications to paying with Venmo online to buying things online. And I think I've already tipped my hat once on this that we're working on an app redesign as well given that Venmo historically has really been P2P centric. We're bringing all these new capabilities. We know we need to modernize and update the app so these new capabilities are more discoverable and easier to use.

So as a Venmo user, when should I expect to see the new app redesign?

Some point probably around the middle of the year. I would -- right now, it's likely to be kind of an early Q3, but targeting directionally midyear. But we'll bring it when it's -- it's one of these I don't have a hard definitive date on it yet. We'll bring it when it's ready and when it's been through enough testing that users tell us they love it.

Yes. Yes. Yes. That makes total sense. So speaking of Venmo users, I think the base grew over 30% year-over-year in 2020 to your upwards of 70 million, call it, as of the end of last year. So how should we think about going forward the projected growth in the Venmo user base? If we look at PayPal, overall, the guidance there is for overall users to grow at about a 15% CAGR over the next 5 years. So how should we think about the growth in the Venmo user base potentially relative to those numbers?

So the growth has been just really amazing in the roughly 11-year life of Venmo to make it to the 70 million actives. And of course, we're in the U.S.-only right now. So we will run into a place where the rule of big numbers in the U.S. population will kind of become a gating factor for us. But I think for the very near term, we'll still grow a little faster than the enterprise at large. And then over the longer run, over that kind of 5-year window, I think we'll likely be growing at least a little better than the enterprise as we ultimately achieve opportunities to enter new markets. I'm not putting dates around new market entry yet specifically yet. But we do see that, that's something, especially over a 5-year horizon that we would be taking Venmo out of the U.S. So I think it's safe to say that we would expect Venmo to do at least as well as the enterprise over that time horizon.

Right. Right. And so given all the new offerings that we're talking about, some of which have just launched in recent months, some of which are coming later this year, I would assume that ARPU will grow quite a bit faster than active users over that 5-year forecast period. So is that a fair assumption? And which parts of the Venmo ecosystem do you think are going to drive the most incremental ARPU opportunity?

Yes. I think your assumption is safe, that ARPU will indeed grow faster than active users as we move forward. And that's going to come -- it's going to come in the near term. It's going to come from things like commerce and crypto. So those business profiles and Pay with Venmo and using Venmo QR codes and then as we move into buy, sell, hold crypto. Those will be the things that will drive the near-term ARPU expansion. And then eventually, over time, again, over the 5-year journey, we'll expect other targeted financial solutions, be they things like savings, investing opportunities to come in to drive as well. Those are, again, longer term. I think for the foreseeable future, what will really bend the curve most materially is going to be around commerce and crypto.

Right. Okay. Yes. No, that makes sense. Can you tell us a little bit about the demographics and the level of engagement that you see for newer Venmo cohorts versus those that have been on the platform for some time now?

Yes. We're not seeing a material difference in sort of the demographic construct, in composure of the newer cohort. We have seen a little acceleration in certain geographies where Venmo has always been strong in the West and the Northeast. And in the Midwest, it's probably a little slower taking off. And so since pandemic, we've seen some of those areas that didn't naturally hit with Venmo quite as early in the game have picked up for us. And from a usage perspective, it's a young cohort, of course, since we're only a year into it. But at 6 months on file, when we look and do read at 6 months on file, the 2020 base is a little more active than the 2019 base. So those who are coming in since the pandemic are a little more active than normal. We are, of course, watching very closely to see what happens as reopening activities start to happen in earnest. This is obviously a cohort that has used Venmo differently than all who have come before. Everyone who came before for Venmo, they were really leveraging that social aspect of Venmo. And they're going out to eat with each other. They're going to concerts, riding in Ubers and so forth. And Venmo is sort of the way to pay back your friends and family members for those social activities. And of course, everybody who's joined in the last year, none of that stuff was going on. So -- and we did -- ultimately in the pandemic, we saw an initial dip -- a pretty sharp dip in March, which we covered in terms of volumes, but grew -- came back really quickly in April as the lockdown started and people started helping people. And that became the primary use case of the newer group of customers. And people helping people, sometimes it's very literal. Like I'm helping someone who's in health care, I'm buying meals for them or something. Sometimes, though, it takes on a little different lens, and it's -- it becomes things like those -- I'm going to -- instead of -- I can't go to my yoga studio anymore, so I'm going to do an online class and I'm going to pay my yoga instructor that way; or I can't go to a show -- I'm not going to go to a show, but I'm going to tip my favorite band. And so it's come in all different ways. But I think as the world kind of reopens, we're going to be really interested in how this newer group. We expect we'll get a surge from the more legacy base who was used to doing all of that paying back for rides and shows. But really excited about watching how the new cohort uses the product as the world opens up.

Yes. I'm wondering, just like in recent months, have you seen any kind of noticeable uptick in some of the legacy use cases again, just as the COVID case counts have improved and things like that?

Well, right now, the one that we're seeing that is showing some promise is the one first -- it's kind of the first thing for us that reopening case is March Madness is going on. And it didn't exist last year. And so that's our first place that we're seeing and seeing some noticeable kind of improvements.

Right, right, right. And that's not dependent on the pandemic. So that's -- yes. Okay. That's very interesting. So let's come back to the Pay with Venmo experience, which you mentioned is one of the newer initiatives and the fact that you guys are retooling that in the not-too-distant future, can you talk about some specifics, just in terms of the enhancements that you're making here and how it's going to look different from a consumer experience standpoint?

Sure. So Pay with Venmo has always been good inside of another company's app. So it's been a great way to pay inside of an app. So if you want to pay for your Uber or a Grubhub or something like that, like where we're integrating into an app, that use case has always worked terrific for us. Where Pay with Venmo hasn't worked as well and needed reinvention was just in sort of onetime shopping online, like a onetime checkout, if you're going in and buying something in real-time. And so what's happening here is we've made -- we're making 3 fundamental changes, and that will be -- we're actually starting -- we're piloting with some of these now. But as we move through the year, Q2, we'll start to roll with these a little more. But thing number one is the entry point is now going to be through a Venmo checkout button, where historically, it was a little -- it wasn't necessarily intuitive for the customer. You would load your Venmo account effectively into your PayPal Wallet and you would press the PayPal button to pay with Venmo and Venmo was a funding instrument inside of PayPal. And while maybe that -- for some of the folks in the audience that makes sense because they know Venmo and PayPal are the same, a lot of consumers don't actually recognize that Venmo and PayPal are all part of the -- it's the same company. And so that's thing number one, that we'll make this experience materially better and more beneficial to our buyers and the sellers, frankly, the merchants. So we'll have an entry point through stand-alone Venmo button. Second is we've introduced a desktop solution initially for our Braintree merchants, so merchants who are processing with us through our Braintree platform. Historically, Venmo has really only been in the app and for some limited mobile transactions. Now it's going to be available for desktop. And the experience is really cool. And I like this a lot because much like with the credit card, we're creating the synergies of how the products work together. So this desktop experience, if you go in and Pay with Venmo, you'll actually get a QR code from the merchant, will populate on your screen. You point your phone at your screen. So you'll still use your phone, which is how people use Venmo today to complete that payment. And so given how QR is becoming central to a number of our strategies, I like the synergistic effect that it's reinforcing that QR and Venmo and PayPal kind of go together. And then the third thing that we've done is we've materially simplified a more elegant and beautiful flow for mobile checkout. So when you're -- if you're shopping on a mobile site and Venmo's available, first, you'll start, as I said, by pressing that Pay with Venmo button instead of having to navigate through a PayPal button. And then once you do that, it will switch you straight to the Venmo app where you'll confirm your funding instruments straight back to the merchant. It's a really slick 2-click kind of experience, very elegant. It looks beautiful on a phone.

That's great. Lots to look forward to there, for sure. I know that you guys have said that over time, Pay with Venmo should be the greatest contributor to Venmo monetization. And so with everything you just described and this refreshed experience rolling out, how soon could that actually happen where Pay with Venmo is the biggest revenue contributor? And then anything you can tell us in terms of how many merchants have enabled Pay with Venmo as a checkout option versus maybe a year or so ago?

Yes. So while we've added some notable merchants on the in-app integrations, those that -- where the growth -- where the real growth will come from when I talk about Pay with Venmo becoming top revenue driver in the longer term, that is going to be from those -- more from those onetime purchases. That's the net new, that's what's net new here. And the reality is, so from year-on-year, there's not a lot of change because we actually throttled back selling the old service while we built the new one. And so we really -- we continue to serve and take care of existing customers, but we were not actively selling hard on Pay with Venmo. So there's nothing really to talk about a consequence on year-on-year kind of comps. But relative to your initial question, as we start to roll this out, I think it's -- I think it ends up -- it probably takes a few years because we're going from something very small, starting a new business line here, and at the same time, we've got the business profiles rolling, which is another way to effectively buy things more locally. And -- but it's definitely not a this year or next year story. It will be ramping and building upon itself year-on-year. But year-over-year, you'll see a bigger portion of that stacked bar chart showing up as Pay with Venmo. But it's -- a lot of things can happen, merchant here and trend there. But my sense is it's probably a few years out before it's the biggest part of that stacked bar, which is actually a very good -- it's actually a very high-quality problem because we've got other monetization levers that we'll be ramping in the same time period.

Yes. Yes. So let's come back to the Venmo credit card. Like you mentioned, it's now broadly available across the whole base. And I think at least qualitatively PayPal and Synchrony have both made some comments about being pleased with the initial launch. But any metrics you can provide us or any more detailed comments around initial uptake? And then we'd just love to hear your views on what you think the key points of differentiation are for the Venmo credit card versus other similar products in the market.

Yes. So first, sorry, I can't really get into yet any numbers. I will say that it's scaling faster than we initiated or initially planned in our initial plans. We'll wait to be more collaborative and aligned with Synchrony ultimately with specific comments on the program as they ultimately own the account in the loans. What I'll say -- what is different about it is there are 3 things that are materially different and make this a very, very unique card. It's probably one of the most exciting products I've been involved in a launch in quite a while. So first is the card design itself has functional utility. And I know it might seem a little gimmicky, but I pull it out every time I get the chance to do one of these. But you see my card. So the face of the card -- so it has a QR code on it, a working QR code. So that's my -- that is mine because this is my card. That's my personal profile code. And so it has utility on a face where if you and I go to a show together or something and I buy the tickets, you want to pay me back. All you have to do is point your phone at my card and it will pop -- bring you into my Venmo profile where you can then pay me back or you can request money if you so inclined as well. So the design and not only -- it's actually kind of cool different looking card and I get comments on it wherever I go. But the fact that the design itself has functional utility is different. The other -- second thing is that the rewards flex with the customer's use. It's not completely uncommon to find these tiered programs where you get a certain number of points or percentage of cash back for certain categories. What's unique about this program is across those eligible categories, we actually effectively game it to the customer's advantage every single cycle. So every statement cycle every month, whichever of the eligible categories is the number one, you get 3% cash back for that. You get 2% for your second and 1% for everything else. And then that cash-back goes straight into your Venmo balance every month with every cycle, too. So you're getting a reward straight into your Venmo. And then maybe the most noteworthy difference of all is it seems simple, but it actually is powerful in that most cards -- most credit cards have apps that they come with. And Venmo is an app that now comes with a card. And it might not seem like much, but it's a big deal. Because where other cards, there's always a benefit associated with the user going to that app in transparency and controls and so forth, but it's not a behavior that's necessarily really natural. Well, the whole Venmo experience is interacting in the app. So I'm in the app is my primary way to deal with Venmo. And now I get these beautiful, they are really stunning, engaging experiences that help customers see like how much have you spent on dining versus travel versus this, like managing your budget, seeing where you are and how much rewards have I accrued in this period. And so it's very interactive. And the engagement that comes with it because it's a card in an app as opposed to a card with an app, it creates a different level of kind of financial transparency for the consumer. It's not that other cards don't have that transparency available. It's just that the customer is probably not playing in their app multiple times per week.

Yes. Yes. True. Tell us a little bit more just about the partnership with Synchrony and how the revenues and the costs kind of get shared here. Obviously, there are marketing dollars behind this. And typically, these programs have some kind of revenue-share agreement.

Sure. Yes. As you would guess, I, of course, can't share the construct of the agreement of how it works exactly. But fair enough to say that we are both invested parties in making sure this program is successful. And we both share in that monetization of that program. It's a great, long-standing partnership, though, and -- with PayPal and Venmo, and -- or sorry, PayPal and Synchrony and now Venmo coming in. We've actually built what we think is the flagship product between us from a card perspective, at least. And I think we'll likely see PayPal kind of the card ultimately move in some of the directions that we've got with this card. But the partnership, things that I can share is we leverage in -- Synchrony brings risk in -- risk management and back-end expertise to the game and a lot of suggestions on the front end as well. Whereas Venmo, we bring the front-end user interface and run the marketing traps and manage through all the marketing program. And then ultimately, the -- even from a risk management perspective, coupling the data that we can between Venmo and Synchrony gets us a really strong credit outcome.

Let's go over to crypto a little bit. So when you think about launching that within the Venmo platform, and obviously your users skew more towards the digitally oriented millennials than PayPal. So what would be the right way -- or how are you guys envisioning sort of early adoption curves once you do launch crypto buy, sell, hold within Venmo versus what the initial experience for buy, sell, hold within PayPal was? And do you foresee some kind of similar halo effect just in terms of increased engagement for these crypto traders across other parts of Venmo?

Yes. So you hit it. The Venmo customers definitely skew millennial, and they are digital native. And by definition, the fact that they're dealing with Venmo, they are digitally active and mobile active. They're also just starting to invest, so -- as a group. Generally, the demographic is -- tend to be younger on average, but I think the median age is in the low 30s tend to be highly educated. They're comfortably middle income with rising incomes, right, in trajectory, and they're just starting their investment lives. And so for all those reasons, we think crypto gives reason for confidence here. And from a -- relative to the halo, absolutely expecting that engagement halo. We observed steady rises in both transactions per active and ARPU as customers embrace additional features on Venmo. So going from 1 to 2 to 3 to 4 to 5 kind of services, there is a material and a steady upstream of ARPU as customers embrace more. And of course, crypto is kind of product that once customers own it and hold it, they want to come in and check the value. So clearly, we expect more visits into the app as we've observed at PayPal.

So as more of the new Venmo products and experiences roll out, I mean, how would you think about like a potential crossover or halo effect into the PayPal app, not just within the Venmo platform? And then one question we get a lot, I don't know if you can shed any light on it, is any sense as to how many of Venmo's 70 million actives are also actives with PayPal?

Yes. I'll start with that. And so of those 70 million or so out there, it's directionally half of them are also active with PayPal. And so you've got big swaths of customers who -- the relationship with us is exclusively Venmo, and then the other half are also with PayPal. It is natural and organic more than it is deliberate, I would say, at this stage because, as I mentioned, the consumer customers -- business customers are different. Merchants understand that Venmo and PayPal are the same enterprise, generally, larger enterprises, of course. And -- but individual consumers don't necessarily associate Venmo and PayPal yet. And so it's circumstantial that half kind of are using PayPal. Now having said that, what we do observe is we don't notice like any material cannibalization that it becomes additive, that the customers who use digital use digital. In the same way, I think that the banks years ago discovered as debit cards were coming out and is this going to gobble into our credit card business, and I think the discovery was, you use cards, you use cards. And much the same, if you use digital -- you use digital commerce, you use digital commerce. And I do think that, over time, the opportunity is such that we can consider things like interoperability kind of between the apps. And if you're one of the 50% of Venmo customers who -- or the other way around, even if you're a PayPal customer who doesn't use Venmo and we want to do a P2P between us, today, we don't do that. And I could -- I'm not pre-leaking anything because I have nothing to announce, but it seems like a logical kind of obvious thing we could do down the line. And that's where I think it becomes more additive and deliberate.

Yes. So you get some more synergies. Yes, for sure. We haven't talked about direct deposit yet. I know it's, in a way, may not be the most exciting product, but it did get a boost clearly for Venmo and others when stimulus hit last year. And it's certainly a great way to increase stickiness and ultimately ARPU ideally. So can you give us a sense of how many Venmo actives have adopt the direct deposit? Is that a focus for you in 2021 to really boost that figure? We've obviously got the latest round of stimulus having just hit.

Yes. It's not a big use case yet at Venmo in the way that it is at PayPal. Having said that, it's incredibly valuable for the customers who do use it as a way to gain access to faster funds. And those customers tend to use the Venmo debit card as well as a funds out kind of mechanism. We did -- we actually brought this to life across all of the devices just actually last year, a little in advance. We launched direct deposit, generally available right around the time of the first stimulus. And then with the second round of stimulus here not that long ago, we launched the cash a check. But this -- for us, at Venmo, it's a part of the future for sure. I think what will happen where PayPal -- PayPal has a more mature network relative to money out, some more places to take money out, be it shopping or kind of the debit cards and bill pay capabilities coming along and the like. I think as we get more and more money-out capabilities developed at Venmo, direct deposit will be more important to many more of our customers. Today, it's not the thing that's going to bend the curve in 2021. But I think in the future years, it's going to be really important. Like I said, it's important to the customers who use it. And that's why we pushed so hard to be ready for the last stimulus, and we're seeing it being used a good bit in tax season right now as well. So it's valuable to the customers who use it. But it's not part of the growth story yet. It will become important over time.

Yes. Yes. And what about business profiles, is that part of the growth story in 2021? Anything qualitative around initial uptake there or how that could evolve over time? Like I've always wondered, for example, is there a way to inject kind of an advertising-centric component into Venmo?

Yes. I'm going to keep disappointing you, Jason, about like numbers -- actually giving you specific number. But we love what we're seeing here early on. And this is actually -- I probably shouldn't say it, but Dan said it at the Investor Day, like I think it was at Investor Day or either earnings call about Canada's favorite product of recency. This is probably my favorite product at Venmo right now. And I -- what I really love about it, what I love about it is it's such a natural extension to the Venmo base. Venmo has always been about communities and circles of communities. And it's app-powered money, and it's a social capability. And all we've really done to make this business profiles a viable path forward for us is we've just extended the circle of that community to include businesses in your neighborhood, like who are the businesses who are in your local neighborhood who are -- who you think of as having a relationship with, like really somebody who's part of your community. And it does -- it ends up being service providers like it's yoga instructors and it's the person getting guitar lessons and it's the dog walker and it's the hair salons and nail salons. Like these are the first kind of entities coming in with some scale. And so these are people you have relationships with. And what's beautiful about it is you use it. If you're the sender, the buyer, you use it exactly the way you use Venmo. Like there's nothing new to learn. I'm just Venmo-ing the business instead of Venmo-ing a person or I'm scanning the business' QR instead of my friend's QR code. And so it's amazingly easy. The businesses, they all know what Venmo is. Many of them use it in their personal lives already. We're coming in with a very affordable rate for electronic payments. It's a 1.9% plus $0.10 per transaction on the price of the transaction. So very competitive relative to what a small business would be used to paying for digital kind of processing fee. And then it also gives them the opportunity to take advantage of that social part of Venmo, where we have the feed and people make comments and they use the stickers and emojis and like in their feed. And so now the business -- by the way, consumers can always choose privacy. So they can always choose on any given transaction, I don't want anyone to see this one. And they use that feature. So we know they know how to use that feature. But when they want to share, they can and they do. And so now if I go to the food truck down the street, it's amazing and I know it's there every Friday night and I post something, and I do the Venmo thing and I put like a picture of a taco, yummy taco or something, and the business profile will end up showing up there as long as I share it as the buyer. And so not only for that business -- not only did they get what to them is a really affordable digital payment, they also now got exposure to my friends. So my friends who see me post what I did, they say, wow, this food truck is great, right? And so that's what I just love this -- love where this can go. I actually think it can be a part of the recovery of Main Street America, ultimately, and that gives small business the opportunity to have digital reach, a new kind of wave, as you call it, like advertising. Could that be monetized? Sure, it could. We're giving it away with a service at this point. But there are a number of things you could do. It's almost endless of how you could build out this track. And I think this is a road map that will play out over years not because we're slow, but because there's so much that we're going to be able to deliver to add on top of this case. I'm super excited about it. And I guess that is probably my -- and as Dan said at that meeting when he named a product, I hope I didn't offend any of my other coworkers, yes, thank you. But I do love business profiles and where it can go.

Yes, I can see why. Let's come back to the international road map maybe for a minute. What would make the most sense? I mean would it just be kind of large GDP, English-speaking countries? Is that the way to think about the initial overseas push? Could the first international foray be in the next 12 months or so? Or is it more future dated? Not looking for specific date, obviously, but just a general frame of reference.

Yes. I have said out loud that it's not going to be in 2021. And -- but I've also said out loud, it will be in this 5-year horizon, somewhere in between likely. For me, the key here is what I started with -- sorry, your first question around how we sort of bending our innovation curve, is that being part of PayPal is kind of the key. And we're on a journey right now to consume those common platforms with PayPal. They're not -- it's not done yet. I -- personally, I think I want to -- I don't want to go in and build a new Venmo, a new company inside of a new country. I want to fully leverage all of those platforms and, as or more importantly, risk and compliance experts who know all the local laws and rules and so forth to help us enter and go to places that the enterprise already exists and performs in a strong way. So that's kind of a bit of a tease, I suppose. But that's kind of my view on the geo. I want to do it in a way that we're really leveraging the PayPal capabilities and expertise. And then I don't suspect it will be -- discussion will be one by one by one when we're ready to do that.

Okay. So I know you guys have said that Venmo [indiscernible] on a transaction margin dollar basis this year and then that it should be operating profit positive in 2022. So can you just give us some insight on how to think about the cost structure of Venmo because we've just been talking about revenue so far?

Sure. Yes. Well, I think, generally, we should probably expect to think -- to see -- like, well, you're going to see the revenue -- and I know we're going to get into the cost side here a little bit. But more and more of the TPV will be monetized. So you'll see as commerce kind of takes off and becomes more central, you'll see a much higher rate of monetization and overall effectively take rate. Now if we were calling it a take rate on the platform overall, the take rate will rise. That will rise considerably faster than the expense base on that volume. I would expect, since we're going to be into commerce, we should anticipate sort of normal for PayPal kind of losses across that volume as we grow commerce. But I think a lot of the cost -- like you've got a lot of the fixed costs already built into the machine. I'm sure they'll come a quarter down the line that we'll talk about, like in guidance more specifics around kind of return. I think, for now, as much as we're saying, we expect operating profit in 2022, but we should anticipate that the revenues will grow considerably faster than the expenses based on the kind of volume that we're moving towards. I think you could directionally kind of look towards PayPal merchant margins and that will be in the same galaxy.

Okay. Last one because I know we're running out of time. But just adoption that you may be seeing in terms of using Venmo QR code at the point of sale, the physical POS, whether it be the CVSs, the larger merchants versus what you're maybe seeing down at the micro-merchant level.

Yes. A lot more to come, still very, very new, early days. More velocity as you might guess at the places like those kind of brands that you mentioned where people show up more than once in a blue moon, where there's repetition, the customer coming in and out. I think we'll see other categories come into play, where, again, that velocity of visits is even higher over time. But we're really early. We're really early in that journey. And I think not only for QR for PayPal and Venmo, but for like business profiles, we just launched really just in the last couple of weeks even these QR kits, where now if you have a business profile, you can come in and you can get your whole kind of pack of QRs, be it stickers, lanyards, desktops, sort of the backstage pass lanyards and so forth. I should have worn it today, my favorite shirt of all. I got a shirt that has my QR code on it as well. And so -- but those -- yes, look, you'll see more and more of this over time. Yes, we're so early in the journey.

Okay. All right. Well, that was a quick 45 minutes, covered a lot of ground. Thank you, Darrell. Always appreciate the insights.

My pleasure.

Hope to be seeing you next time, and thanks to everyone who participated in the session. Have a great day, everybody.