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

All right. Welcome back, everyone. Hang in there. It's our 2:00 session with Dan Schulman, the CEO of PayPal. Dan, thank you for being here.

You bet, Lisa. Thanks for having me.

All right. And we will jump in. As always, guys, as you've heard all day long, if you have questions for Dan, shoot them to me in Ask a Question function through the webcast, and I will weave them in as we go. Don't feel like you need to wait to the end for these.

Okay, Dan, here, we're going to start off at Investor Day in February, you outlined new 5-year business objectives for PayPal, including a 20% revenue CAGR, 22% EPS CAGR over that time horizon, which -- I mean, you're in a fast-moving industry. So 5 years is a long time, and those are some big numbers. So what gives you the confidence to provide that kind of level of outlook over that time horizon?

Yes. Well, we obviously -- we're quite thoughtful about it before we put out any kind of guidance, whether it be shorter-term guidance or longer-term guidance. And really, we take a look at where do we think the trends are going. And it's as clear as it can be to us right now that the world has moved into a digital-first mode that we're experiencing at least Phase 1 of the digital economy, where really, the distinction between off-line and online is rapidly dissipating. And we had seen markets both open and close during the pandemic. So we saw kind of what was happening to digital trends at that point, and we continue to see elevated levels. And so we put out a 5-year guidance that we thought was conservative enough that we felt comfortable putting out that long term of a guidance. And yet, clearly articulate it kind of the aspiration that we have as a company. And I think if you look at first quarter results and you look at kind of the raise that we did for 2021, in that 5-year plan, clearly, the toughest year for us was this year. You have all of eBay rolling off, that puts 600 basis points of pressure on us. We had margin pressure from that eBay roll off. And yet, we just said that revenues for 2021 were going to be 20%, and that EPS would move up from 17% to 21%. So I'd say we feel quite comfortable with that guidance. We're clearly off to a very good start, and we need to just keep executing.

All right. Well, included in that guidance was the objective to have 750 million active accounts by 2025 compared to, as you just released last week, about 390 million today. So talk a little bit about -- I mean, we all know U.S., U.K., Canada, Germany, Australia, these are your big strongholds. Talk a bit about when you look out over the next 5 years, how will that next 300 million, 350 million users coming into PayPal look different from the ones today, either geographically or demographically?

Yes. Well, we had another good Q1, 14.5 million new customers coming in. We raised guidance for net new actives, up from 50 million to 52 million to 55 million. So we're clearly seeing more strength on that than we've imagined. We're going to end the year somewhere around 430 million net new actives assuming we stay relatively constant, maybe grow a little bit next year. I mean, you've got 0.5 billion people on the platform that's like within near-term site and I think there are probably 3 or 4 things that give me a lot of confidence on the net new actives. And I think net actives will continue to grow year-over-year. First of all, bottom of the funnel when you get to be closing in on 400 million net new actives, the bottom of the funnel, the churn is almost as important, if not more important than the top of the funnel. And the new products we're putting out are having a pretty big impact on engagement. In general, the move into a digital world is helping our daily active users were up 33% in the quarter. So we're seeing our churn rate come down. And I think we're just at the very beginning of what we can see churn rate drop to. Obviously, the more products in services we put out more engagement, the more our churn will decrease. And even with a consistent level of top of the funnel, your net new actives will go up as a result. Second thing is, honestly, just streamlining the basics, and there's so much low-hanging fruit yet that we can do. Like our guest to member conversion flows, we have a ton of people that sign in guests but don't become members. That just needs to be a much smoother process for us. We can get a ton more net new actives by looking at that process. And of course, we are looking at that process. Our marketing programs are starting to kick in. Our marketing team is really beginning to get their rhythm in terms of just reactivations, life cycle management and a number of things that are basic things, but we've been doing a, I'd say okay to good job, but not a great job yet. And clearly, we've got great in our sights on that. Second, I think -- third, as you expand the value proposition, you attract more people. Somebody may be using us for Checkout today, but if we have a great high-yield savings account, they may very well opt to come on to the platform. So as you expand the breadth of your offerings, you attract more people. And then finally, obviously, international has a huge opportunity for us. To your point, we operate very strongly in core markets. And I think we have a lot of room of growth in those core markets, but the rest of the world is a huge opportunity for us. I'll just give you an example. I mean, China, we've got a partnership with CUP, now China UnionPay. China UnionPay has got 1 billion-plus cards. I mean, if we start to do some linking with that, which clearly is something they'd like to do, and we'd like to do. That's a lot of potential just from that one customer there. So I feel comfortable with where we are in the 750 million. I feel optimistic that our net new actives will continue to grow year-over-year.

Actually, I had a quick follow-on on this topic, right off the bat out of the question list. So how do you highlight that -- starting to highlight now more of the top funnel versus the bottom of the funnel. So when you're thinking about investments, how do you think about balancing between new growth and retention?

Well, I think they kind of go hand-in-hand because a lot of our new growth will come from new products coming into the portfolio. And those help on the bottom line as well. So new product innovation is clearly, one of my top focuses that we have as a company. And you've seen from kind of our increase in marketing spend and OpEx, product development. We're clearly going to invest into the opportunity. There's so much potential for PayPal. We want to be $750 million, but everybody has heard me talk about -- our goal is to be 1 billion-plus users on our platform. You've got to invest into it. And we're quite measured in the way we think about investment. We've had very tight controls on OpEx, we still do. But when we see a real good ROI return, we're going to invest in it right now. And all of those numbers that we shared for our medium-term and short-term guidance contemplate significant investment in the business.

All right. Let's talk about engagement. Your 5-year outlook implies continued ARPU growth, meaning if you just do the CAGR on the user growth, it's about 15%, your revenue growth is about 20%. So that implies that you are continuing to increase ARPU. And you are rolling out all these new services, investing, bill payment, shopping, et cetera. We'll talk about those in more detail in a minute. But when you think about these long term, are these the products that are going to drive that long-term ARPU growth? Are there more things coming? Is there like a upside to this outlook? How do you think about ARPU as a lever in this business?

Well, I think ARPU has a plenty of room to grow, that's for sure, because we're just starting on all of these new products. And you're talking about products that we think about in Wallet 2.0. But we're already working on and thinking about 3.0 and 4.0. So obviously, this is going to be a continuous process. Every quarter, you should see incremental products and services coming out from us. And I think you're beginning to see transactions per active, start to turn the corner. They grew 7% as we measure it last quarter. But if you think about it, we are also putting on a lot more net new actives than we've ever put on before. We're typically averaging about 35 million, 37 million a year. We're up at now somewhere between 52 million and 55 million. Last year, we did 70 million. So if you normalize for that because when you put on somebody and a lot of people, it takes a year for them to get up to their TPA. We, if we did the calculations, think our TPA actually is growing about 14% year-over-year last quarter, which really shows the new products beginning to kick in, like we talk about crypto. Crypto -- somebody uses crypto. And obviously, we've had a surge of first-time users that continue to grow quite dramatically in Q1. But not only do they open the app a lot more, but their lifetime value now, as best we can calculate it, has gone up by $25 per person using crypto. Think about that, like that's a pretty massive number. If your lifetime value across our base went up by $1, that would be $400 million incremental dollars. Obviously, not everybody is going to be using every product we put out there. But every single product is lifting lifetime value, it's lifting incremental transactions for active TPV. If you look at direct deposit, as a -- for instance, and obviously, we're going to be encouraging a lot more direct deposit, putting high-yield savings into the digital wallet, the lifetime value of a customer with direct deposit is 10x that of our other users. Buy Now, Pay Later, I think I mentioned it on the call. We have 50% repeat use in 3 months, 70% repeat use within 6 months' time frame. So these are just new products and services that are continuing to grow engagement, grow TPV, grow revenue, grow lifetime value. And so I think the ARPU is clearly going to go up. And by the way, the other one thing I just mentioned really, this is not about putting on an incremental service, this is really like 1 plus 1 equals 3. So if you use Bill Pay, for instance, that gives us some incremental engagement, some incremental revenues, but the data from that allows us to more effectively lend to somebody because we have more of their payment processing history. So when you start to think about each of those separate products and services in a common platform, common data underlying it, the ability to look at that from a machine learning perspective and add that intelligence into other apps or other products and services is tremendous as well.

All right. I wanted to talk a little bit. You -- when I had the opportunity to host you back in December, you commented on this. I wanted to follow-up on a question just around the technology and development transformation at PayPal that's happened over the last 3 or 4 years. The observation being Buy Now, Pay Later, crypto, a lot of these more recent services, you have rolled out organically, you've developed them in-house. And you've talked also, and John talks regularly about now the incremental operating leverage you're getting out of the business because you're on more of a single global platform. Maybe just, holistically, take a step back and frame for the investor community, like what's the PayPal of now when it comes to your ability to innovate and deploy new technology maybe in what that journey or where you've come from over the last 5 years since the spin?

Yes. There have been 2 major areas that I've made a point of investing heavily in. The first is kind of our risk, compliance, FinCEN, AML, all the regulatory compliance elements. When I came in over 6.5 years ago, we had about 120 people doing those functions. And today, we have somewhere around 4,000 people doing that. Because, to me, being best-in-class from a regulatory compliance perspective from all of the basics around keeping bad guys off the network, managing fraud, keeping loss rates low, that's foundational for being a major financial services player. And the other area that we invested was in our tech platform. When I came in, it took us 6 months to do a change on our website. And that is because we just had a monolithic, massive entangled C++ code base. We are putting out maybe 30 software releases a year. Today, I think last year, we put out 46,000 software releases. We're doing something like 130 to 140 software releases every single day. That was really disaggregating the sort of monolithic platform into a service-oriented architecture, really upgrading to modern programming languages by putting in developer toolkits and processes and just a ton of work around taking a system that was inflexible and created one that was very flexible. I'll give you an example. It used to take us -- we had started planning for the holiday season in like March because we knew the holiday season was coming, and we're going to see a step function. It's just now -- just automatic. We were doing over 1,000 transactions per second in the busy period of last holiday season, and it was seamless. Our uptime now is 99.99%. That's up dramatically. Our things like authorization rates are up 400 basis points in the last couple of years as a result of having -- being able to use all the data across the platform. That's an additional 1 million transactions per day that we're putting through, just because the auth rate is higher right now. And so -- and if you're a merchant that's -- that difference is gigantic for them. So I think 3 years ago, if we had wanted to go in to , we would have to have bot, 1 of the leading players, it would have cost us $10 billion, $12 billion to buy somebody. now we do it organically. And I would put us in terms of our value prop, in terms of the integration into our system, we have to leverage our base, both on the consumer and the merchant side. Amongst the very best of any of the Buy Now, Pay Later players. It's just 1 example. Crypto is another. But it's one after another. It doesn't mean we won't be acquisitive, but it does mean from an organic perspective, we can do more than we've ever done before. And at the same time at a lower cost. Our cost per transaction is going down every single year. And you think about leverage in the model, there are so many places in the model where we have leverage right now, which is why that 22% EPS growth on a 20% revenue was another number we felt very comfortable with.

You mentioned Buy Now, Pay Later, so that's certainly in hop topic. I believe already back in February, you were annualizing Pay in 4 at about 3 billion in TPV. Sure that's a higher number now. And that's not that different in scale actually than a number of the stand-alone Buy Now, Pay Later players. So a few questions on this one. First of all, you're offering Pay in 4 to merchants no incremental fee. So how should investors think about the benefits of Pay in 4 to your business?

Well, clearly, we want to be the market leader in Buy Now, Pay Later. And we felt we could leverage the assets that we have. We have 30 million merchants. If we could just go out there and say, basically, no incremental charge to do Buy Now, Pay Later. But of course, every one of those incremental sales, we have our take rate on. And so every sale we can do that increases from where we were is positive for us, positive for merchants. Our cost per transaction is down like something like 16% on every one of those transactions. So not only are we seeing a lot of incremental transactions, our costs are going down on those as well. And to your point, it's -- Buy Now, Pay Later is growing by leaps and bounds. We have something like 500,000 unique merchants that have used Buy Now, Pay Later. Compare that to anybody else, it's probably a market-leading position over 30,000 that have now placed us on their product pages. That's sort of upstream from Checkout, and we see a much higher checkout conversion a share of wallet when we're presented upstream, and that's just beginning. We had over 200 of the largest merchants in our network have signed up for Buy Now, Pay Later, being implemented as we speak with a ton of momentum behind it. We've had over 14.5 million transactions on -- since we've rolled out. And remember, we just rolled out in the U.S., the very end of third quarter, beginning of fourth quarter. So this is still new and still ramping quite substantially for us. I think it's going to be another one of these really good products that we put out that goes into scale and big lift in halo, something like a 15% lift in TPV.

I had a question coming in on Buy Now, Pay Later, specifically about the competitive landscape because there are a number of players in the U.S. and actually in our session with Karen Webster earlier, she commented that we're kind of getting back to that world where our websites look a little like NASCAR, where you can have like multiple buttons and multiple stickers going on. So how does PayPal differentiate from the stand-alone Buy Now, Pay Later players?

Well, first of all, obviously, for the merchant, there are more than a couple of things. One, they don't have to pay anything incremental. So it's just -- it's a no-brainer for the merchants. Second, we're the most trusted brand for consumers out there. So other brands, they may have less familiarity with and may opt to click on those less. We also have -- know all of these customers. So our approval rates are much higher. Our paybacks are much higher than the industry standard because we have 392 million customers on the platform. We know their payment history, we know who they are. And so our approval rates are also quite good. And for merchants, that's something they look at, and they also want to look at what is the payback rate that occurs. So I think we've got a number of different areas in which our size, scale, brand, trust, all play to a very strong value proposition against any competitor.

And I know it's early days. As you said, you just rolled it out in the U.S. in the last like 7 or 8 months. But how are you integrating Honey and the other marketing services and capabilities of -- into the Buy Now, Pay Later, the Pay in 4 offerings to merchants?

Yes. Well, I think I tend to think about all the different things that we're introducing with our digital wallet, the superapp that we talk about, shopping tools being a key component of that. And Honey is going to really be the primary engine initially powering a lot of that. That can be rewards, deals, coupons, price monitoring, creating these wish lists on these demand curves, where merchants will be able to come in. And basically, through a self-servicing tool, available sells of those demand curves and when they do have universal checkout right off of that -- of our shopping Buy Now, Pay Later, we can put in rewards points into that. Just when I think about the combination of payments, basic consumer financial services and these robust set of shopping tools and kind of how they all interplay together, it's an incredibly strong proposition for consumers that want to get the most out of their financial lives. But also for merchants, that want to tap into that ever-growing consumer base, that will -- that is obviously there to buy. When you have a PayPal consumer and a PayPal merchant, I talked about some of these numbers, on the call, every part of the shopping journey goes up substantially. More repeat users, higher average order size. And when you start to now put in full omni capabilities Buy Now, Pay Later at point-of-sale, the ability to get rewards that point-of-sale or online seamlessly, I think it's a value proposition if we do it the right way, and we'll get better and better at it, and we'll never stop improving it. I promise you that. It can be really powerful and very difficult to replicate.

All right. Next up is crypto. Everyone's favorite topic nowadays. So different kind of angles or questions related to crypto. Now you added buy-sell-hold services in PayPal late last fall, Venmo, just very recently. You've obviously also now added the Pay with Crypto or do the instantaneous conversion to fee out at the point of purchase. How -- let me start first with the buy, sell, hold, how are the buy-sell-hold services affecting broad-based user growth, engagement and revenue for PayPal? You commented a little bit on it in terms of engagement, but just more holistically, how are you seeing the impact on your business?

Well, there is a tremendous amount of pent-up demand for the ability to buy, hold or sell crypto. I think the demand was multiple fold of what we expected, so not 100% or 200%. It was well more than that of what we expected. And then on Venmo, any study shows that millennials are quite apt to be thinking about how do we use crypto, not just by hold, sell it over the next several years as well. They expect it to be a payment methodology to add some utility in the payment process. We just rolled that out into Venmo, but it will be 100% ramped by the end of this month. We'll expect to see probably pretty good results there as well. And then if you look at like first quarter to fourth quarter new users that was up, just new users, it's close to double what we saw. And so the fast growth around all of that. And Pay with Crypto has been quite interesting to watch. People are buying watches, fitness equipment, designer, fashion items, that kind of thing. It's simple and easy to go and do. And when we first introduced buy, hold, sell, I think the bitcoin was selling for something like $12,000 or something like that, it's up wherever it is today. And so people have a lot more money in their balance. They can look at things that they might not have looked at before. And I think crypto will become just like any other funding source in our wallet. When we go into investment services, we want people to be able to buy and dispose of things almost instantaneously and use them to do vacation purchases, whatever they may want to do are they're saving up. For that, they may want to use some of their investment gains to go and do that. They may want to put some of that into savings or into a rainy day fund. So I think we're going to see more and more use of cryptocurrency. We're trying to turn it from really less about the hype of where is the price point of it and much more into the utility of what a blockchain-based payment can look like. And obviously, with a big eye towards the future of what the financial system looks like and where do we play within that.

All right. Well, perhaps a little less sexy than crypto, but maybe my personal favorite is bill payment.

I know it's your favorite. We've been talking about it for at least a year, maybe more.

Any time we did a little waterfall chart, where all the dollars are? There's a lot of it in bill payment. And direct deposit kind of goes hand in glove with bill payment. So you've been rolling out these services ad hoc. I'm sure with the wallet, that's the big versions we're going to be seeing coming up in the next quarter or so. It's going to be integrated even more closely. But what is -- the question I always get on this one with PayPal is what's the value proposition for the consumer to pay bills through PayPal? And then what steps are you taking to get people to sign up to kind of get over the hurdle of getting their billers loaded or whatever they need to do to sign up?

Yes. Well, the big introduction of Bill Pay, where we really start to go ramp substantially will be when we do our digital wallet next generation, which will be in Q3. There, Bill Pay will be one of the upfront and center components of this, along with things like high-yield savings and direct deposit. And I won't go into kind of what some of the things will be in the value proposition that will differentiate us, but we're quite excited about what we can do with Bill Pay and how we can differentiate it and make it quite attractive for consumers. We've got a couple of things that we're looking at there, and we're not looking at things anymore. We're programming them right now and have them in code. So I think Bill Pay, direct deposit, budgeting, credit, these all kind of go hand-in-hand together. The more of your financial life that you spend on PayPal, the more we can do things in an automated fashion. We could create budgeting reports for you automatically. If you've ever tried to keep a budget, it's almost impossible because you've got to write everything down that you spent. But if we see that spend, we can categorize it for you and then you can easily say, I'd like to spend a little less here, these are the bills I want to pay first, these are the ones I want to pay later, these are the ones that I want to pay instantaneously as opposed to have a lag associated with the payment. And then if we look at all the data around it, you can start to create different services, open up the possibility of things like credit for those who may not have been able to have credit before because we can see now that you pay your bills on time or responsibly. And all of our algorithms around that, FICO scores, that kind of thing, we look at them, but they're not a major part of our scoring process. We think our models right now enable us to go 30% lower in the FICO bands with the same risk as FICO would say at 30% higher. So we're opening up the aperture, same risk levels. And the more data we have, the better our models will be and the more services and products we can offer. And the more somebody comes to open their wallet to pay their bills, the more apt they are to do other services. And so what does really excite me about the superapp, more and more products and services in the wallet that are seamlessly coordinated together is that you're going to have engagement, go up, I think, in a step function manner. And as we mentioned before, the more engagement, the less churn, the more net new actives you have. It's really -- if you get this right, it's a very positive virtuous cycle that can occur.

All right. Well, I have a question from the audience that is related to this and related also, I think, to direct deposit, which is when you look at building out the suite of services for PayPal, is there a specific product or products that you think are key to owning the user's primary financial relationship? Is that direct deposit? Or is it something else like bill payment?

Well, I think all of the first, let me just say this, all of the things that we'll put out into the digital wallet, we'll have a common user interface. You are not going to click on something and go off to a different website and come into a different NAV and have a different password and wonder like what happened here, I thought I was on the PayPal. So this is going to be something that the customer basically -- just like crypto, we use Paxos as the underlying custodial right now. But when you work with crypto, it is a full PayPal experience. Same thing will happen on a lot of the basic consumer financial services. We may use some of the underlying capabilities from our partner FIS. In fact, it's likely that we will, in many cases. But the experience will be a full PayPal experience. I do think direct deposit kind of a high-yield savings account. These are sort of some core things that from there, it makes it easier to do a lot of transactions. I mean you could add your savings somewhere else as well and just draw it in like you do with your PayPal Wallet today. But we're very focused on where we think our customers want us in the value proposition. We're not going to be doing sophisticated trading derivative. That's not us. That's not our business. It's not where we want to be, probably not doing complicated insurance sort of mortgages, that kind of thing, either. We're basically basic consumer financial services that our customer base needs and would want on the platform and allow us to basically collect all that data and information to give them a better experience across all of their apps. And hopefully, through machine learning, customized offerings to them and maximize their financial lives, make sure that they can maximize their savings, maximize their financial health. And some of those services and products, I think, are more important than others.

On that. Just a real quick one that came in, I'll put you on the spot, but I had a question actually along these lines about online gaming. Have you thought about iGaming, sports betting, et cetera, and that whole kind of direction, which some of the players like in China, for example, have a whole more of a social media and gaming component to their platforms? Is that an area that you focused on or not at this point?

Well, clearly, our partners with a lot of the gaming companies right now, and we're seeing the growth in that. There's a regulatory component to that, that we are not going to be out on the fringes of the regulatory landscape. We are -- first of all, we never offer a product or a service without working hand-in-hand with the regulator on that. But there's a lot of growth in gaming. And there's the potential for us to work much more closely, maybe even bring some of those into the app. But that's not a near-term thing, but obviously, a ton of growth there and a ton of opportunity.

All right. One, let's go to in-store for a moment. Another area where you've got huge investments going on and building out your QR acceptance in particular in store. I mean, I know you've got the cards too and iZettle, of course, too, but just big focus right now on QR. What is the value proposition -- as you're building that out, how are you thinking about what's the value proposition to the consumer for getting them to change their behavior to start using QR?

Yes. I think I've talked about this for quite some time. I think if tapping your phone or scanning it for a QR code is simply about a different form factor as opposed to tapping your card on or inserting your card, you tap your phone or scan your phone. I think that takes a long time for a consumer to have a change in behavior. It isn't that it's difficult to use a card at the point of sale. The issue and the reason that I believe that in the next 5 to 10 years, let's call it, 10 years, I think you're going to see a ton of less cards at point-of-sale because I think point-of-sale is going to, first of all, be much more cloud-based than hardware-based; second, interacting with a mobile phone and apps, you can just do so much more at point of sale. You can see what your loyalty points are. The retailer can see who you are, give you deals, coupons, offers right there, maybe try to up-sell you as you walk into the store. We're putting in geofencing capabilities at the end of this month into the app to be able to do those kinds of things. It really is -- and then, by the way, when you're at the register, you can decide, do I want to buy now, do I want to pay later, do I want to use my rewards points that I got from the retailer or supplement them with rewards points that I have in my PayPal balance, go want to Pay with Crypto? There's so many things you can do when you're using your mobile phone and you're looking software-to-software as opposed to really a hardware device and an anatomic card, if you will, that you're just tapping. So I think the value proposition when it really starts to roll out. And this is a conversation that we're having with every retailer, which is how do we substantially increase your connectivity, your loyalty, your ability to enroll consumers into your loyalty programs through our app, and that's really what's gaining a lot of traction. And where that starts to happen, you see AOV go up with mobile phone as opposed to a card. So a lot of really early positive signs with that. But it's got to be a complete value proposition change as opposed to a form factor change.

All right. Before we run out of time, a couple of quick questions from a competitive perspective. And on this one, I'll just name names so we know who we're talking about. But just so with some of the big commerce platforms, so this is like a Shopify or a Google, a longtime big partners of PayPals, but also have now while it's payment services of their own that they're trying to brand and develop. So what do you do at PayPal to make sure that they remain more friends than enemies or competitors?

Well, first of all, it's a gigantic marketplace. I mean, people can argue about the TAM size, but we think it's like a $100 trillion TAM. It's just like gigantic. And so there is not going to be any one player in there, and there's -- everything is digitizing. So there's a ton of opportunity in this space. Second thing is, I think as we move more and more into these superapps and into digital wallets, there's going to be more and more partnering that occurs. I actually think there could more partnering within the superapp than we had outside of it. Tremendous amount of opportunity to partner with, for instance, with FIS in ways that we've never been able to do before. And there's always been some degree of both competition and cooperation that's occurred. But it seems like we've been able to do a lot more partnering and less direct competing as we've gone into full choice on our wallet. We're very close partners with Shopify expect that we will continue to be. In fact, we expanded our agreement recently with them. We obviously work quite closely with all of the tech platforms. Even in China, we just did a full MOR with Alibaba, merchant of record into their marketplace, seeing tremendous growth in volumes as a result of that. And so I think there are going to be a lot of places where we'll partner. There are obviously be places where we compete as well. But I think if past is prologue at all, there'll be a ton of opportunities for us to partner even more closely than we have in the past.

All right. One more before we get to our other questions. And this is on the merchant side. So tons of investment going on right now of PayPal on the consumer value proposition. And of course, very high anticipation, new versions of the wallets coming out next quarter. But balance that a little bit with what are you doing to enhance the value proposition at the same time on the merchant side and maybe weave into that the role of your unbranded payment services as well as the Checkout one?

Yes. It's getting a lot of less attention, but you shouldn't underestimate the amount of internal attention and product development we're putting into the PayPal commerce platform because the PayPal commerce platform is basically the digital wallet to the merchant, where it's going to enable merchants to move fully into the digital economy on a full omni basis. So think about it as payments as commerce enablement and back office integration. All of those things we're putting into the PayPal commerce platform. On the payment side, it's not just Checkout, it's full-stack processing, it's payouts, it's risk management, fraud management, it's going to be things that charge backs. We just bought a company. I think we announced it just a couple of days ago, called that Chargehound manages chargebacks for consumers. Look, we're going to be moving into things like how do we help merchants with refunds, with tracking, with returns. We're already in iZettle right now, point-of-sale can help a merchant to sell not only across channel, like online and off-line at the same time, but also into multiple marketplaces through inventory management into those multiple marketplaces as well into social selling, whether that be through Instagram shopping or something like that. And so there's a whole commerce orchestration layer, there is a full-stack payments that includes unbranded in there. And then there's open APIs into our platform, where if you're using, for instance, Intuit, for your tax, you can just seamlessly put that into the platform. And so I think the value proposition that we offer to merchants is going to be as substantially changed as that, that we're giving into consumers going forward. We are going really from predominantly checkout, predominantly online to full omni payments across all forms of payments. And then anything you can imagine around commerce enablement will be part of the suite of services that we offer. Invoicing all the different things that most people on the call probably don't know that we offer to merchants, but we have as big a product pipeline on the merchant side as we do on the consumer side.

All right. We've got 2 wrap-up questions. The first one, I want to come back to the 5-year outlook. You described it around the financial terms and users and ARPU, et cetera. But now let's just talk vision of PayPal. From an investor perspective, when you think about that 5-year outlook, what -- how is PayPal going to look differently in 5 years, notably relative to today?

I think we're going to be kind of a consumer platform, a basic consumer platform. Think about it when you have the scale that we hope to have by then, the amount of apps that you can start to put on there, the different services that you can put on, you'll just see us becoming much more of an everyday part of a consumer's life on that. And that it's going to be a dramatic change. And then on the merchant side, the same sort of thing. I believe we're moving towards, if not an essential platform for merchants to move into the digital economy. And we're just going to leverage that and add more and more products and services to that.

All right. And I'd like to end on your personal focus and priorities, what are the top couple of areas that you personally are the most focused on and most excited about?

Clearly, the number one 1 area, I think, for any CEO, at least I hope to answer it this way, is how do you maintain and attract the very best people in your organization and not just do that, but have them passionate about what they're doing, like that they believe and what your mission is, they understand the values of the company, you act on them, you pay them such that they all have a financial health. And you attract the very best talent. Because I actually believe the only sustainable competitive advantage for a company is the depth of its talent. And so we've done a ton of investment around that. We'll continue to do that. But that is paying off. Our engagement has never been higher. Our attrition has never been lower, and that starts to pay off in ways that we can put more and more products out, serve customers better than we ever had before. And do it in a way that is compliant and allows all of our relationships to be at the highest level possible with all the constituencies that we serve. But in everything else, takes a backseat to that.

All right. Wonderful. Thank you, Dan. Thanks so much for joining us. Fantastic overview of PayPal, lots to come.

Thank you so much, Lisa.

Can't wait for the new apps coming in 3Q. So...

That's 2 of us.

All right. Wonderful. Thanks a lot. Thanks again.

Okay. Bye-bye.

Bye.