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

All right, everyone. Kicking off the conference today. I'm very excited to have Alex Chriss, President and CEO of PayPal today. Alex stepped into the CEO almost exactly a year ago following nearly 20 years at Intuit. So thanks for joining us today. Alex, exciting video. Maybe we could just kick it off. Can you talk a little bit about the PayPal Everywhere campaign?

Yes. Well, thanks for having me. And hopefully, you enjoyed that. We're kicking off that campaign today. And so you'll start to see more and more of that. But yes, very exciting. Look, this has been a journey for us. If you think about PayPal, it's a business that 80% of Americans have used the product over the last few years, but almost all online, all through e-commerce. And we wanted to take the brand that people love, the product that people love and know for security and safety, add additional value proposition and rewards. And so you saw it in the video, some of the best rewards with 5% cash back through debit and now bring it to users everywhere. And so for us, this is about creating habituation. It's about taking not only the proportion of online that people are using, but now make it every single one of their online purchases and expanding into offline. So for us, this is an expansion of TAM, this is an expansion of the daily use habituation that we want people to start to think about when they think about PayPal. And I'll just give you a little bit of early data. We've been in beta for a few weeks with the product. And we give people a choice of what category they want to get their 5% cash back on. The top 2 categories that people are now getting rewards on are groceries and gas. These are everyday purchases that people need to put more money back in their pocket and they are things that you would never have thought of using PayPal for in the past. So we are starting to change mindset. We're starting to change behavior and we're starting to create that daily use habituation. So very, very exciting to see more of this campaign kick off again today, and you all are some of the very first people to get to see Will Ferrell and the new campaign, so.

That's very exciting. Maybe we'll kind of stick with some of the direct-to-consumer initiatives. I think reinvigorating Venmo has been a key part of the strategy and one I think that hasn't got as much attention relative to branded checkout and Braintree. Pay with Venmo seems to be getting a lot of traction online. What's the outlook for Venmo? What are you most focused on from a product perspective?

Yes. So Venmo, again, a tremendous brand, a product that continues to grow and one that users love. I mean, it is one of those verbs that I use, my kids use and they talk about, again, what's your Venmo and how do we share Venmo information. It's also a product that I think we haven't focused on from a monetization perspective until now. And so as we thought about all of the money that comes into the Venmo ecosystem, how do we enable our consumers to be able to keep that money and now use it for their everyday purchases. So we've been focused on Pay with Venmo, which is allowing people to pay online. We've seen 30% monthly active user increase in Q2 with Pay with Venmo. We've also been starting to integrate the debit card. The debit card previously, we had it, but it was disconnected from a customer experience perspective. We've now deeply integrated into the onboarding flow. And with that, we saw a 30% increase in monthly active users of debit in Q2 as well. And so for us, step one is just ensuring that all of the money flowing into the ecosystem for a user, they get to keep that money in their account and use it for the purchases that they need. Longer term, what gets me really excited about the Venmo opportunity is the connection that we have across communities. If you think about what the Venmo experience is, it's not just peer to peer, but it's also those interactions with small businesses, right? The people that are walking your dog, the people that are washing your car or your babysitters, right? These are small businesses, even solopreneurs that are engaging in your community. How do we enable better interactions? How do we enable CRM-type interactions? How do we enable scheduling type interactions? These are really experiences that we think Venmo as really one of the best social networks that also as combined payments can facilitate. So short term, really just lean in on monetization because we have a tremendous ecosystem that is very vibrant right now. Once we get that humming, we can really start to look to the long term and how we actually build out this social commerce network across millions and millions of users.

And maybe coming back to the PayPal Everywhere campaign, how do you think about just the form factor that PayPal Everywhere takes? Is there a connection to Venmo? Is it pure PayPal in regards to how you actually use it at the point of sale?

So if you think about the overall strategy, we have an omnichannel commerce strategy. For both PayPal and Venmo, we believe the way consumers are starting to think about their payments or to think about commerce, it is an omnichannel solution. They don't think about online and then think about offline and then think about how they do peer-to-peer. People are starting to think about what is the wallet that I want to use, what is the mechanism that I want to use to be able to just move money. And with both Venmo and PayPal, we have opportunities not only to connect the two of them, but also to enable customers -- to meet customers where they are and enable them to have the commerce experiences that they want. And so with the PayPal Everywhere campaign, you are starting to see, hey, I have a PayPal Wallet. I have balance that's sitting there, I've been using that for years to make my online purchases. Now I can have that information put into my phone. Right now with PayPal everywhere, it's embedded inside of Apple Pay or Google, my Google Wallet, and I can tap to pay anywhere that I want. So I'm taking the convenience of what I've already had and known for years and years and years. and now enabling that to be available at point of purchase. And so look, overall, we are looking for an omnichannel solution. There's obviously different geographies that we play in, where NFC access is available, and we'll continue to move into that in the near term and we'll continue to look at that in every place that we play. But the strategy is omnichannel, and we just want to remove friction for our customers any way we can.

I'd love to hit on the NFC chips in a bit. But maybe if we pull up for a second. I mean, I think you're almost exactly near your 1 year of your mark since taking over as PayPal CEO. Was hoping you can maybe reflect on the first year on the job. How has the strategy shifted? And what is your vision for the company now looking forward?

Yes. It's been an incredible year. In some ways, it's been a fun grind. And in some ways, it's gone by in a blink of an eye. Things I'm super proud of, I think, we've built one of the best teams that I've ever been engaged with. And I think, one of the best teams in the market. If you look across the leaders that we've brought in, we've reshaped the entire leadership team, my direct reports, and you are starting to see us bring in leaders actually up and down the organization that are best-in-class in their domains. And so I think we have a world-class team that's built for the future. I think we've changed the way we think about innovation, both the velocity, the rigor in which we're operating the organization, our aggressiveness. And you've seen us start to put out both innovation as well as partnerships that are starting to really drive engagement across the ecosystem. So I'm very proud with the velocity that the team is starting to execute on and sort of the spirit of the aggressiveness in which we're playing. And then lastly, we made a big change in just how we organized the team, both customer-backed. So we are now organized delivering against consumers, small businesses and enterprises as well as what the focus and the orientation of the company is based on, which is profitable revenue growth. That was a shift that I came in and shared with as soon as I joined, and it's something that you started to see in our last earnings as we've really started to make a shift in both Braintree monetization, Venmo monetization that I just talked about, continuing to lean into our branded checkout and now expanding, as you just saw with PayPal Everywhere into new addressable markets as well. So 1 year in, very proud, and we're stronger today than we were a year ago and very, very excited for year 2.

Great. Well, maybe looking a little bit more nearer term, before we kind of jump in further, the operating environment over the summer has been in focus, particularly around some of the softening of some of the employment data points that have come out recently. What are you seeing in the data? Is there anything notable to call out with respect to PayPal's performance?

We've seen our data to be pretty consistent. Nothing really of note to call out. We're still expecting, as we guided in our last earnings. So no big change there. And it will be an interesting summer to conclude and then excited to kick off our -- the biggest shopping time of the year for us as we break into the back half of the year.

Got it. Maybe we could touch on -- you hit on it a second ago, the topic of profitable growth. I think Braintree is an area where the company has made a lot of enhancements to the platform, pricing to value has been in focus after you landed a series of beachhead wins last year. So how do you feel about Braintree's positioning? And what should investors expect around pricing to value as you lap some of those big wins?

Yes. So let me remind you all of the context. So Braintree has, as you mentioned, landed a number of very large beachhead customers. And that was critical a few years ago as we were establishing ourselves and building up really a new payment processor. The reality is we've also started to build some very, very powerful value-added services, things like Risk as a Service or FX. And we've also now put in play really the best guest checkout experience on the market with Fastlane. So now we have a lot of things to be able to talk to customers about, not just around their payments and their payment processing, but also enabling them to get new customers with our ads platform. And so the quality of the conversations that we're having with our Braintree merchants has really, I think, become much, much stronger. But we're also having much more intimate conversations about pricing to value. And so the conversations are strategic. They're holistic but they also mean that we're focused on profitable revenue growth. And our customers know that. I've been very clear externally and in the conversations we've had with them. And so what I would expect is we're going through the conversations now. I would expect our revenue from Braintree to continue to grow, but grow at a more moderated pace as we continue to move through these conversations. But over the long term, again, they are much healthier conversations. This is not just about really what I would consider to be a commodity payment processing conversation. This is about a holistic strategic conversation of how we can bring the power of commerce to our customers. And so again, the conversation is about how do we help them bring customers in, how do we help convert them? How do we then have long-term engagements with these customers and enabling a more commerce partnership with these large merchants? So they're very healthy. We've got to get through the conversations. We're making good progress. It will take, again, a few more quarters in order to get through all those conversations, but I'm very pleased with where we are.

Yes. Any surprises in those conversations just in terms of kind of like the balance between pricing adjustments that merchants are willing to accept versus kind of maybe your share of volume in some of these merchants?

I think the reality is these are healthier conversations. I think when you're just asking for as much share of your processing as possible. It's a little bit of a strange conversation. And I think that's where we've been in the past, which was how do we get more and more and more of your processing volume without adding necessarily additional value. These are healthier conversations. And especially for large enterprises, they need multiple processors to be able to have those conversations. You even saw today, we are now an additional processor for Shopify. We announced that today. And so large enterprises need to be able to have multiple processors. I'd much rather be in a strategic conversation where we're saying, here are all the value-added services that we're bringing to bear. And what's most important to you is conversion rate. We're going to extract the right value for -- the right price for the value that we're delivering to you than just saying, hey, how do I get more and more and more of your gross revenue?

Yes. Makes sense. So maybe pivoting a little bit back to the NFC chip conversation. There's been some news recently around the NFC chip on the iPhone, I think first in Europe, more recently in the U.S. Do you think this is a wedge into POS? How can you kind of stand to benefit from that? How do you think about POS opportunity for the company more broadly?

Yes. So look, I've been very clear, omnichannel is an important part for us and an important part for the future. That is customer backed. Customers are looking to use PayPal as their solution for every purchase everywhere, every time. And we need to meet customers where they are. And that means we need to be not just online where we have ubiquity around the world, but we also need to be able to be in their pocket when they go to check out and buy their groceries and buy their gas. NFC is one how. It's not the only how, but where it's available, we will move quickly to be able to offer it. As you mentioned, it opens up in Europe. We'll start with one country in Europe likely this fall and then continue to expand over time. And if it happens to work in the U.S. as well, we'll do that, but we're not waiting. You saw with PayPal Everywhere. We're now launching and meeting customers where they are. They already have a phone in their pocket. They've got a wallet that works. PayPal can now be the default solution for them as they go and check out. And so the strategy is omnichannel. The how will continue to evolve based on geography and partnerships and regulatory issues. But I'm excited about meeting customers where they are and accelerating our omnichannel strategy.

Got it. So maybe we can talk through some of the dynamics in online checkout and guest checkout with the Fastlane product. What is the problem Fastlane is solving today? And how do you kind of view where it fits into the industry landscape and in the PayPal product portfolio?

Yes. So as a reminder, about 60% of checkout is still a guest checkout experience. That means someone's going in, they're filling up their cart, they're going to check out and they're typing in their name, their address, their credit card information. That checkout experience is rife with disconnect and failure. About 50% -- 40% to 50% of those checkouts actually succeed. And so that is a big problem for merchants. We've come out with a solution that I believe is best-in-class solution and raises that checkout conversion rate from 40% to 50% to 80% for returning users. And that's because we are the only player out there that can bring an enormous ecosystem of consumers to bear. So we bring not only the entire PayPal base and Venmo base to the Fastlane experience. But with the brand that we have, we have customers that are coming in. And for the first time, if they're not -- if they've not ever been a PayPal user and they go through the Fastlane experience, 40% are actually opting in to vault their instrument with us, vault their information with us and use Fastlane for the next time as well. So we're bringing the largest consumer ecosystem to these merchants and enabling them to again raise their conversion rate to an 80% for returning users, which overall creates a double-digit lift in conversion. That's unheard of, unheard of, for guest checkout. And so not only have we thought that this is phenomenal for our merchants, but we want this to be a platform that could be enabled for every merchant everywhere. And so we've built it as a platform. We've built it where you can use it with any processor, and we started to roll that out with other processors as well. You've seen us announce Adyen and Fiserv, both coming on and enabling fast link to be part of the experience for their merchants as well. And we think this will ultimately be the default guest checkout experience for any merchant that's looking to have the best, highest converting experience anywhere in the world.

One of the questions we got a lot on the back of some of those announcements was just how the relationships work with those third-party processors, Fiserv, Adyen and just how you think about the commercial relationships, unbundling Fastlane from the Braintree processing.

Yes. So these processors are -- if you think about what they're trying to do, they're trying to create the best experience, the best converting experience for their merchants as well. So when they looked around and they see that Fastlane is the best experience, they want to make sure that they have that available. So we look at this as a win-win-win. It's a win for consumers because they're getting a tremendous easiest frictionless experience to check out. Our partners, Fiserv, Adyen and so forth, will be looking at this as the best way for them to provide an experience for their customers. They're a distribution channel for us. So they get to go to all of their merchants and say, hey, if you process with us, we also are able to provide you with the best guest checkout experience with Fastlane by PayPal. And then for us, we get the distribution. We get a direct monetization relationship with each merchant which allows us to monetize guest checkout and monetize guest checkout on processors that for payments that we're not even processing, which, again, is access to customers and merchants that we didn't have. And then lastly, if you think about what this is building is it's building a network effect. Every time we bring a customer that comes in, every time we're building a new relationship with a customer that's vaulting their instrument, it grows the pie of Fastlane. and it grows the customer relationship that we have. And those customers now get to be seen. That data is now available for the next merchant and it is a network effect that just starts to build. And so we've got the lead because again, we're the only player that can bring a consumer ecosystem to bear. And we think that with these partnerships, we'll just continue to build on that lead and continue to provide the best guest checkout experience in the world.

That makes sense. And I guess you hit on a little bit how just the consumer database and the number of relationships that you have helps roll out Fastlane. How does it work kind of in reverse? How do you think about the synergies between Fastlane and the branded checkout ecosystem?

Yes. So they are connected. So first, as I mentioned before, customers that come in that are not PayPal customers and they go through the Fastlane experience. So imagine they've already seen all the branded marks available to them. Again, 60% bypass all branded marks and go straight to a guest checkout experience. Of those people that are now filling out the guest checkout experience, 40% are opting in to a Fastlane by PayPal experience. So we're now capturing their data. We're capturing their instrument, and we're now able to remarket to them. We're able to give them an experience that says, hey, if you had checked out with PayPal, you could have saved 5%, 10% on this purchase. So we're able to give them all of the reward systems that we're now putting into place for our consumers for not only our existing customers, and there are existing PayPal customers or other branded mark customers that bypass and go to guest checkout. We're able to remarket to them and bring them back into a PayPal experience by showing them what that value proposition is. So that's, again, just a network effect that just continues to grow as we get access to more and more customers. It was a surprise to me when I stepped into this role, just the large percentage of customers that continue to go through a guest checkout experience. In my vernacular, that is nonconsumption. They're not using any branded experience at all. That is still the majority of checkout. So that's what we're playing for. And we think we now have a guest checkout experience that is not only giving merchants and other processors a better, higher converting experience, less friction for the consumer. But now an opportunity for us to have a second bite at the apple and be able to communicate to those customers, vault their information and then bring them back into a branded experience with PayPal. And we think that's a really exciting strategy for us.

So 60% of customers using no wallet at all. The online checkout space has been competitive for a while. You've got kind of the phone-based competitors, the kind of e-commerce platform based competitors, the banks are trying to stand up pays right now and a lot of others. What is your latest thinking around mobile and the online checkout space and how PayPal differentiates itself in the competition?

Yes. Well, it's an exciting space. That's why there are so many fun competitors that are out there. What I like to do is focus on, first and foremost, what the customer experience is. And for us, the customer is both the end consumer as well as the merchant. So the end consumer is looking to put more money in their pocket, right? If you look at purchases today, if you look at the rate of inflation today or just cost in general, and you talk to consumers, they're looking to put more money in their pocket. If you talk to merchants, they're looking to obviously reduce their costs, but they're also looking to get those customers. Right now, the cost of advertising has more than doubled in the last couple of years. So they're putting more and more money to get less and less ROI on their advertising spend. We think because we are the only player that you just mentioned that really has both sides of the ecosystem, we need to play to our strengths. So we bring to bear hundreds of millions of consumers and tens of millions of merchants. And we think we can build an ecosystem and build a network effect that connects those two ecosystems together. And you are starting to see us do that with the innovations that we started to put to market. So not only can we bring a frictionless checkout experience, online, mobile and in-store. But now we can actually build a reward system and an ad platform that enables merchants to actually take the money they were spending on advertising before, move those towards rewards to find targeted customers and drive those targeted customers into an actual purchase experience. And those merchants are only paying for those customers when they check out. So they get guaranteed ROI and consumers are now getting more money in their pocket. They're getting 5% cash back with PayPal Everywhere at point of sale. They're getting rewards and stackable rewards when they're making online purchases or in-person purchases. So consumers are putting more money in their pocket. They know that PayPal is now the most rewarding way for them to pay. And merchants are getting much more directed, targeted customer acquisition and able to build the base that they want. And so again, there's lots of players in this ecosystem. What we're going to do is play to our strengths and deliver on the customer experiences that -- and the customer problems that they are most focused on. And we think because we have both sides of the network, we can build differentiated experiences.

So speaking of differentiated experiences, PayPal is one of the largest players in the BNPL space. You benefited significantly from your leading role in online checkout from a distribution perspective as well as the large customer base that you've referenced several times. How do you think about the opportunity of BNPL for PayPal and within your customer base?

Yes. I love Buy Now, Pay Later. It's something that customers are moving more and more towards, especially as we've seen more customers that are forsaking traditional credit cards and using either a debit purchase or a balance purchase and then moving towards some sort of BNPL purchase when the price tag actually goes up. But BNPL is also not a one-size-fits-all product. It's really ideal for a high purchase price product, but you shouldn't be buying your coffee with Buy Now, Pay Later. And so for us, it's one of the instruments or one of the vehicles that we want to have in the portfolio so that we can meet customers where they are. And when they go to check out and they check out with PayPal, if you've used our new experience that we've rolled out online, you actually now start to get all the different experiences that PayPal was able to bring you, whether it's a debit experience, a balance experience, whether it's a credit card that we're able to provide or any of the other instruments that you put into your wallet or buy now experience. All of those should be available to you, and we should be able to be very transparent to the customer what the right experience is for that moment for them, for their personalized outcome. And so Buy Now, Pay Later is an important element. It's something that is growing fast for us and will continue to grow, but it also needs to just be one of the elements as we think about all of the different credit offerings or all of the different experiences for our customers.

Maybe zooming out on the credit offerings. The company has had a lot of solutions in the market for a while. I think the trend over the years has been to lessen the capital intensity of the business, take more of a partnership approach. So is that still the strategy? And just how do you think about kind of the role that credit solutions have in the business going forward?

Yes. Again, I'd go back to -- we need to have all the different credit opportunities that meet our customers where they are, meet the demands that our customers have in front of us. But I think the strategy of working with partners and continuing to externalize some of our credit solutions is the right strategy for us. It allows us to be nimble. It allows us to be quick and focused on innovation and leverage the breadth of partnerships that we have.

Makes sense. So maybe switching gears. You made a big hire to run your advertising efforts, and I got a couple of questions over time on just what the advertising opportunity is for PayPal? How do you kind of frame where you are today and maybe some of the goalposts along the way towards that being a bigger part of the story.

Yes. So I'll go back and share a little bit of, again, the challenges that merchants are having as they find the right customers. This is really about data and it's about being able to be personalized and strategic with your advertising dollars. Right now, when we look at both large enterprises and then the full long tail all the way through to small businesses, there's a lot of ad dollars being spent in sort of general spray and pray type of advertising. It's not targeted. It's not all that effective and the costs are going up. We have unique data and a unique experience with consumers. We've actually seen not just their intent of what they're searching for, but we've seen their actual purchases. And we're building profile information for those consumers. And with their permission and with their ability to adjust it, we can actually leverage that profile information and give our merchants the ability to target exactly the right customer that they want at the right time and have that advertising be effective in the ROI that they want to spend. So imagine that a customer shows up on a merchant's website and you already have that profile information. You know that they are size large, their favorite color is blue and their shoe size is 11. Our ability to provide that as an API and allow that merchant to be able to adjust their website, adjust the checkout experience, create a buy now experience at that moment because they have personalized information, we are the only ones that can do that because of that consumer ecosystem, the personalized information of their purchase information and the relationship that we have with the merchant to be able to embed that in. Again, it's leveraging this commerce solution that we're moving towards that allows us to play both sides of the ecosystem with each other. We also are starting to build more and more visibility and opportunities for merchants to actually get in front of customers through our experiences. So if you go to the improved PayPal application over the last few weeks, you actually have a significant shopping experience built right into the PayPal app, where we're having more and more advertisers using that visibility to be able to say, hey, I want to target that customer with exactly this personalized sweater that I know they want to have. Or as we start to think about what are the journeys that people are on because we know that they happened to buy a tent recently, we can infer that they're going camping. So what are the types of experiences that if you are a merchant or an advertiser that wants to target that user, you can start to get very surgical with that ad spend. And again, you're paying for it through conversion. And so again, we think that there's an opportunity for us to really move into the ad space to disrupt the way people have thought about it in the past, and it's an exciting opportunity for us moving forward.

Makes sense. Shortly after you took over, you spoke about refocusing the organization on a smaller number of initiatives, cutting resource allocations to noncore activity. And I think there were kind of split between sort of legacy business lines, but also just legacy integrations. Is there a way to kind of quantify the impact that those things have had on revenue and gross profit over the last year? Can you help contextualize where we are in that process?

Yes. So we're continuing to -- as any new management team would sort of go top to bottom through the organization and think through what is core, what do we really need to focus on. And what are things that either we divest or we start to wind down or we start to strategically pivot and leverage in a different way. We're making good progress. I'd say we're still in the early days of how we think about assessing every single part of our business. But the most important part is our focus. We're a very large organization with lots of opportunities. One of the things that delights me about the company is when we look at all the opportunities for growth, they are numerous, but we can't do them all at once and they're not all created equal. And there has to be a sequence and there has to be a focus of where we spend our time and our energy. One of the things I'm most proud of over the last year is that we have really honed in our energy on just a handful of things. And we're now starting to see meaningful progress. So we needed to focus on improving our core checkout experience, particularly on mobile. We have done that and the experiences we're rolling out, we're now seeing significant improvement on that customer experience and the conversion rates, both online and on mobile through those experiences. We focused on ensuring that we could bring an amazing guest checkout experience to market. We focused on that and delivered Fastlane. We launched it in August. You've seen the partnerships over the last few weeks with Adyen and Fiserv, and we'll continue to roll that out over the coming quarters to as many merchants as we can. We focused on becoming an omnichannel solution. And you've now seen us launch PayPal Everywhere, starting to move into NFC, starting to really think about how we focus the organization so that we can provide our customers with an omnichannel experience. That's what we wanted to spend our time on right now. That also means that we've delayed things or have had to stop doing things in order to be efficient and effective as an organization. So again, no shortage of growth opportunities, our ability to stay very focused and maniacal on what is most effective for growth for the organization is going to be one of our strengths going forward.

Got it. So I know it's early. The company is still in the middle of kind of a multiyear strategy transition. One of the questions that we get most often is how to think about the gross profit growth algorithm and what that could look like over time as you execute on some of these initiatives? So I mean, looking several years out, do you have any updated thoughts on the growth and the earnings potential of the company?

It's a great question. We are -- as I've said from the beginning, this is a growth organization, and we are focused on continuing to drive profitable revenue growth. We think we have the right formulas to get there. And when we're ready to share that, we'll hold an Investor Day and invite you all and unpack it for you.

I had to ask.

I know.

Okay. So in addition to simplifying some of the business activities, you've also exhibited a lot of cost discipline. You've restructured compensation structures. You're guiding to a very modest increase in expenses. How much more room is there to drive further efficiencies in the business?

Yes. So first, this is a growth business. And where we see opportunities to invest in growth, we will invest in growth. That said, what I just mentioned in terms of just focusing our energy as well as leaning into more effective ways for us to leverage the business, taking manual labor and manual work out of the organization, putting more and more into automation and into AI, we're very early in that journey. Every organization is in a different path in that journey. I'd say we're in the very, very early innings of being able to really take an incredibly effective organization, but one that has relied too much on manual work and start to drive more and more automation. So I think there will be more opportunities for us over the coming quarters and years. None of this is an immediate fix, but I get excited about being able to drive cost out of the business and invest in growth.

We've got just about a minute left here, but maybe we'll end on the capital allocation front, PayPal has leaned more heavily towards capital return over the past year, buying back, I think, $6 billion of stock this year, generating a lot of free cash flow. Is PayPal a capital return story now? Or is there a lot of M&A still to come? What is the bar for M&A today? How do you kind of evaluate when the company is ready to step back into that?

Yes. So we started the year with $5 billion in free cash flow. We raised it to $6 billion and putting all of that into buybacks. Right now, where we are as an organization is we see a lot of opportunity with the assets that we have to really focus and drive growth within the organization. We always are looking outside. We have to and make sure that we have a significant inorganic lens on the market just for the scale that we're at and the opportunities in the environment that we play in, that's prudent for us. But right now, our focus is on taking the assets that we have internally and making them really hum and grow. So that's our focus now.

Great. Well, Alex, I think we're out of time. Thanks for joining us. Everyone, please join me in thanking Alex for his time today.

Thank you.