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

All right, guys. Let me kick in. And first of all, thank you again for everyone here for joining us at day 1 of the Wolfe FinTech Forum. Really happy to have the team from PayPal here with us. And we have on stage Jamie Miller, who, as many of you know, is the CFO and the COO of the company more recently as well. So Jamie, thank you so much for joining us. Really great to have you here.

Yes. Happy to be here. Thank you.

I remember, I was just saying about a year ago, I think you were really almost -- it was probably your first conference, right, as the CFO of PayPal. And so, it's great to have you back with us.

Thank you.

Look, with that in mind, maybe we just kick it off in that way and start off with a little of what you've seen over the past year in terms of what you believe are some of the most exciting milestones from 2024 and maybe how you exited the year and we'll go from there because there's a lot to unpack.

Yes. No, happy to. And again, thank you for having me here. And yes, this was my first conference that I did a year ago. And a lot has changed in the company. I've been there 16 months. And we have pretty much refreshed the company top to bottom in many respects. New management team really refocused last year on getting our operating rhythms in place, really putting a lot of structure in the company. I kind of rebuilt the finance team, top to bottom them. But the primary focus for us was inflecting the company to growth and just really establishing that foundation from where we can move forward as a company. And I'm really excited because we had our Investor Day a few weeks ago, and I think we are very, very clear in terms of what we need to do and how we're aligned to go execute against it. And to me, that's probably the most exciting thing about last year's execution. And we had a nice year, and you saw that in our fourth quarter results, too, in terms of how we ended the year with positive transaction margin, up about 800 bps over the past couple of years, revenue growth, earnings per share over 20%. So it was a nice foundational year for us.

Definitely had a lot of change from where you exited 2023 into '24 and to where we exited and from a trajectory standpoint. What are you most excited about going forward now? I mean, just big picture for a moment and especially coming off of 2 weeks, I think it was now removed from your Investor Day. I mean, what are some of the most incremental points and takeaways from that day? You want us to make sure we're aware of that leads into what you're most excited about going forward now?

I think when we look at PayPal, we see a massive opportunity with our 2-sided network and the market positions we have with our products. And as I mentioned, I'm really excited about the clarity we have around our strategy that as we really lean into consumer and habituate folks around how they work with the PayPal brand, the PayPal app, branded checkout, it really yields in terms of monetization across all the pillars of the company. And so when you think about Investor Day, to me, the 3 pillars are winning branded checkout, how do we do that? It's about growing omnichannel and growing Venmo, and it's really around -- really leaning into processing in a profitable growth sort of way. And that's the story we laid out. And I think the other piece of it is that as we've really sort of studied the cohorts and looked at our experience, how self-reinforcing it is around habituation elements and the growth elements once we get all of those moving in concert.

So tell me more about that. I mean, in terms of making sure investors come away from that Investor Day understanding a couple of key points, the network effect is huge. Having the consumer base you have is obviously something that's probably still in our view, underappreciated, but really understanding what you can bring that all together as that was the message, right, is what that could look like in terms of both the results on branded and unbranded. So what are your hopes for the end of '25 to see that we really shows that the Investor Day message was materializing?

So maybe it helps if I unpack just a little bit of those 3 pillars, and then I can lean into the '25 side of it. So when we think about winning branded checkout that is a really core product for us. It's really important. And we have, in the past, really leaned into the working with our merchants part of it very closely. I think as we've broaden the aperture, that is still a really important pillar. So one of the things we're very focused on is really improving our merchant experience and our conversion uplift and our consumer experience with the app. So driving stronger selection rates, better presentment and just improving latency and just driving lift in our TPV through making the product better and deeper relationships. But the other 2 pillars, which hadn't been as tightly connected, one is Buy Now, Pay Later, and we are a very significant Buy Now, Pay Later company, but it had always been run very separately in the company as opposed to being highly integrated. And we've taken a lot of steps in '24 to really reintegrate that back into the pay flow, get that front and center with our consumers and have that be a core part of our offering. And so that should be a significant part of how we move branded checkout, the needle on that over the next couple of years. And then the last is Pay with Venmo. And anybody who knows me knows I get super excited when I talk about the Venmo product because we're just doing so much with it. But Pay with Venmo in particular, is something that has been great for our merchants, particularly those who are mobile first, but it's also something where we've seen very significant growth. So those 3 things together sort of bring you to our 3-year outlook on branded checkout. But in '25, what we've said and what we expect is that we'll see pretty consistent branded checkout TPV growth this year versus last year. And then when we look at Omni and Venmo, we've really been leaning into the off-line experience for our consumers because we really want to habituate around the brand. And so offline, meaning the debit card penetration, how we really lean into rewards and loyalty and other elements of that. And then on the Venmo side, just bringing more features and more also debit penetration. But taking this whole space around PSP, consumer experience, and really moving that needle as well. And then the last piece place the PSP piece of it, is beginning to really inflect the revenue there. We've made some very intentional decisions in that business and really putting that back on a trajectory of revenue growth in addition to the margin growth of...

That's a great overview from what you wanted for takeaways from the Investor Day. I appreciate that. Let's just go back to guidance now in terms of your medium term and your outlook overall. I mean you've talked about right now mid-single digit in terms of where we were medium -- in terms of gross -- I'm sorry, transaction margin growth. But you're calling for high single-digit transaction margin growth ex float by 2027 and a long-term ambition of 10% plus, obviously. And so maybe just walk us through the bridge of how we go from where we are today to that high single then maybe even hypothetically long-term 10% plus if we can get there as well?

Yes. So the bridge to that high single digit is really the framework I just laid out. It is winning in branded checkout. It is deepening penetration in Omni and Venmo monetization, and it's the processing growth that we talked about. And if you look at all of that, we just expect each year to be better than the last in terms of how that progresses and how that shifts over time over that 3-year period. And then when you look at the long-term ambition we put out, it's -- we felt it was really important not only for our teams, but really for everyone to understand, like when we're investing for the future, like we're really thinking about that as our North Star. We want to come back to our teams really have them understand when we are investing, when we are executing and when we're really nurturing some of these longer-term growth factors that it is not about incrementalism. It is about really leaning into the notions of commerce platform and real growth. And so having sort of the medium term, coupled with that longer-term ambition, we felt was an important part of keeping that in front of us.

Okay. Jamie, if we go back to fourth quarter for a minute, I mean, branded volumes grew, I think it was 6%. It was about a 50 basis point acceleration. You talked about U.S. had shown almost 300 basis points of acceleration in international which is about 60% of the business, if I remember correctly, from a branded standpoint, had decelerated about 100 basis points. So maybe just walk us through the varying dynamics for branded from a regional standpoint for a moment. And what's macro, what's something you have control over? And what do you see the trajectory looking like?

Yes. So -- and when you look at branded in fourth quarter, 6% TPV growth. The U.S. piece of it, we were really encouraged by. We saw a 3-point lift versus third quarter. And we have spent a lot of time over the past couple of years diversifying around different sectors. We saw nice growth there in travel in gaming and in crypto. And when you look at international, we have a very, very strong market presence internationally and very strong share profile there. And so when you looked at that, we saw a little bit of shifting, as you mentioned, but still taking share and still very strong growth. But when you look at how we're investing in the markets, the U.S., we are there to win. I mean the way of the organization is around how we're investing in product in the U.S., how we're deepening with merchants in the U.S. and that is something is a core part of our execution. And then on the international side, it's really around continuing to refresh the product and bring innovation there. All the things we're talking to you about whether it's Omni and debit or the merchant conversion uplift or the consumer experience. All of those are now being -- going into Europe as well this year. So we've got nice execution plans around that.

So just to take a step back again, and I want to stay on branded given how important it is for investors and for the story overall. But I mean, you had accelerated, as you said, 3 points. So just help us understand the cadence of what U.S. was maybe before that, where it's been trending towards and what you see more recently and opportunities into this year as well from a cadence standpoint?

Yes. Well, as we've said before, when you look at our 6% growth, I mean, international was growing stronger than that. U.S. was growing less than that. So I would say low single digits in the third quarter and then in the fourth quarter, moving up from there. In terms of more recently branded TPV through February was consistent with what we've seen. It's obviously a very dynamic environment and we're cautious and we're watching that. But it really gets back to -- we're very focused on execution across our strategic initiatives and managing what we can control, which is investing in our product and continuing to drive very strongly.

And internationally, I mean, again, you talked about a couple of markets having just some macro dynamics and maybe there were some other dynamics also. Maybe just explain what you were seeing internationally that drove that mild deceleration last quarter and what you see from a trajectory there also?

Yes. So I mentioned on our fourth quarter call, the U.K. and Germany. And I would say, for different reasons, those markets dipped a bit in the fourth quarter. But again, I would say internationally has continued to perform very strongly this year. A little bit of noise around the German elections, but that's popped right back but largely still investing and executing.

Good. When we think of the bigger picture targets, once again, on branded specifically now, even just going back to the Investor Day, you expected branded volume growth to accelerate from that 6% level or the mid-single-digit level up to you've said 8% to 10% by 2027. And I know there's been building blocks of conversion improvements as well as investments in marketing. So maybe just revisit that again. Number one, just what -- what's the cadence around the investments you're making? Where do you see them actually impacting the volume growth on branded -- from a branded standpoint. And the time line of getting to that 8% to 10%? And what are you seeing?

Yes. And what we look at is over our 3-year outlook getting to that 8% to 10% starting with the 6% base. And just to unpack the merchant experience piece of it, a little bit more we started mid last year to focus on not only changes to the consumer app experience, improving latency, improving features, improving just how it performs in connection with merchant checkout but also really focusing on merchant conversion uplift. And we have been working over the past 6 months to really get that rolled out, get that pushed out in the experience. And we're probably -- well, as of Investor Day, we were at about 30% U.S. penetration on that. And we are continuing to work on that this year. We'll begin to roll that out in the U.K. and in Germany and in parts of Europe in the second quarter. And then also at the same time we've done a ton around brand and marketing in the company and really engaging the consumer differently. So you saw us come out with our Will Ferrell campaign in September and October. You've seen us come out in different ways with rewards programs in loyalty and cash back. And all of that has had a really nice impact on not only our monthly average accounts but also on selection rate and how just people are engaging with us in a different way. And so those kinds of investments are the things you should expect to see more of this year as well, really centered around how we're launching product and around the big buying periods within the year. But when you start to look at some of the other stuff I talked about before around Buy Now, Pay Later or around Pay with Venmo. Buy Now, Pay Later is super interesting because it's been part of PayPal for a long time. But Michelle Gill came in last year, and she's just a very, very deep credit financial services, capital markets leader and rebuilt the team top to bottom, really evaluated all of the products, really rebuild our risk function. And credit is back to growth in the fourth quarter. But if you remember, we're not in the credit business to be in the credit business. We're in the credit business to really enable all of the other parts of our business. And Buy Now, Pay Later is one that now with it much more tightly integrated -- we're moving the needle. And so we expect that over the next couple of years to have about a 20% CAGR in our growth on Buy Now, Pay Later, which really brings against a nice uplift into branded. And then the...

That contributes about a point, right? So the potential...

It will contribute about a point. So the first winning check out the merchant experience piece should be a point or 2; Buy Now, Pay Later should be about 1 point of growth over the next couple of years; and then Pay with Venmo another point. And...

Okay. So that's your 3 points, incremental to the mid-single-digit range you're in now?

Yes.

Okay. And that's really helpful clarity. I mean I guess the conviction you have of going 30% U.S. to 80% globally on that modern checkout is a big deal. It doesn't seem like intuitive for investors to understand how you're going to get it done. So just help us understand what goes into that and why you have conviction in that? Because I know it comes with a great conversion uplift to have someone on a single checkout or a vaulted checkout.

Yes. Our conviction really comes from the fact that there's maybe a few pieces of this in terms of how you execute. The first piece is really things that are largely within our control. And things that we can do that -- and push out with merchants or push out with consumers that naturally drive the experience to be better and the conversion uplift to happen. As I mentioned, we're already at 30% penetration within the U.S. And between the U.S. and what we can roll out in Europe, there's still a significant amount of execution that is just that. When we start to look at Europe, a lot of our merchants are ready on our latest integration. So the uplift for them. It's not a ton of work, and it's something that we think can come pretty quickly once we move into Europe for execution. And then there's also a fair number of merchants here in the U.S. and outside of the U.S. where we have to get them on the latest integration, and we have to do work with them to really get it integrated into their checkout flow. And we're in the market talking to merchants now about lining that up. You mentioned the conversion uplift being super exciting. It's really compelling. We're seeing at least 100 bps of conversion uplift in some cases, 300, 400 bps of conversion uplift. So it's very compelling for folks to do the work. But we've got to get it in the queue now so that we either hit it before the holiday season or already in '26 to really get that going into the '26 holiday season as well. So we've got about a 2.5-year period here, and we're just very organized around how we're going after it. But I expect you're going to see acceleration, some plateauing while we really do some of the heavy lifting and then more acceleration.

Okay. Shifting to the consumer engagement side for a moment. Obviously, the checkout experience we spent a lot of time talking about right now going to 80%. But we still -- and I think I even asked this in your Investor Day, we still want to see the kind of the fire ignited again under the consumer to want to use some of these -- some of these great products you have. And I've said this before. I mean, I think it's still under appreciation that you have 230 million monthly active users that you have data on that are engaged with you on a monthly basis. And so it should be very doable to get them more and more engaged from a what is it, roughly 34x or so per year now. And so -- maybe help us revisit again, whether it's loyalty or what you're expecting from a marketing campaign standpoint from going forward, that will help really drive that incremental engagement?

Yes. Well, so for us, it's multipronged. But I'll first start with, we had to reinvigorate the brand this year and that's why when we really hit the market with our Will Ferrell campaign and really looked at top of the funnel, really bringing that brand energy and the awareness back, we wanted to energize the brand. So that was a piece of it, and you'll continue to see that. But when you get down to how do consumers engage, there is the experience of the app itself and the ease of use, the contact sinking some of those kinds of features, which we have really spent a lot of time on improving the app, but it also gets to how do you reward people for being there. And we rolled out a campaign in the fall around not only debit card penetration, but also 5% cash back on debit card transactions. And we're also doing a lot of co-marketing, if you will, with our merchants, where we're having merchant offers embedded in the app and the ability to stack those things and have them all together collectively give a lot of money back to consumers. So it's a number of different ways, but it's about helping people not only be there, but stay there, but then get rewarded as they do. And what we found is we've grown our debit penetration by over 1 million users in the fourth quarter. In addition to that, what we're seeing with the debit habituation is a really nice halo effect into branded where we're seeing about a 20% lift with those debit users back into the branded product, which is awesome as well. We don't want them keeping their money where we want them, the transaction is flowing through all of the -- the products we have.

Right. So then what do we expect for this year? I mean another big marketing campaign like a Will Ferrell campaign again at some point this year, similar? I mean it's not one and done, I guess this is my question.

Certainly not one and done, and they're working on that right now. It's awesome. I just saw our Chief Marketing Officer in the hallway this morning, and he's very excited about it. But it will be -- we are going to spend time on brand. We have to continue to bring that back to the energy level it deserves. But we're also moving more deeply into more of the mid-level and lower funnel marketing and really looking at strong paybacks there, but in terms of how we do it. It will be through partnerships. It will be through ads and offers. It will be through just different ways of engaging the consumer and...

And a little more of a balance, I guess. You have all the data on the consumer to really be more targeted, if you want to be, right? So we have a few hundred basis points from a combination of Buy Now, Pay Later and Pay with Venmo and conversion checkout and marketing behind all that. But again, this takes time, right? So our expectation is still mid-single digits for this year, maybe some inflect -- a little bit of evidence of this as the year progresses. I'm just -- I don't know if you can give us a sense of what the cadence was for this year. I think it was more just mid-single digits, right?

For branded?

Yes.

Yes, for branded. We said consistent with last year. And certainly, as we look at it, as we execute, we expect to see the ramp over the 3-year period. So you should see inflection later this year as we go into next year.

Got it. Very helpful. All right. Let's shift to Braintree and just generally what you've done there. I mean it's been a big transformation, obviously, from what was really a much lower cost opportunity for some customers to hopefully cross-sell and think you've really pivoted back to being really just make sure it's a profitable business, right? So just talk to us a little more about the price to value motion the last few quarters and really just unbranded now contributing to transaction margin dollars and the growth rate of it. What does the forward trajectory look like for that initiative now? And maybe we'll start there and go a little more into it.

Yes. So one of the first things we did when we came in a year ago was really study this business around, number one, our mission was to really pivot to profitable growth. But we also really wanted to understand exactly how we were hitting the market. And so we tore the business apart, top to bottom and really looked at sort of our merchant value prop, our products, our services, what our performance levels were and really understood kind of what did our margin profile look like relative to our peers in the market. And as we did all that, what we found is we have a very strong merchant value prop. Our performance levels are excellent, world-class. And the question really came back to, okay, if all that stuff is true, why aren't we taking more of our seat at the table in terms of how we put product around it, how we work with our partners to really drive a much more holistic value prop around it. And that's what we set out to do last year. So we've got a really rich cross-section of big accounts we work with in Braintree from mega merchants to thousands of large enterprises and really set out to look at the contracts where we just really weren't feeling like we were where we should be, not only for us but for them in terms of servicing them. And either as they've come up for renewal or in some cases before they've come up for renewal, started a process of opening them up, opening up the conversation and getting back to how can we be more strategic together. And that involves core pricing. It involves deciding which services are win-wins for both of us and which ones may not be, but it also gets back to value-added services and building out a much more complete portfolio of that. And it's really funny too, because when you look at core operations, there's a lot of fees and prices that flow through these kinds of businesses. And the other thing we found is we're just not passing through price or like doing some parts of the core daily blocking and tackling of the business that everybody else does that we should be doing too. So there's a whole range of things we're tackling here. What I'm really excited about is we have a new leader in Braintree, came in about 6 months ago. He is tackling this, and he's on fire about it and just really has the full vision. And he's -- he's done a very nice job of table setting with our strategic merchants and repositioning and just setting the business up for the future. And we get a lot of questions around how do you think about repeatability of growth? Is this onetime because you're opening up a contract. And that's what I love about it the most is he's building the business. And -- so we did, in the second quarter, see the first quarter of Braintree contribution to TM growth that we had seen in a while. We've seen that since every quarter and we expect a nice trajectory over the next 3 years.

Yes. I was going to ask you about that because it's sort of a question of what's the forward trajectory of this, just given how much you've already done. But you guys have commented on how it has more to go, not just because of repricing, but just value-added services on top of that. So help us frame that? I mean is this a multiyear contribution of TM growth?

I view it as multiyear for a couple of reasons. One is simply when you do the benchmarking and you look at the geographies where we have still yet to grow and have huge opportunity. When you look at the types of products like OVAS, where we haven't yet fully penetrated. And when you simply look at margin yield, us compared to competitors, there is a significant difference, and we have a right to win. So that's number one. The second is when you look at how we're actually running the business and the team we have really leaning into it now, there's very strong execution opportunity in front of us, and we're hitting it.

And so where are you on the volume shift though? I mean that's another question we get is, obviously, you've seen the branded -- the unbranded volume obviously decelerate as you make this transition, where do we level off and inflect on that?

So we've seen some impact from the negotiations that we've had and partly because in the past when we negotiated, we were really wanting to secure a very high percentage of volume. And as a result, we gave some things up in order to do that. And as we are moving into just more strategic kinds of relationships, we're willing to release some of that volume intentionally deliberately in order to have just a healthier margin profile on the overall relationship. And so you've seen some of that derouting start to happen in the fourth quarter and into this year, we expect it to happen. And so in the first half of this year with respect to Braintree, we do expect lower growth, still growth, but lower growth than what we've seen before...

On the volume side, you're saying?

On the volume side. And then as we get into the second half, growth should resume and we'll see that move.

Okay. That's really helpful color. All right. Let's shift gears to the Venmo monetization. I mean, again, you talked about an exciting opportunity with Pay with Venmo now. And it's definitely an area that you would think should be a big contributor given the activity and how active the 60-plus million users are. I think you said, again, you expect it to grow. I think it was a 40% CAGR through 2027. And so just remind us again, what's going to drive this growth algorithm now for the next couple of years to that kind of CAGR? And just maybe a little more on the momentum you're seeing on Pay with Venmo usage across both the merchant and the consumer base.

Yes. And if you don't mind, I'm going to expand it and talk about Venmo and also Pay with Venmo. Because Pay with Venmo is one piece of it, but Venmo is an asset we've had for a long time that has been when we just haven't -- we've kind of let it run itself. And it's been a very vibrant product. People love it. But we have a lot of opportunity to monetize and to really work with consumers differently. And part of that is how the core app works sort of a same story here. Really making the ease of use, how we add new features like Venmo groups, contact syncing, just different elements of it so that people can engage and stay. But part of it, too, is really getting it into omni and getting it into off-line usage. And I use Venmo all the time through -- at the point of sale, where I've got my Venmo debit loaded and people pay me for something, and I tap to pay and use Venmo debit as my credit or my debit payment method there. That is a huge growth vector for us. And when you look at, again, some of our peers out there, we are highly underpenetrated in terms of how both Venmo and PayPal for that matter, are penetrated in debit usage. So that's a big piece of it. And then Pay with Venmo is another piece. And you probably -- I don't know, you may or may not have used Pay with Venmo yet.

I did. Actually, on a food delivery, on the screen actually...

And it's awesome, right? It's delightful...

It stays in actually, and it doesn't -- it automatically clicks through now.

Yes. And it's super-fast. It's really cool the way it works. And so how it's engineered with mobile is a delighter for people. And it's something that our merchant population, as you look at it, starting with merchants that are sort of mobile-first. It's a real winner of a product.

Yes. Okay. That's exciting. I mean, I think, again, just to get the word out though, it's going to be part of the marketing campaigns that you're doing?

Part of the marketing campaigns, absolutely. And you saw that again, with some of the work we had done last fall where that was all around PayPal Omni. And as we get into this year, you'll see more around Venmo and PayPal both.

Can I ask -- so you mentioned omnichannel, and omnichannel has been something that we've heard fits and starts from PayPal over many years. And so now we're talking more about it again. You have a partnership with Verifone, obviously, right, which I think it's going to enable software embedded in the terminals to automatically accept it as well. But maybe just expand on what that partnership even is and how does it really help? But bigger picture, just what are your aspirations from a physical and just broad omnichannel capability?

The Verifone partnership is important for us. It's foundational in the sense that it allows us to really broaden into point of sale. And candidly, when you're a Braintree and you're competing with others who have different kinds of partnerships and different kinds of point of sale or off-line capability, you need it as part of your offering. And that's really a core part of it. I mean there are RFPs where we can't participate because we don't have that kind of capability embedded inside PayPal. And so the partnership just at its base is really important from that perspective. But I also think that there are elements around building towards the commerce platform, elements around how do we become more holistic, not only for our merchants but our consumers that I think the Verifone partnership is going to help us unlock and I think it will be really good for us.

Okay. Just touch on PayPal Open. It was a big topic at the Investor Day, and maybe help us understand what it does for the business a little bit?

Yes. PayPal, we have amazing assets. I mean we really do. When you look across all the products we've been talking about and small business. The problem has been is they've been individual assets in the company that we have bundled together to bring to merchants or in some ways to consumers. And what PayPal Open does is really bring that under one umbrella. And so from a merchant perspective gives our merchants a single way to access everything we have to offer in a much more seamless and integrated way. But equally importantly, from an internal perspective, it involves a lot of platform convergence for us over the next couple of years. And as you can imagine, platform convergence means speed of engineering velocity, it means being able to ship a lot faster on a lot more things. It means reducing duplication and duplication of effort, so cost reduction and ability to remix and invest in different ways. And it allows us also to integrate our product in different ways. Like today, if you're a Venmo -- if you have a Venmo account, you can't send me money on my PayPal account. And so being able to integrate these backbones in different ways is also going to give us better consumer experience opportunities.

Okay. That plays into the SMB strategy also, obviously, right? And so maybe just touch a little more on what the mix is now from an SMB standpoint for the business and what the strategy is there. We've all watched PPCP a little bit. And so I'm curious to know where you are on that -- on that road map.

Yes. So 2023 we spent time as a company, shifting the product base and really building out and launching PPCP, that was coming online then. But in addition, we deprecated a lot of old product. And so '24 was about growing PPCP, beginning to build out value-added services around it and really stabilizing and inflecting the business, and we did that. As we move forward, it's really about 2 things. One is really taking the value-added services we already have, whether it's invoicing or other things like that, really building those in so that it's a much more seamless integration, and it's also about building out or bringing in partners who can do the same as well. So having a very holistic offering to our SMBs that with low-code, no-code solutions, we can come in, in a different way. We also partner with a lot of partner platforms. So we're a big partner with Shopify, BigCommerce, Woo, Wix, all of those. And so how we partner with them can either be to process payments. It's also bringing our branded marks, but it's also selling value-added services and Buy Now, Pay Later through them as well. So all of that is in the mix of this SMB plan.

Very helpful. Just in interest of time, I'm going to ask a question about expenses real quick, just because it's obviously been great to hear, I think, from you guys the discipline and see the discipline on expense management. I think you talked about what, for -- well, first transaction margin guidance, like we said, 5% to 7% this year, and then accelerating hopefully, to high single digits by '27, right? But you're talking about expense growth being roughly half, I think or less than half the growth of transaction margin growth, if I'm not mistaken, right? Just help us understand where you're -- number one, is that enough to invest in the business for everything you have to do, so that's effectively a low single-digit growth rate in OpEx, right? And number two, where do you see that prioritization because it does lead to a lot of operating leverage in the business?

Well, that's our framework. Our framework is really to drive strong transaction margin growth and do it -- and to drive operating leverage by only growing OpEx at less than half of that. And so our plan for 2025 is to grow OpEx low single digits. And what we began doing last year is really remixing the composition of OpEx into tech, product and marketing and really taking automation, AI and just frankly, a lot of inefficiency out of the business as we did it. As we look into 2025, it's really more of that same play. We talked about marketing, we've talked about tech velocity. All of those things are things that are very, very core and we're very focused on pushing investment into that. But it -- we have a lot of opportunities still within PayPal to be more efficient. It's around our velocity. It's around the clarity of what we're going after and the focus and the decision-making around that. And it's around having all of our teams focused on that and candidly, repurposing some of our talent and some of our money into places where it matters. So that's really how we look at things. So that's what you'll see.

That's great. Guys, any quick questions? I think we have time maybe for one. Right in the front.

So BNPL clearly is a growing part of the strategy. I would just ask, given what seems like rising competition in that space, what gives PayPal the right to win?

I think we've got an amazing consumer base. We've got an amazing merchant base. And when you put those things together, it gives us a fantastic platform to really work and have that product be at the center of it. And I think that is something that really distinguishes us from others is our more than 200 million consumers in our significant merchant population. But in addition to that, I talked before about what Michele Gill has done with that business, really rebuilding that business, top to bottom and really reformulate a product, really redoing all of our risk vectors of it and thinking about how we price. I just think we are a real sweet spot for merchants and consumers around how they can engage with us in a different way there.

Guys, I want to thank you very much for staying with us. Jamie, thank you very much. That was incredible, and we really appreciate having you guys.