PayPal shares fell Thursday after the company provided earnings guidance that fell short of Wall Street estimates, due to the impact of recent acquisitions. 

Shares were down 2.5% late Thursday morning at $113.80, after closing Wednesday afternoon at $116.66. 

The company announced a $4 billion acquisition of rewards platform Honey Science Corp., in November. In December, PayPal announced a commercial agreement with Latin American payments platform MercadoLibre, for the companies to jointly leverage their scale. 

PayPal in December completed the purchase of a 70% stake in Guofubao Information Technology Co., making it the first foreign payments platform with licensed access to the Chinese online payments market. Earlier this month, PayPal announced a deal with UnionPay International, which will allow the companies to jointly serve consumers and merchants. 

"In 2020, we expect our operating margin to be essentially flat as a result of absorbing acquisition related dilution, while continuing to invest in other key initiatives," CFO John Rainey, said on a conference call with analysts.

The company is also spending to enhance Venmo, international growth, PayPal’s in-store POS and several new partnerships.

The company said the impact of recent acquisitions would impact non-GAAP earnings by about 8 cents to 10 cents a share, during the first quarter.

PayPal is forecasting non-GAAP earnings per share of between 76-78 cents a share in the first quarter of 2020. Revenue is expected to increase about 17-18% on an FX-neutral basis to reach $4.78 billion to $4.84 billion.

For the 2020 year, PayPal is forecasting non-GAAP earnings of between $3.39 and $3.46 per share. Revenue is expected to grow more than 18% to between $20.8 and $21 billion. 

The company reported a 14% increase in net new active accounts in the quarter, rising by 9.3 million to 305 million. 

Transactions rose by 21% to 3.5 billion in the quarter, while total payment volume rose by 22% to $199 billion. 

PayPal reported a double-digit increase in user engagement, growing 10% to 40.6 transactions per user account. Mobile accounted for much of that increase, representing 44% of total payment volume.

Venmo, the social payments unit, processed more than $29 billion during the quarter, an increase of 56% over the prior year.  Venmo ended the year with 52 million active accounts.

Schulman noted that Venmo signed a deal with Synchrony last year to provide a Venmo credit card and he announced Wednesday that Synchrony was the exclusive network provider for the card.

For the year, non-GAAP earnings rose 28% to $3.10 a share, while revenue rose 19% to $17.8 billion. Excluding unrealized gains, the company reported earnings of $2.96 a share, a 25% increase from year-ago figures. 

Revenue increased 17% in the quarter to $4.96 billion.

Cover image: PayPal

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