PayPal explores sale of its remittance business

PayPal is pressured to sell its remittance business Xoom, Coinbase launches Coinbase One in Europe, and Lightspeed stock plummets on soft guidance

May 19, 2023

Hi!

Lightspeed was the last Fintech company to report its first-quarter results, and the earnings season is officially over! The reported results were not as bad as feared, with most companies beating expectations. I should probably write a summary, but in the meantime, here are three stories to wrap up this week:

  • PayPal is pressured to sell its remittance business Xoom,

  • Coinbase launched a subscription service, Coinbase One, in Europe, and

  • Lightspeed stock plummeted on soft guidance

Thank you for reading and have a great weekend!

Jevgenijs

Please help me spread the word about the “Popular Fintech” newsletter 👇🏻

PayPal Explores Sale of its Remittance Business, Xoom

PayPal (NASDAQ: PYPL), the Fintech pioneer, is facing mounting pressure from shareholders to explore a potential sale of its subsidiary, Xoom, according to The Information. Xoom, an international money transfer service, acquired by PayPal for $890 million in 2015, has struggled to gain significant traction in the competitive remittance market. By divesting Xoom, PayPal aims to optimize costs and re-allocate resources to the company’s primary payment services, PayPal Checkout, Braintree, and Venmo. PayPal has been aggressively cutting costs to boost share repurchases since the activist investor Elliott Management took a $2 billion stake in the company last year. This included laying off 2,000 employees, or 7% of the workforce in January.

Coinbase Launches its Subscription Service in Europe

Coinbase (NASDAQ: COIN), a leading cryptocurrency exchange, announced the launch of its subscription service, Coinbase One, in the United Kingdom, Germany, and Ireland. The service will be rolled out across the whole European continent in the coming months, according to Techcrunch. With Coinbase One, subscribers gain access to exclusive benefits such as zero trading fees, faster customer support, boosted staking rewards, and exclusive offers from partners, including Messari and CoinTracker. This move comes as Coinbase aims to strengthen its position in the European market, as well as diversify its revenue stream. Coinbase One was initially launched in the United States in 2021.

coinbaseone infographic 1600x1016px

Image source: Coinbase Blog

Lightspeed’s Stock Plummets on Soft Guidance

Lightspeed (NYSE: LSPD), a Canadian point-of-sale and e-commerce solution provider, reported its fiscal year 2023 results yesterday (the company’s fiscal year ends on March 31). Gross Payment Volume increased by 76% YoY to $14.7 billion. Revenue increased by 33% YoY to $730.5 million, and the company posted a Net loss of $1.07 billion, due to a $1.05 billion goodwill impairment. Adjusted EBITDA was negative $33.9 million. The company’s stock plummeted 12.63% after the earnings release, as investors were disappointed with the company’s guidance. Thus, Lightspeed’s management guided for $875-900 million in revenue for the fiscal year 2024 (Q2 2023 - Q1 2024), representing a 21% YoY growth at the midpoint, and committed to delivering a “break even or better Adjusted EBITDA.”

Lightspeed’s competitors include Block’s Square (NYSE: SQ), Fiserv’s Clover (NASDAQ: FISV), Toast (NYSE: TOST), and Shift4 Payments (NYSE: FOUR). Square and Clover are part of bigger organizations (Block as Cash App, and Fiserv has Carat) that have multiple levers of growth, but it makes sense to compare Lightspeed’s stock performance to Toast and Shift4. As you can see from the chart below, over the last year, Lightspeed has been underperforming both, its peers, and the index.

Cover image source: PayPal

Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.