The above graph represents the PayPal total operating expenses by year, starting from fiscal 2012 to recently completed year. PayPal’s total spending increased 13.5% YoY in 2019, to a whopping $15,053 million. The growth was primarily driven by a notable 21.7% YoY increase in PayPal transaction expense.
|Source||PayPal Annual Reports|
|Note||PayPal fiscal year starts from January 1st|
The company has been spending a significant amount of its total annual revenue on transaction, Customer support and operations, Technology and development, Sales and marketing, etc.
With 17.9% YoY growth, PayPal’s total operating expenses surpassed $5,636 million mark for the first time in 2013, representing 83.8% of the company’s total revenue. In just 4 years, exactly in 2017, the operating expenses of PayPal crossed $10,967 million, registering 18.5% YoY growth.
About PayPal Holdings, Inc.
Founded in December 1998 as Confinity Inc., by Max Levchin, Peter Thiel, Luke Nosek, and Ken Howery, PayPal Holding Inc. (NASDAQ: PYPL) was funded by John Malloy from BlurRun ventures.
However, it was March 2000, when Confinity merged with X.com, an online banking company founded by Elon Musk in November 1999. The visionary Musk was quick to visualise the future potential of the money transfer business Confinity was developing. In contrast to that, Bill Harris, the then-president and CEO of X.com, didn’t find much merit in Musk’s thoughts. Soon, Harris decided to part ways was Musk was determined to stay focused on Confinity money transfer service. He was so committed that he terminated the company’s all other Internet banking operations in order to remain focused on the money transfer business.
All these shifts created an impact on Elon Musk’s position in the company he was replaced by Peter Thiel as CEO of X.com. In the following year, the X.com was renamed as PayPal.
The astounding growth of PayPal convinced executives to launch the IPO of PayPal in 2002. After the celebrated acquisition by eBay Inc. (NASDAQ: EBAY) in July 2020 which valued PayPal $1.5 billion – 7% above the IPO price – it was clear that PayPal is en route to become a global leader in money transfer business.
After thirteen years of being under the umbrella of eBay, PayPal once again became an independent publicly traded company.
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