PayPal Financial Results

The following highlights regarding PayPal's performance were included:

• Payments net revenues grew to $243.9 million, up 51 percent year over year growth and up 4 percent vs. the prior quarter.
  
• PayPal's user accounts grew to 78.9 million accounts, up 56 percent year over year and 10 percent vs. the prior quarter. Active accounts grew to 22.9 million, up 48 percent year over year and 4 percent vs. the prior quarter.
  
• Total gross payment volume handled by PayPal grew to $6.5 billion, up 49 percent year over year and 4 percent vs. the prior quarter. Total number of payments grew to 113.2 million, up 49 percent year over year and 3 percent vs. the prior quarter. 70 percent of PayPal's payment volume was eBay-related.
  
• PayPal earned revenues of 3.67% on payment volume totaling $243.9 million, had expenses of 1.08% of payment volume totaling $70.2 million and losses of 19 basis points totaling approximately $12 million.

PayPal's expenses include the funding costs associated with card payments used to make payments via PayPal. PayPal's transaction processing expense rate, likely reflecting both a combination of economies of scale in processing as well as its hybrid cost of payment funding (from cards, via ACH and PayPal accounts), has declined from 1.34 percent in the second quarter of 2004 to 1.08 percent in the second quarter this year -- nearly a 20 percent improvement.