PayPal Holdings' (PYPL) Management on Deutsche Bank Technology Conference - Transcript

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About: PayPal Holdings, Inc. (PYPL)
by: SA Transcripts

PayPal Holdings, Inc. (NASDAQ:PYPL) Deutsche Bank Technology Conference September 13, 2018 1:40 PM ET

Executives

John Rainey – Chief Financial Officer and the Executive Vice President of Global Customer Operations

Analysts

Bryan Keane – Deutsche Bank

Bryan Keane

Okay. I think we can get started. My name is Bryan Keane. I cover the payments for Deutsche Bank and we're excited again to have PayPal. John Rainey is here, the CFO and the EVP of Global Customer Operations. So John, good to see you, as always.

John Rainey

Good to be back, Bryan. Thanks for having me.

Bryan Keane

I guess I just wanted to start maybe a little bit high level. I think it's been three years or so since PayPal separated from eBay. What do you think continues to be the most underappreciated element of the PayPal story and the opportunity by the market?

John Rainey

I think there are two, maybe three things that stand out. The first that I think is underappreciated is – we talk a lot in our business about the significance and competitive advantage of being a two-sided network, and we are that. But you could argue that there are some other two-sided networks out there as well. But we're – we are truly unique, and I believe in a universe of one, is that we are a two-sided network at scale and we control the technology experience end-to-end.

And that allows us to continue to provide innovative products like One Touch or Smart Buttons or even faster funds, and we can see both sides of those – of that network. So it's one thing that stands out. I think another thing that is probably underappreciated by the market is the scalability of our platform at a low marginal cost. It's not something that, if you go back three, four or five years ago, that we have a good track record for of. We've done, I think, a good job of that more recently and we really tried to – I'd describe it as replumbing our business to where we can continue to grow and scale but do it at a very low margin cost, which is the benefit of any technology platform.

Maybe the third thing, last thing I'd point out that is slightly different way of looking at this, but it's the uniqueness of PayPal as a financial asset. And if you think about some of our financial metrics, we're a company that – just take the most recent quarter. We grew our revenue, just round numbers, 20%. We're also growing free cash flow 20%. We've also repurchased almost $3 billion of stock or over $3 billion of stock in the last twelve months.

And there are few companies that have all of those financial metrics together. So it's maybe a less common or unorthodox way to look at it, but if you were to take the revenue growth per share of 20% and add the free cash flow growth per share of 20%. There are a very few companies that I'm aware of that have those two combined metrics growing at 40%, that are a company the size that we are, over $100 billion. So we are truly a unique financial assets.

Bryan Keane

I wanted to ask about some of the partnerships you guys have signed. I think it's 30-plus partnerships in separation. From your perspective, what are some of those interesting or the most interesting characteristics in some of these key partnerships?

John Rainey

Sure, so, I put them in two categories: the financial partnerships and the technology partnerships. With the financial partnerships, be it with issuers and networks, we are a huge digital distribution channel for them. We literally have 250 million points of contact for an issuer if they were to roll out an experience or offer something with a particular merchant. We are that digital distribution channel. We also provide capabilities that enhance the consumer experience but also add revenue growth for both PayPal and issuers.

An example of that would be around risk declines, improving risk declines, or said differently in the jargon of our business, improving the authorization rate. If you take an issuer, for example, on a particular transaction, they're only seeing one side of that transaction many times. We can actually, by seeing both sides of the transaction with our network, infuse our risk capabilities and complement them with theirs to see an increase in the authorization rate or decrease in the decline. That results in increased revenue for them as well as us.

One more example, I think, around the issuers is, something that we've announced that we're launching later this year, is with respect to paying with reward points or loyalty points for banks. This is something we're pretty excited pretty excited about. If you take the top six or so banks in the U.S., they have something like $30 billion each year of reward currency, and roughly a third of that goes unused and sits on their balance sheet each year.

It’s a very illiquid way for consumers to redeem it, and banks have that liability that they don't want to have. What we can do with our technology is offer that as a form of payment for consumers at our network of 20 million merchants across the world. It's the same take rate model with the merchant, so we monetize that in the same way and actually helps the issuers as well. So we're pretty excited about that. The second category I would put sort of in the technology bucket, and you see us continuing to evolve there, a couple of companies that are worth calling out.

Google and Facebook are ones that we continue to partner with and get more entrenched with what they're doing around payments, whether it's contextual commerce in Facebook, where you can complete a purchase, like in Facebook Messenger, without ever having to leave to go to a merchant's website; or what we’re doing with broadly, the Google ecosystem, where we are embedded as a form of payment across any part of that ecosystem.

Bryan Keane

So I wanted to ask about the loyalty reward points because that is a key differentiator and will be for you guys. Will that work so that consumer will have, as long as opted in, they'll be able to spend those points at any merchant location that accepts PayPal and it can be seamless? And then I would guess that the margin on that transaction is probably better for you guys than a typical linked credit or card transaction.

John Rainey

It is absolutely better for us. But the consumer experience would be such that if you think of using PayPal today and you've got multiple funding instruments in your wallet, an additional funding instrument would be points. And you could use – and you could purchase something entirely with points. You could split a transaction. You could use some points, some debit card, credit cart whatever you want to use. So it's something that we're pretty excited about over the coming months and then see how that plays out in the years to come.

Bryan Keane

We get the question on pricing quite a bit. I know you guys made some changes on price, on the FX. Just trying to figure out, is there meaningful opportunities to make some changes on price to positively inflect on the model?

John Rainey

Absolutely, so pricing is something that – we're embedding that capability in our business and everything that we do. It is not something that has been historically strength of PayPal. We really developed that function over the last two to three years. We made some changes there that – really, what we're trying to do is price to the value that we provide for merchants. So one of the things that is of utmost importance for merchants is conversion, right, how often is a consumer converting a shopping cart or a basket into a completed sale. That is something that, objectively, we do better than anyone.

And if we can increase a merchant's sales, we can certainly price to that, but there are other areas. We look at corridors across the world, where we haven't optimally priced, and optimally priced could mean that we need to price higher or price lower. In some cases, market share may be more important because of the long-term benefit of that. But even as we think about complementary aspects of our platform like Xoom, which is money remittances, Xoom had a different pricing model, a fixed fee for P2P transactions that what had PayPal historically had, which is a variable rate.

And certainly, we would see – we would – the type of behavior that you would expect with Xoom, you would see a much larger amount of money sent because it was a fixed fee. The reverse is true for PayPal. Now we're experimenting with things, even sort of a hybrid of the two, testing that market. So pricing will be a capability that will continue to add benefit to PayPal for years to come.

Bryan Keane

You can’t have a conversation without talking about Venmo and the potential for Venmo monetization, just thinking about some of the exciting partnerships you guys have announced and what that means for Venmo. And how do we think about Venmo monetization, the time line going forward?

John Rainey

Yeah, so Venmo is a really exciting part of our business. We're increasingly hearing more from merchants like Grubhub and Uber, Abercrombie & Fitch, Williams Sonoma that they want to have that button on their website because they attract that millennial demographic, which has the largest potential spending ability of any demographic in our history. So we're certainly seeing a lot of receptiveness to that. At the same point in time, because of the social aspect of Venmo, that's very appealing to merchants as well.

When we're repaying one another after sharing a meal at a restaurant or something, that is – and we talk about that in a social feed, that's akin to word-of-mouth advertising for that merchant. And so they recognize the value of that, and there's a huge demand there. Thus far, 17% of our Venmo customers have used Venmo in a way that we've been able to monetize. And to the consumer, they don't think of that as monetizable. I mean, it's something like, if you're shopping at a merchant; they're not necessarily paying for that.

But there's three areas that we're monetizing today. One is through instant cash withdrawal, and that's, today, the primary way to do that. That will flip over time. The second is with the Venmo debit card, which there's huge demand for at this point. And then thirdly and the area that we would expect to have the most growth and be the majority of the way that we monetize this is by Venmo customer shopping at a merchant. And we're early on in that but excited about what that will do for our business in the years to come.

Bryan Keane

Is there a timeline I think about when Pay with Venmo will become more material in results? Is that a 2019 phenomenon, 2021? Just is there a time line for us to think about that Pay with Venmo piece?

John Rainey

I would say the general feedback in terms of the questions that I get from investors is that there's like this expectation that there's going to be a step function change in 2019 or later this year. That's not the trajectory that we see. This is a more metered ramp-up, where we want to make sure that we get the experience just right. Venmo loses money for us today. The first thing we want to do is get that to where it's making money, and then we want to have it be a sizable part of our profits going forward. But this is something that, I think, plays out in a few years versus a few quarters.

Bryan Keane

Okay. To supplement the portfolio, you guys have been making a few acquisitions. Can you talk a little bit about some of the acquisitions you've made this past year and how it adds to the portfolio suite for PayPal?

John Rainey

Sure, sure, so we have the ability, fortunately, to be able to, with our balance sheet and our cash generation, to go out and acquire companies for growth, where we think that makes more sense than doing it organically. And in the last quarter, we announced four acquisitions. One of those was a good product capability. Two that stand out are around sort of the capability of risk as a service as well as payouts for merchants. So these build out our merchant platform.

At a high level, our focus with respect to M&A is looking at things that are strategically compelling or provide accretive growth to us, and both of these do that. We constantly, though, want to balance both sides of the network. I started the discussion today. We're talking about that being a key strength for us. And so we're obviously going to look at things that enhance our value proposition to merchants but also look at the consumer side as well. And even on the consumer side, where we look around the globe, there are certainly areas that we could stand to be stronger to have a greater consumer presence.

And that could come through organic growth, like what we're attempting in India right now, or we could go out and acquire companies that would help complement that. At the same point in time, I think something that we don't talk a lot about but is an area that we're spending a lot of time on is just in some of these smaller minority investments. We've really enhanced our capabilities there.

We've been a lot more active in going out and purchasing companies, particularly smaller international ones, where we might get an international presence or even insight into behaviors or technology trends that are going on over there. It's very important to us given our placement in this ecosystem because I believe that because of our balance sheet, because of our platform being an open digital platform, we are a natural consolidator in this space.

Bryan Keane

You talked about taking over some of the customer support operations, and you talked about the leverage you're seeing there as a big driver. And I know now that falls under your leadership. Can you just talk about some of the efficiencies you can get from scale and from leveraging technology and customer service?

John Rainey

Sure, I took over Global Customer Operations in January of this year, and it's – we've got tremendous work going on there by the team. And I'm really excited about what we can do to improve customer service, and we've got good plans in place to do that. But to the point of your question, Bryan, I think this is, perhaps, the best illustration of what we can do to scale our platform over time at a very low marginal cost. And so I'll put some numbers around this.

Last year, we did roughly 7 billion transactions. The contact rate from customers last year was a little less than 1%, meaning that we had about 60 million contacts from customers last year. And as we look at that contact rate today, it's at its lowest point in history. Another way to kind of characterize this is that, in the last three years, we've grown our transactions roughly 25% a year. We've added 70 million customers over that period of time, yet the absolute number of customer contacts is down, is down over that period of time.

And this is exactly the model that we want to use to be able to scale our business and not have support costs like this. Overhead costs go up with it. The two ways that we're really focused on this, one is in reducing those contacts, all right? So continue to look at those top ten reasons that a customer is contacting us and get to the root cause of it and fix that problem before it ever occurs and reducing the contact rate but also reducing the cost of that contact. So here's a figure for you. At a sort of nice round number, the marginal cost of each one of those contacts is about $5, a little bit less than that, but about $5. But truly, that is the cost that goes away if we don't receive that contact.

And when we decompose that, about 75% of customer contacts, they come through phone. That's a very expensive way to deal with a customer contact. And it's actually – you much rather the customer be able to have self-service tools to do it themselves or, perhaps, chat or things like that. So this year, we launched chat in Bangalore, India. That's a fantastic service for us, and we have the benefit of lower wage arbitrage there but also the benefit of – with chat of concurrency of communication. So a teammate handling chat may be able to handle 1.2 chat at the same time or 1.5 chats at the same point in time.

And so that has a way of reducing the cost of contact. So through call abatement, reducing the contact rate as well as reducing the cost of those contacts, we believe that we can not need to grow this area of our business as we continue to grow our revenue upwards of 20%.

Bryan Keane

And so often, people say that the leverage is being shown in the model and that you've taken out a lot of that cost. People feel like there's always – there's only a finite amount that can be taken out. Is there enough of a runway to go that you can continue to leverage those operating profits?

John Rainey

Absolutely, so decided customer operations, but if you look at any aspect of our business, we've demonstrated where we've invested a lot so that we can continue to scale and grow. Compliance is a big area. We have invested, literally, hundreds of millions of dollars in compliance over the last couple of years. This is necessary in our business. It's also a competitive advantage in our business as we look at a world of commerce without borders. But each of those countries that we operate in, they have different regulatory requirements or constraints.

The development in this area allows us to go play at all those fields without adding a lot of incremental costs. So the ability of our business to demonstrate operating leverage and grow margins is – it's not in question for me. It's something that we'll continue to do.

Bryan Keane

How do you think about then balancing growth versus margin expansion?

John Rainey

Yeah, well, just earlier this week, I was in New York meeting with some shareholders, and it was interesting. Half the room wanted us to grow, grow, grow, grow. The other half of the room wanted us to expand margins. And there's not like a – just a button you can push that gives you the right answer. I'll tell you how I think about it. We're a growth business, and we have an enormous addressable market in front of us, and I don't think we can turn away from that growth. The right thing for our business is to grow.

I also think that we are a business where the margins want to go up just because of the leverage of our platform. We could certainly optimize for that, but we would turn away growth. I gave the example of Venmo losing money today. I mean, that would be an obvious thing. We could increase margins by turning off Venmo. Everyone in the room would recognize that's the wrong answer for our company. So the way that I think about it, we need to have margins going up each year, but we want to invest back in the business. And so it's a little bit of threading the needle, trying to do both, and not over-rotating too much in one direction.

Bryan Keane

Okay. Common question I get from investors is about the take rate and how to model take rate. How do you think about take rate and the mix? Because there's going to be a mix shift of business as well that has an impact on take rate going forward.

John Rainey

Yeah, so very simply, we don't manage our business for take rate. We manage our business to increase transaction margin dollars, more specifically, free cash flow, free cash flow dollars that are – we're generating for our shareholders. And so I can appreciate the fixation on take rate. It's a unit revenue metric. And in any business, that's a sort of sign of health if you look at same-store sales or whatever the metric is. The decline in our take rate, though, is not a result of like a same-store sales deterioration.

It's simply, really, two things. It's the growth in P2P, and it's the mix in our business. And those were absolutely two things that we want to continue to do because we think it's the right thing to increase our shareholder value. I'll give you a hokey example. Like if you think about, say, you and I have a hamburger store. We sell hamburgers at a 30% margin. That’s good for us. But we realize that with no incremental overhead, we can start selling hotdogs because hotdogs coming at 20% margin and generate additional free cash flow. It's absolutely what we want to do for our business. That's the mix element of it.

On P2P, if you think about what take rate is, it's the revenue divided by volume. P2P doesn't have necessarily the revenue associated with it, but we have the volume. If you take our hamburger store example, it's akin to offering a freebie to someone to come into the store. We recognize that a P2P customer has 2x the lifetime value of someone that doesn't use P2P, so we'd absolutely want to do that to grow our profits in the future.

Bryan Keane

I want to talk about competitively, Adyen obviously went public here recently, and so there's been some interest comparing Adyen with Braintree and how they compare and contrast. Can you just talk a little bit about some of the differentiators that PayPal sees versus some of the competition, including Adyen?

John Rainey

Sure, we often get asked that question about Adyen or others in the competitive space. We're in a slightly different business. We're focused on the front end, the consumer experience, versus back end processing settlement reported. We think as we look at the ability to add value and monetize that value over time sustainably, that front end experience is a lot more important. We're in the business of selling conversion to merchants, and we can do that by having a two-sided network, bringing 250 million some odd customers to a merchant's website with a PayPal branded button. And so I think we are fundamentally focused on very different things, and we believe the growth and the ability to monetize that growth over time is better where we're focused.

Bryan Keane

I want to turn to the model. Last quarter, I think PayPal grew top line 22% constant currency growth, but the 3Q 2018 guide was for 12% to 13% constant currency and I know there's some moving parts there. We got seven points coming off from the credit card sale. But even if you do that, you're still getting at 15% constant currency, which shows a little bit of a two to three-point kind of deceleration. Just want to make sure we understand the guidance versus where you've been coming in. Are you seeing a deceleration a little bit in the business for the revenues and for volumes?

John Rainey

Sure, so first let me start with at our Investor Day earlier this year, we increased our long-term outlook. And I should start with we actually increased the time frame that we provided on long-term outlook and that we moved to a three to five-year time period, and importantly – because that addressed two things that were question marks for us – or not for us but from investors about us. One was the transition away from eBay, so it addressed that time frame, as well as the transition off of the U.S. consumer credit portfolio, where we sold that to Synchrony. So that's why we provided that guidance.

And in that guidance, we actually increased our revenue guide to 17% to 18% from 16% to 17%. And so we feel really good about the core growth in the business. Specific to your question about the sequential nature from the second to the third quarter, there's always lumpiness to the business from one quarter to the next. There's maybe a couple things to call out there. Certainly, we noted in our last earnings call that we've got about $70 million of currency headwind for the back half of the year.

We're also – as eBay noted in their numbers, they're seeing some growth challenges, and we're not immune to that. But the fact is we increased our revenue guidance for the back half of the year by $100 million in the face of those two headwinds. And so we feel very good about the business. It's probably also worth noting, Bryan, that in the third quarter last year, we had – we're lapping the acquisition of TIO, which we don't have in our business anymore, and that contributes almost a point to that trend that you're talking about.

Bryan Keane

And was there a bigger impact on price? I think was there more material increase in price last year that's having an impact to you on the comp?

John Rainey

So we have made some pricing changes last year that we're lapping as well. But as I noted earlier in a previous question, pricing is something that we're always coming back to the table and looking to optimize and for other opportunities.

Bryan Keane

As the Synchrony deal changes here – or well, as we go and we move the portfolio, how does the whole referral and relationship going to work and flow through the P&L?

John Rainey

The referral.

Bryan Keane

Yes, or just the…

John Rainey

Yes, the profit-sharing agreement

Bryan Keane

The profit-sharing agreement.

John Rainey

The way it is structured is pretty consistent with what the previous arrangement was with Synchrony, where there is a floor threshold above which we participate in a percentage of the profits. And so we won't be bringing in as much to the bottom line. We're also not bearing the risk of that, and we also freed up $6 billion of capital that we believe we can put to use in more accretive ways.

Bryan Keane

Okay. As we go through and get – eventually get to the eBay contract expiration or at least the mid-2020, kind of where the contract changes, will there be incremental new things that will come on to help fill that hole? Or will there be a little bit of a slowdown that you'll ramp up and then the 2017 to 2018 is kind of when you look at it holistically through a three-year period? Just trying to figure out the cadence of how growth is going to look.

John Rainey

Yes. So certainly, we would expect to announce some things prior to 2020 that would be new business for us, new partnership opportunities that would help bridge any impact or mute any impact that we would have from eBay. eBay is a declining part of our business, very simply. We look at the other areas of our business, some of the technology platforms and marketplaces that we partner with, they're growing north of 40% versus eBay growing in a single-digit territory. So that will sort of provide a natural buffer as we transition to that. The actual year of the transition, 2020 and 2021, there will be some impact. We're not completely immune to that, and it's tough to structure growth in a business to where everything hits at one point in time.

So the belief, though, and going back to the revenue guide that we provided, is there's enough opportunity out there with other partnerships, with other things that we're doing, that we believe our revenue growth is actually higher than it was prior to when we announced this with eBay.

Bryan Keane

I know TPV kind of has been a focus of some investors. I'm thinking about mid-20s percent range. Is there things that you need to do to maintain that kind of growth? Or is that because the penetration is so low, you should be able to be within that range?

John Rainey

We still believe. We didn't guide to it at our Investor Day, and we received questions about that. But we still believe that TPV growth will be in that mid-20% range. There's nothing to make us think any differently about that going forward. There's a lot of opportunities out there.

Bryan Keane

I wanted to clarify on the earnings growth. I think you guys mentioned and you talked about today 20% growth CAGR for EPS. But then in July, when you guys reported results, you commented and anticipated – I think it's $0.08 to $0.10 EPS dilution on a non-GAAP basis relating to these acquisitions. Is that included? Or do we have to grow 20% then have to grow 20% then take off the $0.08 to $0.10? Just how do we think about the pieces there to reconcile the dilution from acquisitions versus the 20% EPS growth?

John Rainey

Sure. So we have not given 2019 earnings guidance yet. We'll give an update, an indication of that when we get to the third quarter earnings call. We did want to highlight the $0.08 to $0.10 because – related to the acquisitions because of the announcement of those. But getting to your question on the 20% number, when we gave our guidance on the three-year to five-year time frame, this was the first time that we actually gave EPS guidance. And we said that we expect, over the next three to five years, approximately 20% compounded annual growth in EPS. And at the midpoint of our guidance, that's about 250 basis points ahead of what revenue growth is. But it is just that, guidance, and it's compounded annually. It would be the wrong thing for our business to self impose restrictions to where we have to hit 20% every single year. It's a – we said approximately because it is plus or minus.

You hate to turn away an accretive acquisition further down the road or some other investment that you would make in the business because you wanted to impose a constraint on yourself of we're going to hit 20% this year. So that's the way to think about the next five years, and we believe the business will be approximately 20% EPS growth compounded annually over that period of time. It's not specific to any one year.

Bryan Keane

If there's any questions, we have a mic, and so we can go to questions. I want to ask on capital allocation, and I know you guys talked about this at the Analyst Day. I think it's about 40% to 50% of free cash flow will be used for buying back stock. How do you think about that buyback program and when to buy? Will you be opportunistic? And how do you think about potentially even leveraging the balance sheet to buy back stock versus M&A?

John Rainey

Sure. Well, fundamentally, we believe that every dollar of capital that we have has to compete for the alternatives to provide the greatest shareholder value and with return around that. When we look at buying back stock, given our balance sheet, given our free cash flow generation, we think there's an ample opportunity to return cash to shareholders and invest in the business and go acquire companies for growth. When we look at that, we look specifically on share buyback. We look at both our absolute value as well as where we are relative to comps in the market.

And when we look at over the next three to five years, we see the opportunity that we have in our business, see where our stock is trading. It's a very compelling investment today to go out and return cash to shareholders through a share buyback. With respect to debt, we do have a small amount of short-term debt on the balance sheet today. Fair to assume that we'll move to a more optimal capital structure over time. It's worth noting, though, that the credit rating agencies actually impute some debt on us, whether it be leases or some other liabilities. So we're very focused on maintaining our credit rating as well. It's a big part of the trust that goes with our brand.

Bryan Keane

Just real quick on capital allocation. With the Synchrony sale, that portfolio obviously generated a return of cash. Is there anything specific target for that cash?

John Rainey

That's included in the capital allocation plans that we have.

Bryan Keane

Okay.

John Rainey

Yes.

Question-and-Answer Session

Q - Unidentified Analyst

A quick question on Venmo monetization. You mentioned paying – using Venmo at the store is a good opportunity. What do you think the market awareness is of that option being available to Venmo users? And do you guys intend to just try to spend more and making – increasing awareness?

John Rainey

Yes. So it's a fantastic question. And awareness is not what it needs to be to monetize this to the full extent that we want. And very importantly, we want to get the experience right. So with the vast majority of merchants today that were paid – provide this ability for consumer to pay with Venmo, it's still a branded PayPal button. We expect that to change over time. The benefit of Venmo thus far has been – that it's been – the efforts around it have been entirely organic. It spreads on a college campus because a group of peers start using it. And so we haven't had to spend a lot of advertising on that. When we're ready and when we – or the experience is where it needs to be, we can put our foot down the accelerator a little bit more to begin really promoting this. It's a very good question.

Bryan Keane

Any other questions? It’s right here on the left.

Unidentified Analyst

I have a question about kind of the broader ecosystem on mobile. We've seen Apple had a lot of traction with Apple Pay and given kind of their dominance in, at least in the U.S. market, in terms of the handset and the integration there, can you tell a little bit more about how Apple Pay, Android Pay, Samsung Pay is impacting your business? And going forward, how do you guys think about whether or not they're kind of competing with you guys and also partnering as well?

John Rainey

Sure. Among the names that you mentioned, we do partner with several of them, and that's the benefit of being an open digital payments platform. And we look to continue to expand those partnerships. Some companies are more closed systems. Apple, I think it's fair to characterize as one of those. But we compete head-to-head with Apple every single day. And in a world where 70% of shopping experiences – or I would say the U.S. has 70% of shopping experiences begin on a mobile device. Making a seamless, frictionless consumer experience, where you can check out with a simple click of a button and you have integrations into those merchants, is truly helping us to gain market share.

So despite these competitive pressures, we're still growing at a rate that is roughly 2x the market. And look, we've got 20,000 people that show up to work every day with the singular focus of how to be the best in payments. And so whether it's the company that you mentioned or any other company, we believe that we can compete very effectively.

Bryan Keane

And do you think that there's a lot of press about the common checkout button that's coming? Do you think that could be a competitive threat for you guys when that rolls out next year?

John Rainey

There's nothing about that, that I think fundamentally changes the landscape from what we've seen before. We actually have a very good partnership with both MasterCard and Visa, and we're looking at opportunities where we can have win-win scenarios, where we can grow each other's business together.

Bryan Keane

Okay. With that we’ll keep it there. Thanks John. Thanks so much for coming.

John Rainey

Thanks Bryan.