Salesforce is one of the largest enterprise software firms on the planet. It provides a broad suite of products to help clients optimize customer interactions. The overarching niche is called Customer Resource Management (CRM). Salesforce offers a variety of cloud services to its customers. There’s a Sales Cloud, which perfects consumer touch-points. There’s a commerce and Marketing Cloud to build online storefronts and augment promotional activity. There’s a service cloud to handle customer issues and inquiries. There’s also a platform cloud, which includes Slack.

More recently, it debuted its Data Cloud. This is an aggregated analytics service to ingest, organize & glean insight from 1st and 3rd party data. It conjoins siloed context and “unlocks” previously disparate sources for client value creation. It’s similar to what Snowflake does (even though the two partner elsewhere), but more for managing customer relationships. MuleSoft and Tableau are both key pieces of this Data Cloud. MuleSoft integrates apps and data to enable management of these products within Salesforce. Tableau is a data visualization tool to create automated progress reports and suggestions to leverage findings. Next, it offers industry-specific clouds for sectors like healthcare. These are customized to meet specific regulatory and operational needs. All of these clouds and products make up the firm’s subscription & support revenue, which represents 94% of its total business. Professional services make up the rest.

Separately, Salesforce offers a product called Einstein One. This is a full set of AI tools, including outcome prediction, chatbots, image recognition, sentiment analytics and more. It’s considered a general-purpose AI platform infused into all Salesforce products. Most recently, through an OpenAI partnership, it debuted Einstein GPT. Einstein existed before the GenAI wave, but is now getting an upgrade thanks to it. Einstein GPT allows Salesforce clients to plug into language models (including OpenAI, Anthropic and Cohere) to make workflows more productive, intuitive, conversational and automated. It features a low-code toolset to reduce the barrier for non-experts to build applications; it also boasts expert-level tools to build more complex apps. 

The newest Salesforce product is called Agentforce. This is (shockingly) another AI-powered platform. It’s the firm’s take on agentic AI apps. As a reminder, these are goal-oriented applications. They simply need to be told what to do, rather than how to accomplish that task. This makes them far more autonomous, malleable and powerful than legacy AI chatbots. Agentforce functions as a full-service, out-of-the-box suite turbocharge client GenAI adoption by making the embrace of this technology easier. It brings together all of Salesforce’s work in Data Cloud, Einstein AI and Customer360 (data unification across disparate sources) to create an end-to-end platform that actually drives value.

Benioff routinely rips on chatbots like Microsoft Copilot and how they offer empty promises and fall short of expected value. He sees Agentforce as an immediate ROI driver across a boatload of use cases. That’s important to note: The diversity of Salesforce’s cloud tools means more opportunity to drive vendor consolidation, interoperability and broader agent use cases without complexity. These agents do not replace humans, they simply assist them with things like drug discovery, deal pipeline building, customer service etc. And? Knowing Salesforce cannot possibly create every agent a customer could ever want, it offers model and agent builders to seamlessly customize algorithms for unique needs.

That’s Salesforce in a nutshell.  Now, the quarterly results.

Salesforce EPS is expected to grow by 23% this year, 11% next year and 14% the following year.

Agentforce Opportunity & Progress:

Benioff spent the entirety of his prepared remarks speaking about Agentforce. And to understand why, I think it’s important to start with the market size. The company is calling this “digital labor,” which is really just another way of saying deployed agentic AI. So how big is this opportunity? Can this move the financial needle for Salesforce, considering its already massive revenue base. To leadership, the answer is a resounding yes. In Benioff’s typically-charismatic way, here’s how he spoke about the total addressable market (TAM) here:

“We've created a new market that is so much bigger and more exciting than the data management market that it's hard to get our head completely around. This is the market for digital labor. Right out of the gate, Salesforce has become the largest supplier of digital labor.”

Co-Founder/CEO Marc Benioff

If you think about it, the enormity of this market makes sense. The opportunity includes essentially every single tedious manual enterprise task that can be automated, as Agentforce is broad and malleable. Furthermore, it can potentially become the operating system for next-gen hardware, as those robotics will be powered by GenAI models and algorithms.

While I don’t like to be dramatic in my writing, this type of innovation can have a profound impact on human productivity and prosperity in the coming decades. It’s no secret that birth rates are tanking all over the globe. Population growth has always been among the single most powerful drivers of potential GDP growth. By offloading mundane work to next-gen algorithms, we can de-correlate that increasingly precarious relationship and grow beyond population bottlenecks. Whoever enables that de-correlation will likely be financially rewarded. As a relevant aside, this can also have a sizable impact on CRM’s financials by unlocking more complex use cases and so bolstering its own traffic and revenue.

“These agents are not tools. They are becoming collaborators. They're working 24/7 to analyze data, make decisions, take action… and free up humans to focus on building strategic initiatives and relationships.”

Co-Founder/CEO Marc Benioff

Agentforce Go-To-Market:

Agentforce commercially debuted during the last week of Q3, yet has already closed 200 deals with firms like FedEx, Ace Hardware, IBM and others. To Benioff, the level of pipeline growth (which now includes “thousands” of potential contracts) is something they’ve “never seen anything like.” He’s always charismatic, but this quarter it was especially noticeable. Salesforce started with the implementation of 10,000 agents at its Dreamforce event, and has since embarked on a “world tour” program to spread the word. The company also leaned into account executive hiring to bolster go-to-market and support this product’s launch. It will hire 1,400 total salespeople during the 4th quarter and will use Agentforce’s “Sales Coaching Agent” to make these hires as strong as possible. On December 17th, Salesforce will conduct another launch event for “Agentforce 2.0” to build on the utility of the initial offering.

Salesforce is leaning heavily on global system integrators (GSIs) like Accenture to help augment its selling capacity. Notably, Accenture is also using this new platform internally to improve deal quality and deal bidding coverage by 75%. That matters a lot. These GSIs are trusted partners for other clients to purchase software. It’s one thing for Accenture to say “we think this works well.” It’s more powerful to tell customers “look how well this is working for us.” Partners like Accenture delivered 9 of its 10 largest Agentforce deals during the quarter. AWS was credited for 3 of its 10 largest overall deals.

Agentforce Edge & Competition:

There are a few pieces of Agentforce differentiation in the eyes of leadership. First is the broad, unified product platform. All products… from Slack to Sales Cloud to Tableau… have been rewritten and recoded to operate as a single, cohesive platform. These are not stitched-together point solutions despite mainly being assembled via M&A. That’s partially why its largest deals now include more than 5 cloud products on average. A larger sum of compelling products simply means more potential agent use cases and more room for value creation. It also means a lot more data to train all of these agents on a company’s own hyper-relevant insight. For context, Einstein sees 2 trillion transactions per week. All of this added signal lowers model hallucination rates and unlocks more complex autonomous workflows.

And this leads us to its second point of differentiation – the Data Cloud. More product means more data… The Data Cloud means it can effectively use all of this data to train agentic algorithms more thoroughly. The combination of CRM’s suite of enterprise software, models from partners like Hugging Face and the Data Cloud means a customer has everything they need in one place. For College Possible (non-profit), this meant the company could onboard Agentforce for its existing Salesforce products and use all needed data “with the flip of a switch.”

In terms of how this offering compares to others like Microsoft Copilot, Benioff continued to be highly critical of that tech giant’s offering:

“We've heard about Copilot. We've seen the demo. In many ways, it's just repackaged ChatGPT… While these legacy chatbots have handled basic tasks like password resets and other basic things, Agentforce is really unlocking an entirely new level of digital intelligence and operational efficiency.”

Co-Founder/CEO Marc Benioff

Agentforce Use Cases:

Salesforce is readily using Agentforce internally to offer proof of concept for other customers and to make its own operations more efficient. Agentforce is now powering help.salesforce.com and is already on pace to field 2 million support cases per year. It sees this potentially handling 50% of all case volume in the future. The product is also being used for sales engagements and lead generation, as well as other back-of-office automation. All of these efficiency gains will mean a “rebalance” in human resources into areas that will still be relevant and needed – such as sales. This will also likely mean lower employee growth needs, as revenue and profit are less strongly tied to headcount.

“This should save millions of hours and dollars to reinvest into our strategic growth initiatives.”

Co-Founder/CEO Marc Benioff

Customer case studies:

Most of these case studies to date are still related to customer service automation, but I’m sure Agentforce 2.0 will attempt to go much deeper.

Good quarter. All of the misses are related to equity investment valuation swings, which are pure noise to me. The rest of the numbers were quite good and commentary surrounding Agentforce was undeniably exciting. This is one of the highest quality enterprise software companies on the planet, with these results representing more of the same wonderfully stable top-and-bottom-line compounding.

Loan Origination Trends: 

Origination momentum was called strong across all three lending buckets by CFO Chris Lapointe. And notably, he also called capital market loan demand “stronger than it has been in years.” That’s related to rate cuts leading to macro confidence, better liquidity, more favorable credit spreads and lower hurdle rates for capital market buyers. This strength is so important. It helps to effectively de-couple SoFi’s loan origination growth from its balance sheet growth. It allows them to rapidly expand the loan business without jeopardizing capital ratio cushions.

And while this has been a fantastic outlet for balance sheet management, it continues to get even more promising. Its lantern marketplace keeps enjoying rapid growth. This is where it sends rejected borrowers (~75% of applicants) to find other loan partners to originate. SoFi collects high-margin, low-risk fees and can cater to more loan demand without stashing unwanted credit. It also gets valuable data from these borrowers to cross-sell them other products like SoFi Money, debit and Invest. Eventually, many of these customers will turn into prime candidates for SoFi’s credit branch. This ensures they stay close to these people and serve them in other ways (before that credit up-leveling unfolds).

More recently, it has spoken about originating credit within its own app and demographic for capital market partners. This has rapidly become a central part of its overarching loan platform. The development means it can say yes to as many qualified borrowers that enter its site as possible. And it can do so in a way that offloads credit risk and merely generates high-margin financial service revenue. Just like with Lantern, this gives it yet another tool to help more customers. 

This is how you ensure your loan top-of-funnel is as strong as possible… It’s how you maximize member growth… It’s how you delight more customers… It's how you maintain rapid growth… all without placing undue stress on a balance sheet. The loan platform expansion is the single most positive development for SoFi amid a sea of other positives that have played out in recent months. I repeat: This responsibly uncaps the growth potential for its largest segment. More revenue… more customer data… not more risk.

Delinquency trajectories were called good, while leadership reiterated (for the millionth time) confidence in its 7%-8% life of loan loss rate target. Since it tightened credit parameters in 2022, loan performance has been comfortably better than 2017 vintages (last time it approached 8%).

The company is confident in “originating at a healthy level across all products in 2025” with its diverse funding sources, capital ratio cushion, pent-up buyer demand and macro accommodation flowing in. In home loans specifically, he reminded us that 2% of the mortgage customers on SoFi actually take out their mortgage with SoFi. That’s a big cross-sell opportunity. The company has recently integrated Wyndham Capital to fix its back-end processes and remove service delays that it had been dealing with. It’s now ready to delight customers with excellent service… right as rate cuts fuel mortgage demand… with a large base of existing members to sell to.

For student loans, rate cuts are a large tailwind. For personal loans, cuts do diminish variable-to-fixed refi demand, but the overall impact is quite positive, as SoFi and its partners feel far more comfortable with originating more credit (again, pent-up demand). 

Tech Platform: 

Lapointe again told investors that the company has not lost any tech deals in the pipeline. Some are just taking longer than expected, but there’s no change to multi-year tech platform expectations. He was asked about Marqueta (MQ), which is a competitor here. Marqueta just wrapped up a very tough quarter in which “client insourcing” (choosing to build internally rather than buy 3rd party products) was a big challenge. Fortunately, SoFi isn’t seeing that play out in its business.

Lapointe reminded investors that Galileo’s product suite is more complete than any other alternative. Furthermore, as a chartered bank, SoFi understands exactly how to comply with fluid regulations and rising scrutiny surrounding non-banks using 3rd party charters to offer services.

Health of the Consumer:

For two years, bears screamed about how macro would lead to soaring loan losses and would blow up SoFi’s balance sheet. They ignored SoFi’s overly prudent approval process that includes a 75% rejected borrower rate. They ignored sky-high average FICO scores and mean annual income from its borrowers. They overlooked its overly conservative loan mark-down practices (cuts valuation of delinquent loans faster than it needs to). They called its fair value markings shady, when these markings assumed GDP growth and unemployment would be far worse than reality. SoFi is always conservative in their lending practices, and that was all needed context within the incomplete macro cycle bear case. The stock simply needed some monetary policy cooperation to find its footing.

Today, SoFi’s consumer remains very healthy as its demographic resembles American Express, rather than Discover Financial. Interchange growth has remained strong while product monetization has remained equally strong. Both of those things are expected to continue, as its member base is feeling economically confident.

More Notes:

Lapointe reiterated that net interest margin will stay over 5% despite rate cuts. That will need to come from coupon rate durability. It does have a bit more balance sheet optimization to do in terms of swapping out expensive warehouse credit and brokered CDs with cheaper deposit-funded credit. It pockets 2 points in profit spread from this change but has largely completed this process at this point.

The small-medium business (SMB) opportunity is large and highly untapped. SoFi is not yet ready to be the primary issuer of business accounts, payroll products or loans, but is readily using partner referrals to collect revenue while it gets to that point.

SentinelOne directly competes with CrowdStrike, Microsoft Defender and Palo Alto in endpoint security. It specializes in small-and-medium-sized business (SMB) clients and is now effectively expanding up-market. While CrowdStrike’s overarching platform is called Falcon, SentinelOne’s comparable suite is called the “Singularity Platform.” Core products include Endpoint Detection and Response (EDR). EDR offers constant monitoring and protection of endpoints (like a company iPhone). It unveils, prioritizes and responds to observed threats. Like CrowdStrike, it offers highly autonomous services and a slick, lightweight agent to drive interoperability. This, in turn, means overarching coverage and superior breach protection vs. legacy incumbents.

Also similar to CrowdStrike, SentinelOne boasts a complementary data analytics platform (which it calls the Singularity Data Lake). This lake can ingest structured data from a multitude of diverse security products. It’s the perfect complement for every product it offers, as it can seamlessly collect data once, and recycle that data across as many relevant use cases as it needs to. This capability is especially important for the firm’s Extended Detection and Response (XDR). XDR is simply EDR with more diverse data usage to extend protection beyond solely the endpoint.

The Singularity Data Lake ingests data via “log scale,” which means logarithmically organizing and storing information. The company also says customers get lower cost and faster querying speeds with it too. The service of aggregating data (or “logs”) to help organizations uncover and remediate threats is called Security Information and Event Management (SIEM). It recently launched an AI-augmented SIEM tool… fittingly named AI SIEM.

All in all, there are three compelling effects of this product architecture:

Just like CrowdStrike (noticing a theme?), it’s also actively expanding into cloud security. Important cloud security acronyms:

Agent vs. Agentless in Cloud:

CWP takes an agent-based approach while CSPM is agentless. Agent-based requires a direct software installation, while agentless does not. One isn’t objectively better than the other. Agentless is considered cheaper, easier to deploy and easier to scale. It’s perfect for lower-stakes use cases like configuration analysis and is a perfect complement to CWP. Companies just starting out with finite budgets, massive potential scaling needs and a lack of hyper-sensitive data can adopt an agentless approach. Agent-based is considered more comprehensive and has more complete visibility. Industries with tighter regulation, more sensitive assets, a need for real-time EDR and more complex compliance are well served by agent-based. By offering both, SentinelOne can address both markets, thus eliminating the need for disparate point solutions.

GenAI:

PurpleAI is SentinelOne’s overarching GenAI platform layer to up-level its product offering. It’s quite similar to CrowdStrike’s Charlotte AI, in that it can actively detect anomalies, summarize cases, help orchestrate remediations and fix issues with a human analyst’s permission. All of this pushes beginner-level security analysts to much higher levels of capability. This matters a lot in our budget-and-talent-constrained world.

Net revenue retention was called “healthy.” It did remind us that revenue growth mix-shift is moving towards new business and away from existing client expansion. That’s its priority today, with cross-selling and platform adoption a secondary focus area for now. It sounds like this prioritization will shift somewhat towards cross-selling through next year as SentinelOne’s work to overhaul go-to-market begins to take hold:

“It's very clear that our customer estate is under-penetrated with our adjacent solutions, especially if you look at our core endpoint business. And that represents an opportunity… The dominant part of ARR is coming from new accounts. It's what we want to see. But we are gradually starting to balance that with our desire to also become more efficient with our go-to-market motion. And obviously, cross-selling into your own customer estate is more efficient. That will start showing more impact in the next couple of years.”

Founder/CEO Tomer Weingarten

The pricing environment for SentinelOne is stable. It’s not discounting like other vendors are, as you can see in GPM strength. It also isn’t feeling pressure to build its own financing division like Palo Alto and CrowdStrike have both done. 

The EBIT and EPS misses were related to about $4.4 million in one-time legal charges to settle M&A-related litigation. Without this impact, both profit metrics would have been in line. Still, we’d ideally like to see a small beat here to match the small revenue outperformance. At the same time, that’s less concerning considering its continued rapid Y/Y leverage. As leadership always tells us, margins will continue to improve and the pace of improvement will not be linear.

“It’s important to note we’re still navigating a challenging macro environment. Organizations continue to focus on cost and efficiency, and we expect these dynamics to continue.”

CFO Barbara Larson

Last earnings call, we were told by leadership that the impact of the CrowdStrike outage would begin to be reflected in guidance this quarter. During this call, it told us that it’s “engaging with more large enterprises.” They were going to be “ready to quantify” the impact. With this context, I am disappointed in the very small Q4 guidance beat. I thought there would be a larger immediate impact considering CrowdStrike’s $30 million revenue headwind in its own guidance. That didn’t happen, as the CrowdStrike headwind has largely been via customer discounting and free products (not losing customers). Regardless, SentinelOne leadership remains adamant that the benefit will come… just gradually. And it did offer some evidence of this starting to happen. It told us that it “achieved a record number of customer wins vs. CrowdStrike in Q3 and that it’s getting consideration from large customers that weren’t even “available to them in the past.” This includes a Fortune 50 displacement and some public sector wins, as well as new financial institution pipeline opportunities.

“This will play out in quarters and years to come. The road is open…  It's on us to execute well and convert these tailwinds into customer wins over time. We're working hand in hand with customers and partners to test, trial and deploy the Singularity platform.”

Founder/CEO Tomer Weingarten

“I would encourage everybody to kind of think about the July 19 outage as just another factor. It’s not what's driving business for SentinelOne. SentinelOne's momentum is what is driving the business.”

Founder/CEO Tomer Weingarten

Large Enterprise Traction & Go-To-Market:

SentinelOne called large enterprise traction a notable strength for the quarter. Its net new $100,000+ ARR customers rose 24% Y/Y and set a new quarterly record that slightly surpassed sell-side expectations. $1 million+ ARR customer growth was “even faster.” The momentum allowed it to continue delivering over 10% Y/Y ARR per customer growth. Generally speaking, engagement with large customers is getting healthier and more frequent as its reputation and brand awareness improve.

An increasingly important piece of the enterprise momentum will be its new deal with Lenovo. This entails bundling its platform and Purple AI on that company’s enterprise PCs. Lenovo sold about 60 million laptops over the last year, with about 60% of those being for enterprises. That means 36 million endpoints per year in potential growth from this single contract. SentinelOne has about 4%-5% endpoint market share, which represents somewhere around 30-40 million endpoints in total.  It’s worth noting that this partnership will be slowly rolled out over the coming years, but it’s exciting to say the least and a real chance to grab a lot more endpoint market share. The impact from this relationship will begin to show up towards the end of next year.

“We fully believe our pipeline supports continued upward trends in the enterprise market.”

Founder/CEO Tomer Weingarten

Macro:

Per leadership, macro isn’t getting better or worse. This is similar to what others have said, although Cloudflare did say macro was improving in its own earnings call. Interestingly, its AI SIEM tool is more deeply insulating SentinelOne from these enduring headwinds, as it acts as another large cost saver for customers. 

Non-Endpoint Strength – Becoming a True Platform:

I already wrote about a lot of recent product launches from SentinelOne’s OneCon 2024 event. That coverage can be found in section 5 of this article. 

Cloud, Data and AI growth continue to outpace its core endpoint products. And while that’s true across the board, its fastest-growing product is now Purple AI. During the quarter, it debuted automated alert triage (prioritization), hunting and investigation. As discussed in the 101 section, this exponentially bolsters security analyst productivity and coverage. Attach rate for Purple AI doubled Q/Q, as traction explosively builds while the product was called a “must have” in a seven-figure contract win.

“This Singularity platform empowers customers to bring advanced AI capabilities into their entire security stack – from data to operations… streaming enterprise wide security data to be processed and analyzed by advanced AI algorithms and agents that drive real-time autonomous outcomes.”

Founder/CEO Tomer Weingarten

For cloud innovation, the company recently launched an AI Security Posture Management (AI-SPM) tool to extend its CSPM offering to AI apps and models. CSPM tools are essentially repurposed here to offer the same misconfiguration and hygiene issue-flagging services in the world of GenAI. 

SentinelOne also released Singularity Hyperautomation during the quarter. This provides pre-built, no-code integrations and malleable templates for common cybersecurity issues like ransomware. It automates tedious, repetitive tasks to make security analysts more productive, building on the utility of Purple AI. The user interface was designed to be as friendly and seamless as possible, with a “drag-and-drop” process for designing workflows. 

“Our solutions deliver functionality equivalent to deploying multiple modules from competing vendors. We sell solutions, not an endless list of modules and endpoint features.”

Founder/CEO Tomer Weingarten

Accolades:

“The increasing sophistication and intensity of modern cyber threats are exposing the growing shortcomings of incumbent security solutions. Even so-called modern technologies are aging faster than ever. As a result, customer awareness and interest in our platform in AI-based security have risen.”

Founder/CEO Tomer Weingarten

Mixed quarter. We cannot call this bad. Top line modestly outperformed for both Q3 and in the Q4 guide. EBIT and net income missed due to irrelevant G&A charges that will never recur. Sell-siders will all mention this in their future notes and I expect most of them (if not all) to defend this quarter. SentinelOne’s competitive positioning vs. CrowdStrike seems to be improving and its momentum with both large customers and non-endpoint selling is quite strong. Generally speaking, secular tailwinds should continue blowing for years to come and there’s plenty of legacy market share left to displace. That’s all very good.

The fundamentals also coincide with a forward gross profit multiple that is roughly half of CrowdStrike’s. If SentinelOne can deliver a permanent profit inflection, and that looks obvious at this point, then this offers best-in-class, margin-accretive growth at discount to other quality peers. It trades for a PEG ratio of 0.82 using the next two years of expected earnings growth. CrowdStrike is around 4.0X. While I do think CrowdStrike is a better overall company at this point, I do not think that gap justifies anything remotely close to the current valuation delta. All of this motivates me to calmly and confidently stay the course.

At the same time, I’m underwhelmed with the degree of outperformance here. I wanted more. Like many others (including sell-siders during the Q&A), I thought the CrowdStrike outage finally being included in guidance would have a sharper positive impact. In reality, the impact will be subtle and stretched out over several quarters… and it probably won’t be massive. While that’s disappointing, it’s not nearly enough to materially affect my bull case based on everything else mentioned. When taking all of this together, I’m not in a hurry to add into this current dip. I’m very comfortable with what I currently own.

Jamie Miller’s Take on PayPal One Year Into Her Tenure:

“When you look back, I think most folks at PayPal would say it just feels very different. The energy inside the company, we've changed the entire team at this point and really changed how we run things. And the last year has been focused on just restructuring and really reformulating back into investment, innovation and execution.”

CFO Jamie Miller

How is the Quarter Going & 2025 Expectations:

It sounds like Q3 strength has carried into Q4. Across branded checkout, BNPL, Pay with Venmo and PayPal Complete Payments Platform (PPCP), they “feel good” about trends. And from a quarterly guidance perspective, Miller feels “very comfortable and really good” about previous forecasts. Furthermore, results over the Cyber 5 holiday shopping weekend were called “very nice.” Separately today, CEO Alex Chriss also shared some promising holiday weekend data, including $7 billion in Cyber Monday volume vs. $5.8 billion Y/Y for 20.7% growth. Venmo transaction volume rose by 10%+ Y/Y, BNPL volume rose by 10%+ Y/Y and PayPal was the #1 payment option on iPhone throughout the weekend in Germany.

PayPal has continued to close the gap between its own branded checkout growth and industry e-commerce checkout growth, and leadership thinks that has a lot to do with the investments it has made to bring flows up to par with industry peers. PayPal has the unmatched merchant adoption roster; it has the ubiquitous brand; now it has acceptable checkout products, rather than trying to maintain share with an inferior offering. Across the U.S. and internationally, these foundational fixes to its core products are beginning to bear fruit.

PayPal continues to expect transaction margin dollar growth (ex-net interest income) to be at least as fast as 2024. This implies growth of 4%+ Y/Y. While that may not sound like much, it is better than what the company has delivered since the pandemic boom ended. It’s also despite catch-up innovation investments made necessary by old leadership and transaction loss rates flipping from a tailwind to a headwind in 2025.

One more quick note. New tax regulation in Singapore could add 1-2 points to its 2025 effective tax rate.

How it Can Keep Taking Market Share:

While things are going well today, there’s reason to believe market share trends can keep improving. Optimism comes from three places: upgraded checkout, Fastlane and PayPal Anywhere.

First is modern checkout integrations. 30% of its merchants are on its latest integration, yet just 5% of its merchants have adopted the latest checkout experience within that new integration. A big priority will be bringing that experience to this entire cohort of its merchants, which has a profoundly positive impact on checkout conversion rates. Specifically, it boosts conversion by 4 points, with gains even larger on mobile checkout (where PayPal previously struggled the most). That means happier customers, richer merchants and more PayPal transaction volume, with the same amount of traffic. Moving from 5% to 30% should be a seamless process, and 2025 will entail working on the remaining 70% of merchants.

We didn’t learn anything new about Fastlane, but it’s another massive piece of juicing guest checkout conversion and PayPal’s overall market share. It’s live with 1,000 merchants, as PayPal continues to prioritize distribution over incremental fees. It’s not charging anything beyond transaction fees for usage of this product in a bid to maximize adoption out of the gate. This approach will last for most of 2025, before it begins to turn on the money faucet.

Its PayPal Everywhere campaign, with its 5% cashback debit card rewards for a chosen category, is off to a great start. Miller reminded us that it has already gotten 1 million signups from debit card users and talked up the 2x+ volume uplift that these signups come with. Notably, the 5% cashback reward is capped at $1,000 per term. According to Miller, this means transaction volume within this program has the exact same margin as other branded checkout products. Really good to hear, considering 5% cashback is quite the lofty number. PayPal Everywhere customers deliver a large uptick in omni-channel PayPal usage to offer more market share tailwinds in the quarters ahead.

Braintree & Venmo:

Miller repeated what we’ve been hearing from leadership. They’re hiking prices for existing users and accepting lower volume share in exchange for higher gross profit. Growth will likely stagnate through the first half of 2025 as it finishes this reset. Nothing new. (Profitable) Growth is expected to resume thereafter. Braintree continues to boast best-in-class up-time and authorization rates and has made a lot of progress with cross-selling value-added services like Risk as a Service (RaaS) and payouts (Hyperwallet).