Payments app Venmo has a digital user base bigger than Square Cash and banks, but no plan to profit from it

PayPal's Venmo is seeing huge growth, with 40 million users disclosed for the first time, near three times the user base of the Square Cash App, but CFO John Rainey says the company is in no rush to generate profits from the millennial-focused, peer-to-peer payments app. Read More...
  • PayPal CFO John Rainey says eBay is a declining business while services like Instagram Shopping are the company’s future.
  • Venmo is a key part of its growth but the company has no timetable for profitability from the popular millennial app. 

The 40 million users disclosed for the first time by Venmo, PayPal PYPL ‘s millennial-focused, peer-to-peer payments app, outnumbers most of big banks’ digital users and rival Square SQ , run by Twitter CEO Jack Dorsey, which reported 15 million monthly active users for its Cash App as of December.

But by one important market measure, Venmo had no growth to report: profits.

PayPal CFO John Rainey told CNBC on Thursday that Venmo won’t make money this year and profits are “not something we put a timeframe on.”

Venmo payments volume grew 73% year-over-year in the first quarter to $21 billion and is on pace to do $100 billion in payment volume this year. Revenue should hit $300 million this year.

“Venmo continues its significant momentum,” PayPal CEO Dan Schulman said on a call with analysts. “As user growth continues to accelerate, merchants are increasingly turning to Venmo as a way to attract a valuable and engaged consumer base.”

CFO Rainey said in the CNBC interview, “We are able to invest for growth and expand operating margins through other means. We are building the company for the long-term and Venmo is a key part of it, and we need to scale and grow it without too much focus on being profitable in the next quarter or two.”

The PayPal CFO said as eBay EBAY — which PayPal was once part of before being spun off — becomes “the declining part of its business,” it is newer marketplaces like Instagram Shopping where the growth will come. “Instagram Shopping is our future. We want to continue to partner with these large and fast growing marketplaces.”

He contrasted eBay with the other merchants in PayPal’s group of top 20 which are generating $90 billion in payments. “Much more than eBay, but the important point is they are growing at 40% year over year, so this is our future.”

Venmo itself operates like a social network, letting users comment on payments and see what friends are spending on. Venmo has partnerships with Chipotle, GrubHub and Uber, among other merchants. These partnerships are a key way the app brings in revenue.

“We’re certainly pleased with the monetization of Venmo and the rate at which that is progressing ,” PayPal Chief Operating Officer Bill Ready said on the company’s earnings call.

PayPal has a total 277 million total customer accounts — including 22 million merchant accounts.

Total payment volume — a closely watched metric for PayPal — came in at $161 billion, a 25% increase year over year , but below the $163 billion that analysts polled by FactSet had been expecting.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="—CNBC’s Kate Rooney contributed to this report” data-reactid=”30″>—CNBC’s Kate Rooney contributed to this report

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