PayPal Holdings Inc. topped profit expectations for its latest quarter, but it delivered a lower-than-expected outlook for the current quarter as eBay’s transition to managing its own payments experience is happening more quickly than expected.

While PayPal
PYPL,
+0.50%

was the main payments partner for eBay
EBAY,
+0.83%

in the initial years following the separation of the two companies, eBay is now in the midst of taking over the payments experience on its own site. PayPal expects that the eBay transition will be a headwind in 2021, according to its investor presentation, but Chief Executive Dan Schulman told MarketWatch that eBay’s more rapid migration will give PayPal a “clean slate” heading into 2022.

Shares were off 4.6% in after-hours trading.

The company posted second-quarter net income of $1.18 billion, or $1.00 a share, down from $1.53 billion, or $1.29 a share, a year earlier. After adjustments, PayPal earned $1.15 a share, up from $1.07 a share a year prior and above the FactSet consensus, which called for $1.12 a share.

PayPal’s revenue for the second quarter climbed to $6.24 billion from $5.26 billion, while analysts tracked by FactSet had been expecting $6.27 billion.

The company’s total payment volume, or the value of payments flowing through its platform, came in at $311 billion, up from $221.7 billion a year earlier. Analysts were projecting $295.2 billion in TPV. Venmo’s total payment volume came in at $58 billion.

“It’s clear there’s been a shift in shopping behavior,” Schulman told MarketWatch, as PayPal continues to see strong traction in e-commerce and other digital avenues.

PayPal added 11.4 million net new active accounts in the quarter, bringing its total number of active accounts to 408 million. The company saw 43.5 payment transactions per active account on a trailing-12-month basis.

Venmo had 76 million active accounts as of the second quarter, up from 70 million when it last disclosed a count six months ago. The company considers active account as those that have made a transaction in the past 12 months.

For the third quarter, PayPal expects revenue of $6.15 billion to $6.25 billion, which includes a $465 million negative impact from the eBay migration. The eBay move is creating about 700 basis points of pressure on PayPal’s revenue line, Schulman said, roughly 100 basis points more than expected.

The company anticipates adjusted earnings per share of $1.07, with that number also expected to be impacted by eBay dynamics.

Analysts were expecting third-quarter revenue of $6.44 billion and adjusted earnings per share of $1.14.

“The faster they move, from my perspective, the better,” Schulman said of eBay. He expects a “clean slate” in 2022 that he said will allow investors to “really see the impressive nature of the core business.”

PayPal raised its full-year forecast in conjunction with its March-quarter earnings report and is largely keeping that outlook intact this time around, except to boost its TPV expectations. The company now anticipates 33% to 35% annual growth in TPV, versus a prior expectation for 30%.

At the end of 2021, PayPal expects that eBay will represent less than 3% of revenue and TPV.

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