My mind's been percolating on something revolving around this intense period of earnings. We are in what I can only describe as Sweeps week, a ratings period when we decide which shows we are going to back, which ones we are going to pay for, and which ones we want to cut loose.
In a Sweeps week, we are looking for "who won the night," so to speak; who managed to get so much attention and garner so much interest, that you want to put your money behind it, and which ones lost support, even as we thought they could be fabulous and we want to walk away from them.
So, who won the night last night? It's not easy. When I look at ServiceNow (NOW) , the cloud-based company that is literally replacing outdated patterns of work -- particularly involving crucial customer service or hard-to-manage, but consistent problems of human relations -- I can make a strong case that we have a winner.
Any company with 41% growth, including sub revenues of 43% year over year, with 73% of clients licensing more than one product, up from 50% two years ago, has to be considered a winner. This company, with a new CEO, John Donahoe, late of eBay (EBAY) , looking to pick up right where one of the most hard-charging execs in the valley, Frank Slootman, left off, has grown from $93 million in revenues six years ago when it had 375 employees to 5000 people and $1.4 billion today. Under Slootman's five-year public tenure, this was the best performing stock of all software IPOs. That's how you get to a $15 billion market cap.
But, you know what? As phenomenal as those stats are at Service Now, I think it might be Paypal (PYPL) that won the night. The stats here are nothing but extraordinary. Paypal had, arguably, its best quarter ever, adding six million new customers, a 35% jump from the 4.5 million added year over year, which is a gigantic figure and brings the company to more than 203 million online payment accounts. That's the largest organic growth in three years, showing phenomenal acceleration in this key metric.
It's on track to add 20 million people and its transactions per account have gone from an average of 28 per quarter to 32. Revenues are up 17% -19% on currency neutrality, producing non-GAAP earnings of $0.44, above the high end and, perhaps most important, generated a monstrous $603 million in FREE cash flow.
That gives this company a remarkable flywheel effect and allows the remarkable CEO Dan Schulman to announce a $5 billion buyback. It's a cash machine, a digital ATM for its shareholders.
Not only that, but its Venmo division, with peer-to-peer cash delivery, showed a 114% increase in growth to $6.8 billion in transactions, with virtually nil marketing.
Most of all, Paypal continues to expand all of its partnerships, including its worldwide Visa (V) deal, which is now extended to Asia Pacific, and its Google (GOOGL) relationship, which will position it as the keystone to Android Pay. I like that it added an important expansion of its key deal with Action Alerts PLUS charity portfolio holding Wells Fargo (WFC) , which allows that important issuer to expand services at point of sale. It also finalized a deal with Discover to go along with its MasterCard (MA) and Citi (C) partnerships.
I mention all of these partnerships because at one time or another, the bears -- who were considerable and powerful -- had used these potential opponents of Paypal as the reason why you had to short the darned thing. Now, because of the persuasion of Shulman that you have to work with Paypal not fight it -- particularly if you want to expand mobility while winning over the hearts and minds of millennials -- you had no choice but to do so.
There's an ironic coda to last night's Sweeps winners: Donohue, who now runs ServiceNow, shepherded ebay to split off Paypal two years ago, albeit somewhat under pressure from Carl Icahn to do so. Now he's asked to keep the ServiceNow juggernaut going, while Schulman takes Paypal to levels no one dreamed possible just a few short years ago.