INSUBCONTINENT EXCLUSIVE:
PayPal announced today it has agreed to acquire Honey Science Corporation, the makers of a deal-finding browser add-on and mobile
application, for $4 billion, mostly cash
The acquisition, which is PayPal largest to date, will give the payments giant a foothold earlier in the customer shopping journey
Instead of only competing on the checkout page against credit cards or Apple Pay, for example, PayPal will leap ahead to become a part of
the deal discovery process, as well.
Currently, Honey 17 million monthly active users take advantage of its suite of money-saving tools to
track prices, get alerts, make lists, browse offers and participate in an Ebates-like rewards program called Honey Gold
Its users tend to be younger, millennial shoppers, both male and female.
PayPal aims to add Honey technology to its own product line,
expanding its reach to PayPal 300 million users.
&What exciting is that we can take the functionality Honey now offers — which is product
discovery, price tracking, offers and loyalty — and build that into the PayPal and Venmo experiences,& explains PayPal SVP of Global
Consumer Products and Technology, and former Xoom CEO, John Kunze
&When Honey says they&re putting money in the pockets of their customers — that perfectly in line with what we want to do
We want to make digital commerce and financial services more affordable, easier to use, more fun and more accessible to people around the
world,& he says.
In addition, PayPal network of 24 million merchant partners will gain the ability to offer targeted and more personalized
promotions to consumers as a means of acquiring new business and driving increased sales
PayPal Credit may also be integrated into Honey to help finance larger purchases.
Honey has flown under the radar to some extent since its
founding in 2012.
Originally only a web browser extension, Honey tracks sales and retailers& promo codes, as a rival to RetailMeNot and
What makes the extension so useful is that it automatically tries all the eligible promo codes for you during checkout then selects the one
that provided the most savings and applies it on your behalf
This helps shoppers feel more comfortable with their purchases and reduces shopping cart abandonment.
The company also rolled out features
to inform shoppers of an item price history, including the historical pricing of any product on Amazon marketplace
In 2017, Honey launched DropList, which would track and alert users to lower prices, as well as tools for finding travel deals.
As more
consumers shifted their shopping to e-commerce merchants, Honey user base also rapidly grew.
Its browser extension now works across
approximately 30,000 merchant websites, including fashion, technology, travel and even pizza delivery
Last year, Honey publicly shared that its 10 million members had saved over $800 million using its tools
As of today, Honey 17 million members have saved more than $2 billion to date.
&Honey is amongst the most transformative acquisitions in
It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and
rewarding,& said Dan Schulman, president and CEO of PayPal, in a statement.
&The combination of Honey complementary consumer products with
our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers
As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships,
provide personalized offers, and drive incremental sales
The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform,& Schulman added.
The
acquisition also gives PayPal a way to fight back against the increased competition from Apple, Google, Facebook and other tech companies
that have entered the payments market in recent years
On Apple Q4 2019 earnings call, for example, CEO Tim Cook noted that Apple Pay has now exceeded PayPal transaction volume with 3 billion
transactions in the quarter
Meanwhile, analysts are predicting Facebook Pay has the potential to unseat both Apple Pay and PayPal alike.
Then there are PayPal original
rivals — the world biggest card networks like Visa, Mastercard, American Express and Discover
These companies are also fighting to remain relevant online, with a new PayPal competitor of their own to simplify online checkout.
With
Honey, PayPal immediately shifts the battle away from the checkout page itself to instead compete against all the places people go to
discover, browse, get inspired and deal-hunt — whether that directly on retailers& sites or through newer platforms, like Pinterest or
Instagram Shopping.
As a result of the acquisition, Honey co-founders George Ruan and Ryan Hudson will join PayPal where they&ll work on
product integrations and scaling the technology to a much larger user base
Also joining is Honey predominantly L.A.-based team of 350 employees.
The Honey team and headquarters will remain in L.A., where they&ve
just signed a lease on a new office space with expansion goals in mind.
&Combining PayPal assets and reach with our technology, we can build
powerful new online shopping experiences for consumers and merchants,& said Hudson
&We&ll have the ability to help millions of retailers efficiently reach consumers with offers that deliver more and more value to Honey
members.&
To date, Honey had raised $49 million from investors, including Ludlow Ventures, Zuma Partners, Mucker Capital, SXE Ventures, BAM
Ventures, Plug and Play, Wonder Ventures, Cendana Capital, Anthos Capital and others, according to Crunchbase.
Honey was already profitable
on a net income basis in 2018, PayPal notes
The acquisition is expected to close in the first quarter of 2020, subject to regulatory approval
It expected to be accretive to PayPal non-GAAP earnings per share in 2021.
PayPal will hold a conference call at 2 PM PST today to discuss
