PayPal acquires Honey Science for $4 billion, adds offers, deals to payment network

PayPal said it will acquire Honey Science, a shopping and rewards platform, for $4 billion in cash.

According to PayPal, the addition of Honey will boost engagement for its users as well as merchants. Honey was profitable in 2018 and PayPal said the deal is expected to close in the first quarter of 2020. Dan Schulman, CEO of PayPal, said Honey will be one of “the most transformative acquisitions in PayPal’s history.” Honey will continue to be led by co-founders George Ruan and Ryan Hudson.

Honey had revenue of $100 million and growing at 100%, said Schulman. Honey had 17 million monthly active users in October. 

“We believe the acquisition of Honey will be a springboard for our broader commerce ambitions,” said Schulman, speaking on an analyst conference call. “These services dramatically simplify (the shopping experience). We completed a comprehensive screen for other players and Honey had the best e-commerce suite. The combined company can optimize the commerce experience across channels and devices.”

He added that Honey “moves us up” in the shopping hierarchy since most shopping is started with some trigger event. Honey is that trigger. “We want to be a part of consumers’ lives every day,” said Schulman, who noted there is an opportunity to use analytics and understand shopper demand curves. 

Honey provides rewards, instant coupons and deals via a Chrome extension. Honey’s commerce tools are broken down like this:

• A web and mobile tool that automatically finds and applies savings across about 30,000 merchants.
• Price tracking and alerts.
• A loyalty rewards program redeemed with merchant partners.
• A mobile app that has a unified checkout experience and deal discovery.

A few key merchants in the Honey network include Etsy, Booking.com, Hulu, Dell, Walmart and Kohl’s. “We love the business on a standalone basis,” said Schulman. “But the real importance is what Honey does for the PayPal ecosystem.”

PayPal said in a statement that it will use Honey’s technology to personalize shopping experiences and scale the deals network. PayPal reckons that it will be able to drive transactions via exclusive offers across its payment network, which includes PayPal as well as Venmo.

Add it up and Honey’s offers will reach more than 275 million PayPal and Venmo accounts.

Honey will be accretive to PayPal’s non-GAAP earnings in 2021.

Related:

• PayPal Q3 tops estimates as active user base climbs to 295 million
• PayPal intros B2B commerce platform for marketplaces, e-commerce providers
• PayPal’s Venmo now has 40 million active accounts

Article source: https://www.zdnet.com/article/paypal-acquires-honey-science-for-4-billion-adds-offers-deals-to-payment-network/#ftag=RSSbaffb68