PayPal (NASDAQ:PYPL) reported first-quarter results late last month, and they showed more strong growth from the digital payments company. As revenue increased 12% year over year, PayPal's non-GAAP earnings per share jumped 37% to $0.78. In addition, the company added 9.3 million net new active accounts during the quarter, bringing total active accounts to 277 million.

Two themes beneath these headline figures worth digging into were discussed during PayPal's first-quarter earnings call:

  1. PayPal's monetization of Venmo continued to impress.
  2. The company is escaping the negative impact of eBay's (NASDAQ:EBAY) slowing payment volume.

Here's a look at these important topics.

A person using Venmo messaging on a smartphone

PayPal's peer-to-peer payment app, Venmo. Image source: PayPal.

Venmo's impressive momentum

PayPal's peer-to-peer (P2P) payment app, Venmo, continues to grow rapidly as it evolves into a broader financial ecosystem. Management said active Venmo customers rose to more than 40 million in Q1. In addition, total payment volume (TPV) on the platform jumped 73% year over year to $21 billion.

As activity on Venmo soars, so too does PayPal's revenue from the platform. Venmo's annualized revenue run rate surpassed $300 million in Q1, up from a run rate of about $200 million at the end of 2018.

When an analyst asked whether this revenue growth is generated mostly from one aspect of Venmo's business or if it is broad based, PayPal management's response was encouraging. "[W]e're certainly pleased with the monetization of Venmo and the rate at which that's progressing," said PayPal chief operating officer Bill Ready. "And ... it's not really concentrated on any one thing. We've got multiple initiatives that are monetizing for Venmo."

Some examples of monetized features include the Venmo debit card, Pay with Venmo, and Instant Transfer.

"[Venmo revenue is] not really concentrated in any one of those things," Ready said. "And what we're really seeing across the user base is those Venmo users -- while still growing in number, quite rapidly -- are also deepening their engagement with us and are looking for more and more products from us."

PayPal is no longer dependent on eBay

Over a year ago, PayPal announced eBay would be phasing PayPal out as its primary payment processor over a multiyear period. The news startled investors, and shares slid about 6% after the announcement. But this fear has faded into the past as PayPal has proved its growth story isn't dependent on eBay. TPV has continued to soar, and PayPal stock has surged 44% since this announcement was made.

PayPal CEO Dan Schulman shared some encouraging stats on how the company is breaking away from eBay.

Total payment volume, excluding eBay, grew 29% on an FX-neutral basis, outpacing the overall payments market, as we continue to gain share. eBay had negative TPV growth of 4% this quarter, and now represents just 9.7% of our overall TPV. Our merchant services TPV growth rate has accelerated over the past two quarters, offsetting a 700-basis-point decline in eBay's TPV growth rate during that same period.

Despite eBay's dwindling importance to PayPal, Schulman clarified that the online marketplace remains an important strategic partner. However, it's clear that good performance at eBay is no longer necessary for PayPal's growth story to remain compelling.