PayPal Holdings Inc. (PYPL.O) exceeded analysts’ earnings estimates and said it’s making progress toward monetizing Venmo, the popular mobile-payments service.

The San Jose, California-based company reported adjusted earnings per share of 58 cents in the three months ending in September, above analysts’ estimates of 54 cents U.S.. Revenue in the third quarter rose 14 per cent to US$3.68 billion. Analysts had projected US$3.67 billion on average.

PayPal boosted its outlook for fourth-quarter revenue to US$4.2 billion to US$4.28 billion, in line with analysts’ estimates. Shares rose as much as 9.5 per cent in extended trading, after closing down 3.3 per cent.

Chief Executive Officer Dan Schulman has been working to squeeze value from Venmo, which is a hit among smartphone-wielding consumers but has yet to turn a profit. In an interview on Thursday, Schulman said PayPal has reversed a trend of mounting losses in the Venmo business. “It’s clearly on the right track,” he said. “The economics overall are improving, and the growth and momentum around it is substantial.”

In June, the company began rolling out a debit card for Venmo, which would allow it to collect transaction fees. Before PayPal’s last earnings report in July, billionaire Dan Loeb’s hedge fund Third Point LLC disclosed a stake in the company and said he thinks Venmo could contribute US$1 billion in annual sales within three years.

PayPal has courted retailers to accept Venmo transactions from customers’ phones, and Uber Technologies Inc. agreed to add a Pay With Venmo option in July. This week, PayPal increased the fee for fast transfer of funds to bank accounts to 1 per cent of the transaction amount from a flat 25 cents U.S.

In a conference call following the earnings report Thursday, Schulman said the number of people actively using Pay With Venmo increased 185 per cent last month compared with the month before. By convincing people to make purchases using their Venmo balance instead of a credit card linked to their accounts, PayPal is hoping to wring more profit from transaction fees.

PayPal doesn’t disclose the number of active Venmo users, but the transaction growth rate has plateaued. Transactions on the app totaled US$16.7 billion in the third quarter, an increase of 78 per cent from the same period a year ago. The growth rate was the same in the second quarter. Across all services, PayPal handled US$143 billion in payment volume in the third quarter, an increase of 24 per cent.