Sharp growth in mobile payments led PayPal Holdings to report a better than expected third-quarter profit and lift its guidance for earnings through the rest of the year. 

The California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. 

Those deals are clearly starting to bear fruit, analysts said.

Since separating from online marketplace eBay in 2015, PayPal has reshaped itself from a company that mostly processed transactions for its parent to a payments giant that handles money transfers between other companies and customers, as well as friends, roommates, overseas relatives and small businesses. 

It has partnered with household names like Mastercard, Visa, JPMorgan Chase & Co, Alphabet's Google, Apple, Facebook and Microsoft's Skype.

It also acquired startups like online lender Swift Financial and remittances company Xoom, while it owns Venmo, the mobile payments app that is popular with young adults, and still handles transactions for eBay. 

In a call with analysts, Paypal's chief executive Dan Schulman characterised the third quarter as possibly the best since its split from eBay and said PayPal is on the hunt for more acquisitions. 

"We have very strong balance sheet, and it's a potential weapon for us as we think about competing going forward," he said. 

The company's adjusted profit rose 32% during the third quarter to $560m, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters. 

Revenue for the three month period rose 21.4% to $3.24 billion. 

PayPal lifted its full-year adjusted earnings forecast to a range of $1.86 to $1.88 per share from $1.80 per share to $1.84 per share. 

It expects 50 cents to 52 cents per share in earnings during the fourth quarter, compared with an average analyst estimate of 51 cents. 

Much of the gains have come from PayPal's aggressive effort to pick up market share in the fast-growing mobile payments space. 

Its mobile payments volume jumped 54% during the third quarter compared with the same time last year, to about $40 billion. Total payments volume rose 31% to $114 billion. 

Venmo, which allows individuals in the US to send each other money through a mobile app, more than doubled its payments volumes. 

Earlier this week, PayPal said it would soon allow more than 2 million merchant customers to start accepting payments through the platform.