PayPal Holdings, Inc.
PYPL · NASDAQ-GS
Next quarter
Expected to report Feb 2, 2027 — estimated from last year’s reporting date.
Consensus is $1.43 EPS for Dec 2026 across 10 estimates, ranging $1.42 to $1.45.
PYPL Sep 2026
- 10.69%
- $1.31
- $1.45
- —
- $8.58B
Reported results
- $8.58B
- $1.40B
- 16.33%
- $1.07B
- $1.25
Highlights
- Non-GAAP EPS: $1.45, up 8% year over year and 10.7% above the supplied $1.31 consensus; GAAP diluted EPS was $1.25, down 4%.
- Guidance raised: 2026 non-GAAP EPS outlook increased to about $5.60 from $5.38, and transaction margin dollars are now expected at about $15.7 billion, or $14.6 billion excluding customer-balance interest.
- Underlying growth: TPV rose 6% to $487.1 billion, or 7% FX-neutral; transactions increased 7% to 6.8 billion while active accounts grew just 0.6% to 440 million.
- Transaction margin dollars: Increased 2% to $3.95 billion and 3% excluding interest on customer balances, to $3.66 billion.
- GAAP pressure: Revenue rose 2% to $8.58 billion, but GAAP operating income fell 8% to $1.40 billion and net income fell 14% to $1.07 billion; non-GAAP operating income rose 3% to $1.61 billion.
- Growth engines: Venmo TPV grew at a double-digit rate for an eighth consecutive quarter; Pay with Venmo grew 43%, Pay Later 25%, and Braintree TPV 10%.
- Cash and capital returns: Adjusted free cash flow was $2.05 billion, down 10% year over year; PayPal repurchased about 28 million shares for $1.5 billion and declared a $0.14-per-share dividend.
- Transformation: PayPal has reduced headcount by more than 2,000 and targets at least $1.5 billion in gross run-rate savings over two to three years, including more than $700 million exiting 2026.
Analysis
PayPal delivered a mixed but improving operating print: non-GAAP EPS of $1.45 beat the supplied $1.31 consensus by 10.7% and grew 8% year over year, while GAAP diluted EPS of $1.25 declined 4%. Revenue was $8.58 billion, up 2% year over year but down 1% from Q2’s $8.68 billion. Sequential GAAP operating income eased to $1.40 billion from $1.43 billion, and diluted EPS was unchanged at $1.25. Against Q3 2025, GAAP operating income fell 8% and net income fell 14%; non-GAAP operating income rose 3% as its margin expanded 16 basis points to 18.8%. Higher restructuring costs and a higher effective tax rate contributed to the weaker GAAP result.
The quarter’s central theme was early evidence that growth is broadening beyond branded checkout, alongside cost discipline. TPV grew 7% FX-neutral, and transaction margin dollars rose 3% excluding interest on customer balances, while active accounts remained nearly flat. Venmo, Pay Later and Braintree showed strong momentum, even as branded checkout growth held around 1%–2% and European de minimis changes weighed on results. Management raised full-year non-GAAP EPS guidance to about $5.60 and transaction margin dollars guidance to about $15.7 billion, but expects investment to increase in 2027 while targeting EPS growth similar to 2026.
Earnings and margins
Revenue increased 2% year over year to $8.58 billion, but GAAP profitability contracted: operating income declined 8% to $1.40 billion and operating margin fell 173 basis points to 16.3%. Restructuring and other expense rose to $255 million from $69 million a year earlier; the effective tax rate increased to 21.9% from 18.6%. By contrast, non-GAAP operating income advanced 3% to $1.61 billion and margin expanded 16 basis points to 18.8%. Non-GAAP EPS of $1.45 was 8% higher year over year and above the supplied $1.31 consensus. GAAP EPS was $1.25, down 4% from $1.30.
Transaction growth
- Volume and engagement: TPV rose 6% to $487.1 billion, or 7% FX-neutral. Payment transactions increased 7% to 6.8 billion, and trailing-12-month transactions per active account rose 6% to 60.8.
- Account base: Active accounts reached 440 million, up 0.6% year over year and 1.6 million sequentially, a modest increase relative to transaction and engagement growth.
- Margin dollars: Transaction margin dollars were $3.95 billion, up 2%; excluding $289 million of interest on customer balances, they were $3.66 billion, up 3%. Management cited a lower transaction expense rate, lower transaction losses and a credit-loss reserve release as supports to the quarter.
Growth engines
Management emphasized financial services, Venmo and payment services as increasingly important contributors to transaction margin growth. Financial services—including Pay Later, credit and debit—already account for more than 20% of transaction margin dollars in 2026 and are growing at a double-digit rate. Venmo TPV has grown at a double-digit rate for eight consecutive quarters; its debit card reached 6.7 million monthly active accounts, up more than 55%, while Pay with Venmo TPV rose 43%. Pay Later grew 25%. In payment services, Braintree TPV grew 10%, and value-added-services attachment rose to 6% from 5% a year earlier. PayPal plans to keep building these products and merchant services to diversify growth and deepen customer relationships.
Branded checkout
Branded checkout remained the softer part of the growth profile: TPV growth was relatively stable at 1%–2% for four quarters, and management expects a similar range in Q4. In the U.S., PayPal reported a third consecutive quarter of improvement and said merchant cohorts using its checkout, presentment and marketing playbook gained relative share. Germany stabilized, while the removal of the EU de minimis tax exemption created an estimated 70-basis-point headwind to total branded checkout growth; the company expects that pressure to persist through Q4. Management plans to extend its U.S. merchant approach into Europe, while noting that the largest-merchant investments may take two to three years to produce results.
Outlook and transformation
- 2026 outlook: Non-GAAP EPS guidance rose to about $5.60 from $5.38, and transaction margin dollars guidance to about $15.7 billion, including $14.6 billion excluding interest on customer balances. The company reaffirmed GAAP EPS guidance of about $5.07. Adjusted free cash flow guidance includes at least $6.5 billion, with about $6 billion of share repurchases.
- Fourth quarter: PayPal expects low-double-digit FX-neutral revenue growth, slightly positive transaction margin dollar growth and non-GAAP EPS of about $1.43; GAAP EPS is expected to be about $1.37.
- 2027 priorities: Management expects to invest more in transaction margin and operating expenses while targeting non-GAAP EPS growth similar to 2026. It described mid-single-digit transaction margin dollar growth as a medium-term goal, supported by Venmo, processing and financial services, rather than requiring branded checkout to return to historical growth.
- Operating changes: The company has removed more than 2,000 roles and three organizational layers across most areas, and says AI service agents have resolved more than 24 million contacts year to date. It remains on track for at least $1.5 billion in gross run-rate savings over two to three years.
Cash and returns
Operating cash flow was $1.59 billion and free cash flow $1.43 billion, down 19% and 17% year over year, respectively. Adjusted free cash flow, which adds back the net timing impact of held-for-sale loan originations and subsequent repayments or sales, was $2.05 billion, down 10% from $2.28 billion. PayPal repurchased about 28 million shares for $1.5 billion in the quarter; trailing-12-month repurchases totaled about 117 million shares and $6.0 billion. Cash, cash equivalents and investments totaled $15.1 billion at quarter-end against $13.5 billion of debt. The board declared a quarterly dividend of $0.14 per share.
