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PYPL Q2 Earnings Top Estimates, Shares Decline Despite Guidance Raise
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Key Takeaways
PYPL beats Q2 estimates with EPS of $1.40 and revenues of $8.3B, up 17.6% and 5.1% YoY, respectively.
Total payment volume rose 6% to $443.5B, but payment transactions dropped 5% in the quarter.
PYPL raised full-year EPS and margin guidance but kept free cash flow outlook unchanged.
PayPal Holdings (PYPL - Free Report) reported second-quarter 2025 non-GAAP earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate by 7.7% and jumped 17.6% year over year. Results reflected better-than-expected growth in revenues.
PayPal saw an uptick in both total payment volume (TPV) and revenues compared to the first quarter, along with another quarter of high single-digit growth in transaction margin dollars. Reflecting this momentum, the company raised its full-year guidance for transaction margin dollars and EPS while maintaining its outlook for free cash flow.
Net revenues of $8.3 billion increased 5.1% year over year on a reported basis and 5% on a forex-neutral basis. The figure topped the consensus mark by 2.3%.
However, following the results, PayPal shares were down roughly 7% at the time of posting this article. Despite the guidance raise and decent results, PayPal’s payment transactions declined 5% in the reported quarter.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
TPV was $443.5 billion for the second quarter, up 6% year over year on a reported basis and 5% on a forex-neutral basis.
The transaction margin in dollar terms was $3.8 billion, which grew 6.5% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 8% to $3.5 billion.
Transaction revenues were $7.4 billion (89.8% of net revenues), up 4% year over year. Value Added Services revenues were $847 million (10.2% of net revenues), which rose 15.7% year over year.
Net revenues from the United States totaled $4.71 billion (56.8% of net revenues), up 3.5% on a year-over-year basis. International net revenues were $3.6 billion (43.2% of net revenues), up 7.3% year over year on a reported basis and 7% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 2% in total active accounts to 438 million in the reported quarter. The total number of payment transactions was 6.2 billion, down 5% on a year-over-year basis. PYPL’s payment transactions per active account were 58.3 million, which dropped 4% year over year.
PYPL’s Operating Details
PayPal’s operating expenses were $6.78 billion in the second quarter, up 3.4% year over year. However, the operating margin expanded 134 basis points year over year to 18.1%.
The transaction expense rate was 0.89% in the second quarter compared with 0.95% reported in the year-ago quarter.
The transaction margin improved 60 bps to 46.4%.
PYPL’s Balance Sheet Remains Strong
As of June 30, 2025, cash, cash equivalents and investments (including long-term) were $13.7 billion. The long-term debt balance was $11.5 billion.
PYPL generated $0.9 billion in cash from operations, while adjusted free cash flow was $0.7 billion in the second quarter of 2025.
The company returned $1.5 billion to shareholders through share repurchases.
PayPal Raises 2025 Guidance
For 2025, PayPal anticipates non-GAAP earnings between $5.15 per share and $5.30 per share, calling for 11-14% growth year over year. This is up from the prior guided range of $4.95-$5.10.
The transaction margin dollar is expected between $15.35 billion and $15.5 billion, suggesting growth in the 5-6% range. This is ahead of the prior projection of $15.2 billion-$15.4 billion.
Non-GAAP non-transaction operating expenses are expected to grow in the low single-digit range.
Free cash flow is expected between $6 billion and $7 billion. Share repurchase is expected to be roughly $6 billion.
For the third quarter of 2025, PayPal expects non-GAAP earnings between $1.18 and $1.22 per share.
Transaction margin dollars are expected between $3.76 billion and $3.82 billion, suggesting growth in the 3-5% range for the current quarter.
PYPL’s Zacks Rank & Upcoming Earnings Releases
Currently, PayPal carries a Zacks Rank #2 (Buy).
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry — Mastercard Incorporated (MA - Free Report) and Fidelity National Information Services, Inc. (FIS - Free Report) . While Mastercard is scheduled to report on July 31, Fidelity National Information Services is slated to report on Aug. 5.
The Zacks Consensus Estimate for Mastercard’s second-quarter 2025 EPS stands at $4.05, indicating a 12.81% increase year over year. The consensus mark for Fidelity National Information Services’ second-quarter EPS is pegged at $1.36, implying no change year over year.
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PYPL Q2 Earnings Top Estimates, Shares Decline Despite Guidance Raise
Key Takeaways
PayPal Holdings (PYPL - Free Report) reported second-quarter 2025 non-GAAP earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate by 7.7% and jumped 17.6% year over year. Results reflected better-than-expected growth in revenues.
PayPal saw an uptick in both total payment volume (TPV) and revenues compared to the first quarter, along with another quarter of high single-digit growth in transaction margin dollars. Reflecting this momentum, the company raised its full-year guidance for transaction margin dollars and EPS while maintaining its outlook for free cash flow.
Net revenues of $8.3 billion increased 5.1% year over year on a reported basis and 5% on a forex-neutral basis. The figure topped the consensus mark by 2.3%.
However, following the results, PayPal shares were down roughly 7% at the time of posting this article. Despite the guidance raise and decent results, PayPal’s payment transactions declined 5% in the reported quarter.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
PYPL’s Revenue Details
TPV was $443.5 billion for the second quarter, up 6% year over year on a reported basis and 5% on a forex-neutral basis.
The transaction margin in dollar terms was $3.8 billion, which grew 6.5% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 8% to $3.5 billion.
Transaction revenues were $7.4 billion (89.8% of net revenues), up 4% year over year. Value Added Services revenues were $847 million (10.2% of net revenues), which rose 15.7% year over year.
Net revenues from the United States totaled $4.71 billion (56.8% of net revenues), up 3.5% on a year-over-year basis. International net revenues were $3.6 billion (43.2% of net revenues), up 7.3% year over year on a reported basis and 7% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 2% in total active accounts to 438 million in the reported quarter. The total number of payment transactions was 6.2 billion, down 5% on a year-over-year basis. PYPL’s payment transactions per active account were 58.3 million, which dropped 4% year over year.
PYPL’s Operating Details
PayPal’s operating expenses were $6.78 billion in the second quarter, up 3.4% year over year. However, the operating margin expanded 134 basis points year over year to 18.1%.
The transaction expense rate was 0.89% in the second quarter compared with 0.95% reported in the year-ago quarter.
The transaction margin improved 60 bps to 46.4%.
PYPL’s Balance Sheet Remains Strong
As of June 30, 2025, cash, cash equivalents and investments (including long-term) were $13.7 billion. The long-term debt balance was $11.5 billion.
PYPL generated $0.9 billion in cash from operations, while adjusted free cash flow was $0.7 billion in the second quarter of 2025.
The company returned $1.5 billion to shareholders through share repurchases.
PayPal Raises 2025 Guidance
For 2025, PayPal anticipates non-GAAP earnings between $5.15 per share and $5.30 per share, calling for 11-14% growth year over year. This is up from the prior guided range of $4.95-$5.10.
The transaction margin dollar is expected between $15.35 billion and $15.5 billion, suggesting growth in the 5-6% range. This is ahead of the prior projection of $15.2 billion-$15.4 billion.
Non-GAAP non-transaction operating expenses are expected to grow in the low single-digit range.
Free cash flow is expected between $6 billion and $7 billion. Share repurchase is expected to be roughly $6 billion.
For the third quarter of 2025, PayPal expects non-GAAP earnings between $1.18 and $1.22 per share.
Transaction margin dollars are expected between $3.76 billion and $3.82 billion, suggesting growth in the 3-5% range for the current quarter.
PYPL’s Zacks Rank & Upcoming Earnings Releases
Currently, PayPal carries a Zacks Rank #2 (Buy).
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry — Mastercard Incorporated (MA - Free Report) and Fidelity National Information Services, Inc. (FIS - Free Report) . While Mastercard is scheduled to report on July 31, Fidelity National Information Services is slated to report on Aug. 5.
The Zacks Consensus Estimate for Mastercard’s second-quarter 2025 EPS stands at $4.05, indicating a 12.81% increase year over year. The consensus mark for Fidelity National Information Services’ second-quarter EPS is pegged at $1.36, implying no change year over year.
While Fidelity National Information Services carries a Zacks Rank #2, Mastercard has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.