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PayPal Shares Fall as Q4 Earnings & Revenues Miss Estimates
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Key Takeaways
PYPL reported Q4 non-GAAP EPS of $1.23 and $8.68B revenues, both missing estimates as shares fell about 17%.
PYPL saw payment transactions per active account drop 4.8% to 57.7, even as TPV and revenues rose Y/Y.
PayPal guided to a mid-single-digit Q1 EPS decline and softer transaction margin dollar.
PayPal Holdings (PYPL - Free Report) reported fourth-quarter 2025 non-GAAP earnings per share (EPS) of $1.23, which missed the Zacks Consensus Estimate of $1.29. However, the metric jumped 3.4% year over year.
Following the results, PayPal shares were down roughly 18% on the NYSE at the time of posting this article. Results reflected lower-than-expected growth in revenues. Its payment transactions per active account declined in the reported quarter. However, PayPal witnessed an uptick in both total payment volume (TPV) and revenues year over year, along with another quarter of single-digit growth in transaction margin dollars.
Net revenues of $8.68 billion increased 3.7% year over year on a reported basis and 3% on a forex-neutral basis. The reported figure missed the Zacks Consensus Estimate of $8.77 billion.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
TPV was $475.14 billion for the fourth quarter, up 8.5% year over year on a reported basis and 6% on a forex-neutral basis.
The transaction margin in dollar terms was $4.03 billion, which grew 2.5% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 3.8% to $3.74 billion.
Transaction revenues were $7.82 billion (90.1% of net revenues), up 3% year over year. Value Added Services revenues were $857 million (9.9% of net revenues), which rose 10.2% year over year.
Net revenues from the United States totaled $4.94 billion (57% of net revenues), up 4.5% on a year-over-year basis. International net revenues were $3.73 billion (43% of net revenues), up 2.7% year over year on a reported basis and 1% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 1.2% in total active accounts to 439 million in the reported quarter. The total number of payment transactions was 6.75 billion, up 2% on a year-over-year basis. However, PYPL’s payment transactions per active account were 57.7, which dropped 4.8% year over year.
PYPL’s Operating Details
PayPal’s operating expenses were $7.17 billion in the fourth quarter, up 3.5% year over year.
The transaction expense rate was 0.89% in the fourth quarter compared with 0.91% reported in the year-ago quarter.
The transaction margin shrank 50 basis points to 46.5%.
PYPL’s Balance Sheet Remains Strong
As of Dec. 31, 2025, cash, cash equivalents and investments were $14.8 billion, up from $14.4 billion reported as of Sept. 30, 2025. The long-term debt balance was $10 billion.
PYPL generated $2.4 billion in cash from operations, while adjusted free cash flow was $2.1 billion in the fourth quarter of 2025.
The company returned $1.5 billion to shareholders through share repurchases in the quarter.
PayPal Issues Q1 & 2026 Guidance
For 2026, PayPal anticipates non-GAAP EPS to range from a decline of low-single digits to slightly positive.
The transaction margin dollar is expected to decline slightly.
Non-GAAP non-transaction operating expenses are expected to grow approximately 3%.
Adjusted free cash flow is expected to be more than $6 billion. Share repurchase is expected to be roughly $6 billion.
For the first quarter of 2026, PayPal expects non-GAAP EPS to decline in the mid-single digits.
Transaction margin dollars are expected to decline slightly.
PYPL’s Zacks Rank & Upcoming Earnings Releases
Currently, PayPal carries a Zacks Rank #4 (Sell).
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry — Fidelity National Information Services, Inc. (FIS - Free Report) and Western Union (WU - Free Report) . While Fidelity National Information Services is scheduled to report on Feb. 10, Western Union is slated to report on Feb. 20.
The consensus mark for Fidelity National Information Services’ fourth-quarter EPS is pegged at $1.69, implying a 20.7% increase year over year. The Zacks Consensus Estimate for Western Union’s fourth-quarter 2025 EPS stands at 43 cents, indicating a 7.5% increase year over year.
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PayPal Shares Fall as Q4 Earnings & Revenues Miss Estimates
Key Takeaways
PayPal Holdings (PYPL - Free Report) reported fourth-quarter 2025 non-GAAP earnings per share (EPS) of $1.23, which missed the Zacks Consensus Estimate of $1.29. However, the metric jumped 3.4% year over year.
Following the results, PayPal shares were down roughly 18% on the NYSE at the time of posting this article. Results reflected lower-than-expected growth in revenues. Its payment transactions per active account declined in the reported quarter. However, PayPal witnessed an uptick in both total payment volume (TPV) and revenues year over year, along with another quarter of single-digit growth in transaction margin dollars.
Net revenues of $8.68 billion increased 3.7% year over year on a reported basis and 3% on a forex-neutral basis. The reported figure missed the Zacks Consensus Estimate of $8.77 billion.
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 $475.14 billion for the fourth quarter, up 8.5% year over year on a reported basis and 6% on a forex-neutral basis.
The transaction margin in dollar terms was $4.03 billion, which grew 2.5% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 3.8% to $3.74 billion.
Transaction revenues were $7.82 billion (90.1% of net revenues), up 3% year over year. Value Added Services revenues were $857 million (9.9% of net revenues), which rose 10.2% year over year.
Net revenues from the United States totaled $4.94 billion (57% of net revenues), up 4.5% on a year-over-year basis. International net revenues were $3.73 billion (43% of net revenues), up 2.7% year over year on a reported basis and 1% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 1.2% in total active accounts to 439 million in the reported quarter. The total number of payment transactions was 6.75 billion, up 2% on a year-over-year basis. However, PYPL’s payment transactions per active account were 57.7, which dropped 4.8% year over year.
PYPL’s Operating Details
PayPal’s operating expenses were $7.17 billion in the fourth quarter, up 3.5% year over year.
The transaction expense rate was 0.89% in the fourth quarter compared with 0.91% reported in the year-ago quarter.
The transaction margin shrank 50 basis points to 46.5%.
PYPL’s Balance Sheet Remains Strong
As of Dec. 31, 2025, cash, cash equivalents and investments were $14.8 billion, up from $14.4 billion reported as of Sept. 30, 2025. The long-term debt balance was $10 billion.
PYPL generated $2.4 billion in cash from operations, while adjusted free cash flow was $2.1 billion in the fourth quarter of 2025.
The company returned $1.5 billion to shareholders through share repurchases in the quarter.
PayPal Issues Q1 & 2026 Guidance
For 2026, PayPal anticipates non-GAAP EPS to range from a decline of low-single digits to slightly positive.
The transaction margin dollar is expected to decline slightly.
Non-GAAP non-transaction operating expenses are expected to grow approximately 3%.
Adjusted free cash flow is expected to be more than $6 billion. Share repurchase is expected to be roughly $6 billion.
For the first quarter of 2026, PayPal expects non-GAAP EPS to decline in the mid-single digits.
Transaction margin dollars are expected to decline slightly.
PYPL’s Zacks Rank & Upcoming Earnings Releases
Currently, PayPal carries a Zacks Rank #4 (Sell).
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry — Fidelity National Information Services, Inc. (FIS - Free Report) and Western Union (WU - Free Report) . While Fidelity National Information Services is scheduled to report on Feb. 10, Western Union is slated to report on Feb. 20.
The consensus mark for Fidelity National Information Services’ fourth-quarter EPS is pegged at $1.69, implying a 20.7% increase year over year. The Zacks Consensus Estimate for Western Union’s fourth-quarter 2025 EPS stands at 43 cents, indicating a 7.5% increase year over year.
FIS and WU carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.