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Paypal (PYPL) Up 13.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 13.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal’s Q4 Earnings & Revenues Miss Estimates, TPV Grows Y/Y
PayPal Holdings 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.
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 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.
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, PayPal’s payment transactions per active account were 57.7, which dropped 4.8% year over year.
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%.
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.
PayPal 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.58% due to these changes.
VGM Scores
At this time, Paypal has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock has a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Paypal has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Paypal (PYPL) Up 13.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Paypal (PYPL - Free Report) . Shares have added about 13.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paypal due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PayPal’s Q4 Earnings & Revenues Miss Estimates, TPV Grows Y/Y
PayPal Holdings 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.
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 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.
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, PayPal’s payment transactions per active account were 57.7, which dropped 4.8% year over year.
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%.
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.
PayPal 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.58% due to these changes.
VGM Scores
At this time, Paypal has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock has a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Paypal has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.