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PYPL's Q3 earnings of $1.45 per share beat estimates, while revenues of $8.58 billion missed expectations.
Transaction revenues rose 3% to $7.71 billion, while value-added services revenues fell 2% to $873 million.
TPV climbed 6% to $487.14 billion, while payment transactions increased 7% to 6.80 billion.
PayPal Holdings, Inc. (PYPL - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of $1.45, outpacing the Zacks Consensus Estimate of $1.31. However, revenues of $8.58 billion missed the consensus mark by 1.3%.
Moreover, EPS and the top line increased 8% and 2%, respectively, year over year.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
Transaction revenues rose 3% year over year to $7.71 billion. The figure was lower than our estimate of $7.82 billion.
Revenues from other value-added services totaled $873 million, down 2% from the prior-year quarter. The figure was lower than our estimate of $885.5 million.
PYPL’s Non-Financial Metrics
In the third quarter of 2026, PYPL’s active accounts increased 0.6% year over year to 440 million. The figure was slightly higher than our estimate of 439.9 million. On a sequential basis, active accounts rose 0.4% or 1.6 million.
The number of payment transactions experienced an increase of 7%, totaling 6.80 billion. The result was higher than our estimate of 6.58 billion.
Payment transactions per active account came in at 60.8, up 6% year over year. The figure was significantly higher than our estimate of 14.97.
Total payment volume (TPV) increased 6% year over year to $487.14 billion or 7% on a currency-neutral basis. The figure was below our estimate of 489.71 billion.
Transaction expense rate came in at 0.87%, below the 0.89% recorded in the year ago quarter. It was lower than our estimate of 0.90%. The transaction and credit loss rate declined to 0.08% from 0.11% reported in the prior year quarter. The figure was lower than our estimate of 0.10%.
Transaction margin reported 46%, remaining unchanged from the prior year quarter and higher than our estimate of 44.56%.
PYPL's Financial Position
Cash, cash equivalents and investments totaled $15.1 billion compared to total debt of $13.5 billion as of Sept. 30, 2026.
Net cash provided by operating activities declined 19% year over year to $1.59 billion. Free cash flow decreased 17% to $1.43 billion, while adjusted free cash flow fell 10% to $2.05 billion.
PayPal repurchased approximately 28 million shares for $1.5 billion during the third quarter and paid $118 million in dividends.
PYPL Raises Its Full-Year EPS Outlook
For 2026, PayPal expects non-GAAP EPS of approximately $5.60, up from its previous guidance of $5.38 and compared with $5.31 in 2025. The Zacks Consensus Estimate for the same is pegged at $5.39.
For the fourth quarter, PayPal expects non-GAAP EPS of approximately $1.43 compared with $1.23 in the year-ago period. The Zacks Consensus Estimate for the same is pegged at $1.36.
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry, Mastercard (MA - Free Report) and Sezzle, Inc. (SEZL - Free Report) . While Mastercard is scheduled to report on Oct. 29, Sezzle is slated to report on Nov. 4.
The consensus mark for Mastercard’s third-quarter 2026 EPS is pegged at $5.14, implying a 17.4% increase year over year. The Zacks Consensus Estimate for Sezzle’s third-quarter 2026 EPS is pinned at $1.28 cents, indicating an 80.3% increase year over year.
View the Zacks #1 Rank List
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PayPal's Q3 Earnings Beat, Transaction Revenues & TPV Rises Y/Y
Key Takeaways
PayPal Holdings, Inc. (PYPL - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of $1.45, outpacing the Zacks Consensus Estimate of $1.31. However, revenues of $8.58 billion missed the consensus mark by 1.3%.
Moreover, EPS and the top line increased 8% and 2%, respectively, year over year.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
PYPL’s Transaction Revenue Rise
Transaction revenues rose 3% year over year to $7.71 billion. The figure was lower than our estimate of $7.82 billion.
Revenues from other value-added services totaled $873 million, down 2% from the prior-year quarter. The figure was lower than our estimate of $885.5 million.
PYPL’s Non-Financial Metrics
In the third quarter of 2026, PYPL’s active accounts increased 0.6% year over year to 440 million. The figure was slightly higher than our estimate of 439.9 million. On a sequential basis, active accounts rose 0.4% or 1.6 million.
The number of payment transactions experienced an increase of 7%, totaling 6.80 billion. The result was higher than our estimate of 6.58 billion.
Payment transactions per active account came in at 60.8, up 6% year over year. The figure was significantly higher than our estimate of 14.97.
Total payment volume (TPV) increased 6% year over year to $487.14 billion or 7% on a currency-neutral basis. The figure was below our estimate of 489.71 billion.
Transaction expense rate came in at 0.87%, below the 0.89% recorded in the year ago quarter. It was lower than our estimate of 0.90%. The transaction and credit loss rate declined to 0.08% from 0.11% reported in the prior year quarter. The figure was lower than our estimate of 0.10%.
Transaction margin reported 46%, remaining unchanged from the prior year quarter and higher than our estimate of 44.56%.
PYPL's Financial Position
Cash, cash equivalents and investments totaled $15.1 billion compared to total debt of $13.5 billion as of Sept. 30, 2026.
Net cash provided by operating activities declined 19% year over year to $1.59 billion. Free cash flow decreased 17% to $1.43 billion, while adjusted free cash flow fell 10% to $2.05 billion.
PayPal repurchased approximately 28 million shares for $1.5 billion during the third quarter and paid $118 million in dividends.
PYPL Raises Its Full-Year EPS Outlook
For 2026, PayPal expects non-GAAP EPS of approximately $5.60, up from its previous guidance of $5.38 and compared with $5.31 in 2025. The Zacks Consensus Estimate for the same is pegged at $5.39.
For the fourth quarter, PayPal expects non-GAAP EPS of approximately $1.43 compared with $1.23 in the year-ago period. The Zacks Consensus Estimate for the same is pegged at $1.36.
PYPL’s Zacks Rank
Currently, PayPal carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Earnings Releases
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry, Mastercard (MA - Free Report) and Sezzle, Inc. (SEZL - Free Report) . While Mastercard is scheduled to report on Oct. 29, Sezzle is slated to report on Nov. 4.
The consensus mark for Mastercard’s third-quarter 2026 EPS is pegged at $5.14, implying a 17.4% increase year over year. The Zacks Consensus Estimate for Sezzle’s third-quarter 2026 EPS is pinned at $1.28 cents, indicating an 80.3% increase year over year.
Both MA and SEZL carry a Zacks Rank #2 (Buy).