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PayPal's Venmo Grows in Q3: Can Rising Monetization Fuel Earnings?
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Key Takeaways
Venmo's Q3 payment volume rose 14% to $96.8 billion, marking eight straight quarters of double-digit growth.
Pay with Venmo volume rose 43%, while debit card accounts jumped over 55% to 6.7 million in Q3.
PYPL raised its 2026 adjusted EPS outlook to $5.60 as Venmo's monetization and user engagement improved.
PayPal Holdings, Inc. (PYPL - Free Report) continued to witness strong momentum in its Venmo business during the third quarter of 2026, supported by higher payment volumes, increased engagement and growing adoption of monetized services. Venmo's total payment volume (TPV) rose 14% year over year to $96.8 billion from $85.2 billion, marking its eighth consecutive quarter of double-digit growth.
Venmo accounted for 20% of PayPal's total payment volume during the quarter, up from 19% a year earlier. The platform's growth reflects increasing adoption of its debit card and Pay with Venmo offerings. Pay with Venmo TPV rose 43% year over year, highlighting growing consumer demand for using the service beyond peer-to-peer payments.
Venmo's debit card business also gained momentum, with monthly active accounts rising more than 55% year over year to 6.7 million. The platform added a record 1.6 million first-time debit card users during the third quarter. Moreover, debit card payment volume increased more than 60%, reflecting stronger spending activity and deeper customer engagement.
Monetization remains a key growth opportunity. Venmo's average revenue per active account (ARPA) increased at a double-digit rate, supported by rising adoption of financial services. Notably, debit card users generate five to six times higher ARPA than peer-to-peer-only users. With just 23% of Venmo customers using financial services, further adoption could support higher revenues and transaction margins.
For PayPal, Venmo's expansion is strengthening overall profitability. Transaction margin dollars increased 2% year over year to $3.95 billion, while non-GAAP earnings rose 8% to $1.45 per share. Management raised its full-year 2026 non-GAAP EPS guidance to approximately $5.60 from $5.38, reflecting improving earnings expectations.
How Are Block & Apple Doing in the Payments Space?
Block, Inc.’s (XYZ - Free Report) Cash App competes with PayPal’s Venmo in peer-to-peer payments while offering debit spending, merchant payments and financial services. Its Neighborhoods initiative connects Cash App users with Square merchants, supporting engagement and payment adoption. In third-quarter 2026, Cash App gross profit increased 27% year over year to $2.07 billion.
Apple (AAPL - Free Report) competes with PayPal’s Venmo through Apple Cash for peer-to-peer transfers and through Apple Pay’s broader digital-payments ecosystem. The September 2026 launch of Apple Pay in India further strengthened its global reach and merchant acceptance. Apple Pay now operates across more than 90 countries and regions.
PYPL’s Price Performance, Valuation & Estimates
Shares of PayPal have gained 30.8% in the past six months, outperforming both the broader industry and the S&P 500 Index.
Image Source: Zacks Investment Research
From a valuation standpoint, PayPal shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 10.15X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 19.66X.
Image Source: Zacks Investment Research
PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $5.57 over the past month. The consensus estimate for the metric indicates a year-over-year increase of 4.9%.
View the Zacks #1 Rank List
Image: Bigstock
PayPal's Venmo Grows in Q3: Can Rising Monetization Fuel Earnings?
Key Takeaways
PayPal Holdings, Inc. (PYPL - Free Report) continued to witness strong momentum in its Venmo business during the third quarter of 2026, supported by higher payment volumes, increased engagement and growing adoption of monetized services. Venmo's total payment volume (TPV) rose 14% year over year to $96.8 billion from $85.2 billion, marking its eighth consecutive quarter of double-digit growth.
Venmo accounted for 20% of PayPal's total payment volume during the quarter, up from 19% a year earlier. The platform's growth reflects increasing adoption of its debit card and Pay with Venmo offerings. Pay with Venmo TPV rose 43% year over year, highlighting growing consumer demand for using the service beyond peer-to-peer payments.
Venmo's debit card business also gained momentum, with monthly active accounts rising more than 55% year over year to 6.7 million. The platform added a record 1.6 million first-time debit card users during the third quarter. Moreover, debit card payment volume increased more than 60%, reflecting stronger spending activity and deeper customer engagement.
Monetization remains a key growth opportunity. Venmo's average revenue per active account (ARPA) increased at a double-digit rate, supported by rising adoption of financial services. Notably, debit card users generate five to six times higher ARPA than peer-to-peer-only users. With just 23% of Venmo customers using financial services, further adoption could support higher revenues and transaction margins.
For PayPal, Venmo's expansion is strengthening overall profitability. Transaction margin dollars increased 2% year over year to $3.95 billion, while non-GAAP earnings rose 8% to $1.45 per share. Management raised its full-year 2026 non-GAAP EPS guidance to approximately $5.60 from $5.38, reflecting improving earnings expectations.
How Are Block & Apple Doing in the Payments Space?
Block, Inc.’s (XYZ - Free Report) Cash App competes with PayPal’s Venmo in peer-to-peer payments while offering debit spending, merchant payments and financial services. Its Neighborhoods initiative connects Cash App users with Square merchants, supporting engagement and payment adoption. In third-quarter 2026, Cash App gross profit increased 27% year over year to $2.07 billion.
Apple (AAPL - Free Report) competes with PayPal’s Venmo through Apple Cash for peer-to-peer transfers and through Apple Pay’s broader digital-payments ecosystem. The September 2026 launch of Apple Pay in India further strengthened its global reach and merchant acceptance. Apple Pay now operates across more than 90 countries and regions.
PYPL’s Price Performance, Valuation & Estimates
Shares of PayPal have gained 30.8% in the past six months, outperforming both the broader industry and the S&P 500 Index.
Image Source: Zacks Investment Research
From a valuation standpoint, PayPal shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 10.15X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 19.66X.
Image Source: Zacks Investment Research
PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $5.57 over the past month. The consensus estimate for the metric indicates a year-over-year increase of 4.9%.
Image Source: Zacks Investment Research
PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.