Key points
- Earnings per share for the second quarter came to $1.38, beating analysts’ expectations of $1.28
- Quarterly revenue rose 5% to $8.68 billion, beating expectations of $8.47 billion.
- 2026 adjusted EPS target upgraded to $5.38 from previous flat to modestly positive forecast
- The volume of payments through the platform increased by 10% to $486.4 billion during the second quarter
- User base expanded to 439 million active accounts, reflecting year-on-year growth of 0.3%
The digital payments giant delivered second-quarter results that beat analysts’ expectations in both top and bottom lines while simultaneously updating its annual earnings forecast.
The fintech company disclosed adjusted EPS of $1.38 for the second quarter, beating Street expectations of $1.28. Total revenue was $8.68 billion, representing a 5% increase and beating analysts’ expectations of $8.47 billion.
PayPal shares were hovering near $56 before the earnings announcement.
The company’s quarterly report marks the company’s first since confirming it received a takeover bid from rival Stripe along with private equity firm Advent International, valuing the deal at about $53 billion. Management did not comment on the potential acquisition in its earnings materials.
CEO Enrique Llores, who took the helm in March following the exit of Alex Cress, noted that the performance demonstrates momentum in PayPal’s restructuring efforts. “We have moved with urgency to refine our transformation plan and strengthen our growth strategies across our three businesses,” said Loris.
Dollar transaction margin increased 1% to $3.9 billion during the quarter. When excluding interest earned on customer balances, the measure rose by 3% to $3.6 billion. Adjusted operating income decreased 8% to $1.5 billion, while adjusted operating margin decreased 248 basis points to 17.4%.
Total payment volume increased by 10% to $486.4 billion, or 9% when adjusted for foreign exchange rate fluctuations. The total number of payment transactions increased by 8% to 6.8 billion. On a trailing twelve-month basis, payment transactions per active account increased 3% to 60.0.
The platform’s active account base grew 0.3% from a year earlier to 439 million, although it saw a modest sequential decline of 0.2 million accounts.
Annual forecasts receive an upgrade
PayPal It raised its 2026 adjusted earnings per share forecast to $5.38. Previous forecasts had forecast a low single-digit decline to marginal positive growth of $5.31 for 2025. Wall Street analysts had expected the number to remain unchanged at $5.31.
The payments platform also raised its forecast for dollar transaction margin to about $15.6 billion for the full year, compared to $15.5 billion in 2025. Previous guidance had indicated a modest contraction in this measure.
Management noted that it expects to achieve overall run-rate cost reductions of $400 million this year, and is working toward a long-term goal of $1.5 billion in savings over the next two to three years. The organization previously announced its intention to reduce its workforce by 20% during this time frame.
The third quarter outlook shows a conservative tone
Looking forward to Q3, PayPal Expected adjusted earnings per share will decline by a low-single-digit percentage from last year’s result of $1.34, in line with analysts’ expectations of $1.33.
Dollar transaction margin in the third quarter is expected to see a modest expansion.
Loris emphasized the strength of Venmo, Braintree, PayPal debit card offerings and the buy now, pay later segment as key drivers of growth. The company also indicated that it is accelerating the integration of artificial intelligence as part of a comprehensive restructuring initiative.
Net income for the second quarter was $1.1 billion, or $1.25 per diluted share, down from $1.26 billion, or $1.29 per diluted share, in the same period last year.
