PayPal Q2 Earnings Exceed Expectations
PayPal reported stronger-than-expected second-quarter results and raised its full-year profit forecast, helping its shares move higher after the market opened.
The digital payments company posted adjusted earnings of $1.38 per share, beating Wall Street’s estimate of $1.28 per share.
Quarterly revenue reached $8.68 billion, above the analyst consensus of $8.47 billion. Revenue increased by 3% on a currency-neutral basis.
Following the results, PayPal shares gained approximately 2.7% shortly after the opening bell.
PayPal Raises Full-Year Profit Guidance
PayPal upgraded its full-year 2026 earnings outlook and now expects adjusted earnings of $5.38 per share.
The new forecast is higher than the Wall Street consensus estimate of $5.31 per share. It also represents a significant improvement from the company’s previous outlook, which ranged from a low-single-digit decline to slightly positive growth.
For the third quarter, however, PayPal expects adjusted earnings per share to fall by a low-single-digit percentage compared with the previous year’s figure of $1.34.
Turnaround Strategy Gains Momentum
PayPal CEO Enrique Lores said the company made encouraging progress during the quarter.
Management moved quickly to refine PayPal’s transformation plan and support growth across its three main business divisions.
Lores said the company’s improved execution and confidence in its future performance supported the decision to raise its full-year guidance.
PayPal remains focused on delivering sustainable and profitable long-term growth while maintaining discipline across its main strategic priorities.
PayPal Responds to Reported Acquisition Offer
The earnings report followed reports that Stripe and private equity firm Advent International had submitted an offer of $60.50 per share for PayPal.
According to Reuters, PayPal’s board considered the proposal inadequate.
During the earnings call, Lores said the company remains open-minded when evaluating opportunities connected to a possible sale.
However, management’s main priority remains the execution of PayPal’s existing turnaround strategy. The company would consider an alternative path only if it could deliver greater value to shareholders.
Transaction Margins Continue to Grow
PayPal’s transaction margin dollars increased by 1% to $3.9 billion during the second quarter.
Excluding interest earned on customer balances, transaction margin dollars rose by 3% to $3.6 billion.
However, adjusted operating income declined by 8% to $1.5 billion.
The company’s adjusted operating margin fell by 248 basis points to 17.4%, highlighting continued pressure on profitability despite the earnings and revenue beat.
Operating Expenses Come in Above Forecasts
Adjusted operating expenses, excluding transaction-related costs, totaled approximately $2.39 billion.
That figure was higher than Wall Street’s estimate of $2.28 billion.
Goldman Sachs analysts described PayPal’s results as a solid revenue and earnings beat. However, they said the higher operating expenses could attract investor attention.
Analysts also noted that investors were likely to focus heavily on management’s strategic comments following recent reports of a possible acquisition offer.
Total Payment Volume Reaches $486.4 Billion
PayPal’s total payment volume increased by 10% to $486.4 billion during the quarter.
On a currency-neutral basis, payment volume rose by 9%.
The number of payment transactions increased by 8% to 6.8 billion. Excluding payment service provider transactions, growth reached 7%.
Payment transactions per active account rose by 3% to 60 over the trailing 12-month period. Excluding payment service provider activity, the increase was 7%.
Active Accounts Show Limited Growth
PayPal’s active accounts increased by 0.3% year over year to 439 million.
However, the number of active accounts declined slightly from the previous quarter, falling by approximately 0.2 million accounts, or 0.04%.
The modest account growth shows that PayPal still faces challenges in expanding its user base, even as payment volumes and transaction activity continue to increase.
