TLDR
- PayPal delivered its sixth consecutive quarter of profitable growth with adjusted earnings of $1.40 per share, beating analyst expectations of $1.30
- Transaction margin dollars grew 7% year-over-year to $3.8 billion, with branded experiences TPV increasing 8% in the quarter
- Company raised full-year guidance for transaction margin dollars to $15.35-$15.5 billion and adjusted earnings to $5.15-$5.30 per share
- Total active accounts and monthly active accounts both increased 2%, while transactions per active account grew 4%
- Despite strong results, PYPL stock fell 3.8% in premarket trading following the earnings announcement
PayPal delivered another strong quarterly performance, marking six straight quarters of profitable growth under CEO Alex Chriss. The payment giant’s second-quarter results exceeded Wall Street expectations across key metrics.
The company posted adjusted earnings of $1.40 per share, surpassing the $1.30 analyst consensus from FactSet. This performance continues the turnaround strategy that Chriss has implemented since taking over in 2023.
Transaction margin dollars, which measure the company’s profitability, reached $3.8 billion in the quarter. This represents a 7% increase from the same period last year.
When excluding interest on customer balances, this metric grew even stronger at 8% to $3.5 billion. The growth demonstrates PayPal’s ability to extract more value from its payment processing operations.
User engagement metrics also showed positive trends across the platform. Both total active accounts and monthly active accounts increased by 2% compared to the prior year.
More importantly, existing users are becoming more active on the platform. Transactions per active account grew 4%, excluding payment service provider transactions.
Growing Beyond Traditional Checkout
PayPal is successfully expanding beyond its traditional online branded checkout business. A company spokesperson confirmed the payment processor is seeing a more diverse mix of profitable growth streams.
Branded experiences TPV grew 8% during the quarter. This metric captures the total payment volume from PayPal and Venmo online checkout, plus branded in-store payment methods.
The company’s buy now, pay later offering continues gaining traction with consumers. BNPL volumes surged more than 20% year-over-year in the first quarter, with monthly active accounts rising 18%.
Users who utilize BNPL services tend to be more valuable customers. They spend 33% more on average and complete 17% more transactions compared to regular users.
Pay with Venmo is also expanding its reach among merchants and consumers. As more retailers integrate the service, both TPV and user engagement continue climbing steadily.
Raised Guidance Reflects Confidence
The strong second-quarter results prompted management to increase their full-year outlook. PayPal now expects transaction margin dollars between $15.35 billion and $15.5 billion.
This represents growth of 5% to 6% for the full year. The previous guidance range was $15.2 billion to $15.4 billion, or 4% to 5% growth.
Adjusted earnings guidance also received an upward revision. The company now forecasts $5.15 to $5.30 per share for the full year.
This compares to the earlier range of $4.95 to $5.10 per share. FactSet analysts were expecting $5.11 per share, which falls below the new guidance range.
A PayPal spokesperson noted the company has maintained a beat-and-raise trajectory, with the exception of the first quarter. Macroeconomic uncertainty during that period led management to maintain February’s guidance rather than increase it.
CEO Alex Chriss highlighted the company’s strategic initiatives in his earnings statement. He specifically mentioned the launch of PayPal’s dollar-pegged stablecoin as one innovation that could broaden global reach.
PayPal stock initially gained in early trading but reversed course after the earnings release. Shares fell 3.8% in premarket trading Tuesday, even as S&P 500 and Nasdaq futures posted gains of 0.3% and 0.5% respectively.
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