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PayPal Holdings, Inc. (PYPL)·Q2 2025 Earnings Summary

Executive Summary

  • PayPal delivered a clean beat on revenue and EPS in Q2, raised FY’25 EPS and TM$ guidance, and reiterated strong FCF, while acknowledging tariff headwinds and higher transaction losses; the mix of branded engagement (BNPL, Pay with Venmo, debit) and improving PSP profitability drove the upside .
  • Q2 revenue was $8.29B (+5% YoY) and non-GAAP EPS was $1.40 (+18% YoY), both above S&P consensus; GAAP EPS was $1.29 (+20% YoY); non-GAAP operating margin expanded 132 bps to 19.8% . Consensus for Q2 was ~$8.08B revenue and $1.30 EPS (Primary)*, implying clear beats. Values retrieved from S&P Global.
  • FY’25 non-GAAP EPS guidance was raised to $5.15–$5.30 (from $4.95–$5.10), GAAP EPS to $4.90–$5.05 (from $4.80–$4.95), TM$ to $15.35–$15.5B (from $15.2–$15.4B); FCF reaffirmed at ~$6–$7B .
  • Medium-term narrative trend is improving: branded TPV +8% FXN, BNPL volume >20%, Pay with Venmo TPV >45%, Venmo revenue >20%, and a PSP inflection with Braintree volume expected to reaccelerate in 2H; Q3 guide embeds interest-rate/credit headwinds and higher non-transaction OpEx, tempering near-term optics .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based beats and margin expansion: Q2 revenue $8.29B (+5% YoY), non-GAAP EPS $1.40 (+18% YoY), GAAP OM 18.1% (+134 bps), non-GAAP OM 19.8% (+132 bps) .
    • Branded ecosystem momentum: Branded experiences TPV +8% FXN; BNPL volume >20% with 18% MAAs growth; Pay with Venmo TPV >45% and MAAs +~25%; Venmo revenue >20%—“some of our best growth in years” .
    • Strategic resets working: PSP (Braintree) volume roughly flat with an expected return to growth in Q3 after pruning unprofitable volume; TM$ benefitted from improved PSP profitability and value-added services . CEO: “…we are raising our full year transaction margin dollar and EPS guidance…innovations like agentic commerce, ads, stablecoins, and PayPal World” .

  • What Went Wrong

    • Macro/tariff headwinds: Management cited deceleration on Asia-based marketplaces due to tariffs; branded checkout would have been ~6% without this pressure .
    • Higher transaction losses: Transaction loss rate increased to ~9 bps in Q2; FY run-rate expected ~8 bps, above 2024; normalization and new product launches noted .
    • Q3 optics: Company expects CN revenue growth 4% with lower OVAS growth, interest-rate headwinds ($125M in 2H), and higher non-transaction OpEx (investments and shifted marketing spend) .

Financial Results

  • Headline metrics across periods (oldest → newest)
MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$8,366 $7,791 $8,288
GAAP EPS ($)$1.11 $1.29 $1.29
Non-GAAP EPS ($)$1.19 $1.33 $1.40
GAAP Operating Margin (%)17.2% 19.6% 18.1%
Non-GAAP Operating Margin (%)18.0% 20.7% 19.8%
  • Q2 vs S&P consensus (beat/miss)
MetricConsensus*ActualSurprise
Revenue ($USD Billions)8.08*8.29 +0.21 (≈+2.6%)
Primary EPS ($)1.30*1.40 +0.10 (≈+7.7%)
EBITDA ($USD Billions)1.79*1.84 +0.05

Values retrieved from S&P Global.

  • Net revenues by type
Net Revenues ($USD Millions)Q2 2024Q1 2025Q2 2025
Transaction Revenues$7,153 $7,016 $7,441
Other Value-Added Services (OVAS)$732 $775 $847
Total$7,885 $7,791 $8,288
  • KPIs
KPIQ2 2024Q1 2025Q2 2025
Active Accounts (MM)429 436 438
Number of Payment Transactions (MM)6,580 6,045 6,226
TPA (12M trailing)60.9 59.4 58.3
TPV ($USD Millions)$416,814 $417,208 $443,547
Transaction Expense Rate (%)0.95 0.89 0.89
Transaction & Credit Loss Rate (%)0.08 0.09 0.11
Transaction Margin (%)45.8 47.7 46.4
  • Cash Flow & Capital Returns
    • Q2 operating cash flow $0.90B; FCF $0.69B; adjusted FCF $0.66B .
    • Returned $1.5B via buybacks in Q2; $6.0B TTM; cash, cash equivalents and investments $13.7B; debt $11.5B (June 30) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025$4.80–$4.95 (Apr) $4.90–$5.05 (Jul) Raised
Non-GAAP EPSFY 2025$4.95–$5.10 (Apr) $5.15–$5.30 (Jul) Raised
Transaction Margin Dollars (TM$)FY 2025~$15.2–$15.4B (Feb) $15.35–$15.5B (Jul) Raised
Free Cash FlowFY 2025~$6–$7B (Feb) ~$6–$7B (Jul) Maintained
GAAP EPSQ3 2025N/A$1.14–$1.18 New
Non-GAAP EPSQ3 2025N/A$1.18–$1.22 New
TM$Q3 2025N/A$3.76–$3.82B New
Non-transaction OpEx GrowthQ3 2025N/AUp to high single-digit New

Additional color: Q3 revenue growth expected at 4% CN; H2 interest-rate headwinds ($125M) and tougher credit comps to weigh on OVAS; full-year buybacks ~$6B .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Branded CheckoutModern checkout rolled to ~25% US traffic; ~100 bps conversion uplift; BNPL attach rising . Q1: ~45% US traffic; online branded +~6% ex-leap day .Branded experiences TPV +8% FXN; tariffs modest headwind; US/Germany/UK rollout underway .Improving, global rollout widening
BNPL2024 BNPL TPV ~$33B, +21% YoY . Q1: BNPL volume >20% YoY, MAAs +18% .BNPL volume >20% YoY, continued expansion to more markets .Strong, consistent growth
VenmoQ4: MAAs >64M; monetized MAAs +>20%; debit MAAs +>30% . Q1: Venmo revenue +20%, TPV +10% .Venmo revenue >20%; TPV +12% (3-year high); Pay with Venmo TPV >45% .Accelerating
PSP/BraintreeDeliberate pruning of unprofitable volume; +1 pt TM$ tailwind in 2025 .Volume roughly flat; expect reacceleration in 2H; VAS scaling (payouts) .Inflecting to growth
FastlaneQ4: ~2,000 merchants; large-brand wins; 75% new/dormant users, double-digit conversion lift . Q1: rolling to large merchants .50% conversion uplift cited; multiprocessor enablement next (e.g., Adyen) .Early but promising
AdsQ1: Off-site ads launch; UK launch; building platform .Storefront ads and international expansion (DE, UK) .Scaling
AI/AgenticQ1: First remote MCP server; developer momentum .Partnerships with Perplexity, Anthropic, Salesforce; agentic commerce focus .Strategic
Stablecoin/PYUSDQ1: Rewards for holding PYUSD; Coinbase partnership .“Pay with Crypto” enabling instant conversion, 0.99% rate until 7/31/26; PYUSD on Stellar/Arbitrum; ecosystem partners (Fiserv, Mastercard) .Expanded use cases
PayPal WorldN/A in Q4; concept building.Global wallet interoperability (PayPal, Venmo, Mercado Pago, UPI, Tenpay Global) starting fall; TAM expansion .New platform
Tariffs/MacroCautious guide for e-comm decel; diversified verticals .Asia marketplace/corridor decel; July pressure easing slightly; mid-single-digit branded plan intact .Monitored risk

Management Commentary

  • Strategy and momentum: “PayPal delivered another quarter of profitable growth… Based on our momentum, we are raising our full year transaction margin dollar and EPS guidance… leading the industry forward with innovations like agentic commerce, ads, stablecoins, and PayPal World” — Alex Chriss, CEO .
  • Branded ecosystem: “We drove 8% currency-neutral growth in branded experiences TPV this quarter… BNPL volume grew more than 20%… Pay with Venmo TPV was up more than 45%” .
  • PSP inflection: “We are now past the peak pressure from renegotiating and shedding unprofitable volume… We expect a return to volume growth in the third quarter” — Jamie Miller, CFO/COO .
  • Guidance framing: “For the third quarter, we expect currency-neutral revenue growth ~4%... TM dollars $3.76–$3.82B… non-GAAP EPS $1.18–$1.22… For the full year, non-GAAP EPS $5.15–$5.30” .

Q&A Highlights

  • Tariffs headwind sizing: Without tariff pressure on Asia marketplaces, branded checkout would have been ~6%; July showing “a bit less pressure” on those corridors .
  • Transaction losses: Q2 transaction loss ~9 bps; expect FY run rate ~8 bps (above 2024), reflecting normalization and higher-loss new products; continued AI/automation optimization .
  • Fastlane: ~50% conversion uplift; 75% of users are new/dormant to PayPal; next inflection as multiprocessors (e.g., Adyen) enable .
  • Open banking data charges: Bank aggregator changes deemed “immaterial” to PayPal .
  • Guidance puts/takes: Q3 revenue growth 4% CN; H2 interest headwinds ($125M) and tougher credit comps; higher non-transaction OpEx in Q3 due to investments and shifted marketing .

Estimates Context

  • Q2 2025 actual vs S&P consensus: Revenue $8.29B vs ~$8.08B*, EPS (Primary) $1.40 vs ~$1.30* — clear beats. Values retrieved from S&P Global.
  • Q3 2025 guide vs S&P consensus: Non-GAAP EPS $1.18–$1.22 vs ~$1.206* (in line at midpoint); revenue growth qualitative (~4% CN) vs ~$8.24B* consensus. Values retrieved from S&P Global.
  • FY 2025 guide vs S&P consensus: Non-GAAP EPS raised to $5.15–$5.30, which sits modestly below the ~$5.35* consensus — potential source of ongoing estimate reconciliation upward or management conservatism narrative. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution turning the flywheel: Branded TPV growth, BNPL/Pay with Venmo adoption, and PSP profitability are improving core earnings power; non-GAAP OM expanded 132 bps and EPS beat was broad-based .
  • Guidance up but still conservative vs Street: FY’25 EPS and TM$ raised; however, EPS guide below S&P consensus suggests room for estimate trimming or future raises as macro/tariff/interest variables clarify .
  • Q3 pacing softer optics: Mix of lower OVAS growth, interest headwinds, and higher non-transaction OpEx may cap near-term EPS upside; focus on execution milestones (Braintree growth inflection, EU checkout rollout) .
  • Strategic catalysts: PayPal World (global wallet interoperability), Pay with Crypto (lower cross-border costs), ads and agentic AI partnerships broaden TAM and can improve conversion and monetization over time .
  • Risk watchlist: Tariff policy changes (Asia corridors), transaction loss normalization, interest-rate path impacting OVAS interest and credit, and the cadence of Fastlane/multiprocessor integrations .
  • Capital returns intact: Strong FCF trajectory ($6–$7B) and ongoing buybacks (~$6B FY) support EPS and downside protection while the transformation scales .

Appendix: Additional Data

  • Geography mix (Q2 2025): U.S. $4,709M (57%), International $3,579M (43%) .
  • Q2 credit commentary: OVAS +16% to $847M, driven primarily by consumer and merchant credit; net loan receivables $6.94B, +7% seq; delinquency trends stable/low .
  • Non-GAAP adjustments: Q2 non-GAAP operating income adjustments $140M (amortization $48M; restructuring $92M); non-GAAP EPS $1.40 vs GAAP $1.29 .

Footnote on estimates: Values retrieved from S&P Global. (*) indicates S&P Global consensus values.