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PayPal Holdings, Inc. (PYPL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered broad-based profitable growth with revenue up 7% YoY to $8.42B and non-GAAP EPS up 12% YoY to $1.34; both topped S&P Global consensus (Revenue ~$8.24B*, EPS ~$1.206*) driven by TM$ growth across branded, PSP and Venmo .
  • Management raised full-year FY25 EPS guidance to $5.35–$5.39 (from $5.15–$5.30) and introduced Q4 EPS guidance of GAAP $1.23–$1.27 and non-GAAP $1.27–$1.31; reiterated adjusted FCF of ~$6–$7B and increased TM$ guidance on the call (low end +$100M, high end +$50M) .
  • PayPal initiated a $0.14 quarterly dividend (targeting ~10% payout of non-GAAP net income) alongside ongoing buybacks ($1.5B repurchased in Q3; $5.7B TTM) .
  • Strategic catalysts included launching agentic commerce services and a multi-year OpenAI partnership to power instant checkout and agentic commerce in ChatGPT, reinforcing the AI/agentic roadmap .

What Went Well and What Went Wrong

  • What Went Well

    • Beat on revenue and non-GAAP EPS; TM$ ex-interest rose 7% YoY to $3.55B with contributions from branded experiences, PSP, and Venmo; CEO: “Put simply, this is the new PayPal, built for faster, more profitable growth.” .
    • Venmo inflected: TPV +14% YoY; Pay with Venmo hit $1B TPV in September; debit actives +40% and Venmo monthly actives ~66M (+7% YoY), supporting >20% 2025 revenue growth ex interest .
    • BNPL sustained >20% volume growth and is on track for ~$40B TPV in 2025; expansion to Canada and in-store, with upstream presentment slated to further accelerate adoption .

  • What Went Wrong

    • Macro/AOV softness late in the quarter (Europe/U.S.) and prudence into Q4; guide assumes some deceleration in branded checkout growth vs Q3 average .
    • Higher transaction loss provisions from an August service disruption (primarily Germany) created ~1.5pt headwind to TM$ growth; management is seeing an underlying improvement ex the incident .
    • TPA on a trailing 12-month basis declined 6% YoY to 57.6 (total transactions -5% YoY), reflecting PSP mix and legacy integration complexity; management is scaling redesigned pay sheet and biometrics to improve conversion .

Financial Results

Overall P&L and margin metrics

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$7,791 $8,288 $8,417
GAAP Diluted EPS ($)$1.29 $1.29 $1.30
Non-GAAP Diluted EPS ($)$1.33 $1.40 $1.34
GAAP Operating Margin (%)19.6% 18.1% 18.1%
Non-GAAP Operating Margin (%)20.7% 19.8% 18.6%
Transaction Margin Dollars ($MM)$3,716 $3,844 $3,871
TM$ ex-Interest on Customer Balances ($MM)$3,418 $3,526 $3,550
Free Cash Flow ($MM)$964 $692 $1,718

YoY growth context

MetricQ1 2025Q2 2025Q3 2025
Revenue YoY+1% +5% +7%
Non-GAAP EPS YoY+23% +18% +12%

KPI and risk metrics

KPIQ1 2025Q2 2025Q3 2025
Active Accounts (MM)436 438 438
TPV ($MM)$417,208 $443,547 $458,088
Payment Transactions (MM)6,045 6,226 6,331
TPA (Trailing 12M)59.4 58.3 57.6
Transaction Expense Rate (%)0.89% 0.89% 0.89%
Transaction & Credit Loss Rate (%)0.09% 0.11% 0.11%
Transaction Margin (%)47.7% 46.4% 46.0%

Revenue mix

Revenue Mix ($MM)Q1 2025Q2 2025Q3 2025
Transaction Revenues$7,016 $7,441 $7,522
Other Value-Added Services (OVAS)$775 $847 $895
U.S. Net Revenues$4,463 $4,709 $4,753
International Net Revenues$3,328 $3,579 $3,664

Performance vs S&P Global consensus

MetricQ1 2025Q2 2025Q3 2025
Revenue Actual ($MM)7,791 8,288 8,417
Revenue Consensus Mean ($MM)*7,8418,0818,236
Non-GAAP EPS Actual ($)1.33 1.40 1.34
Primary EPS Consensus Mean ($)*1.1611.2961.206

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (July 2025)Current Guidance (Oct 2025)Change
GAAP EPSQ4 2025N/A$1.23–$1.27 New
Non-GAAP EPSQ4 2025N/A$1.27–$1.31 New
GAAP EPSFY 2025$4.90–$5.05 $5.11–$5.15 Raised
Non-GAAP EPSFY 2025$5.15–$5.30 $5.35–$5.39 Raised
Transaction Margin DollarsFY 2025N/A$15.45–$15.55B (range raised by +$100M low end/+$50M high end) Raised
Adjusted Free Cash FlowFY 2025N/A~$6–$7B Maintained
DividendOngoingN/A$0.14/share initiated; ~10% payout of non-GAAP NI Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
Branded checkout & omnichannel“Profitable growth” across branded, PSP, omni; FY25 guide raised (Q2) and “great start” with progress across branded, PSP, omni, Venmo (Q1) Branded experiences TPV +8% CN; U.S. +10%; scaling redesigned pay sheet and biometrics; expect prudent Q4 decel given macro/AOV Improving but cautious into Q4
BNPLStrength called out in Q2 press release >20% volume growth; ~<$40B TPV FY25; upstream presentment; expansion to Canada and in-store; global mix <30% U.S. originations Accelerating scale/expansion
Venmo monetizationHighlighted as growth driver (Q1/Q2) TPV +14%; Pay with Venmo $1B TPV in Sep; debit actives +40%; MAU ~66M; 2025 revenue ex interest ~$1.7B, >20% growth Clear inflection upward
PSP profitability“Value-added services” and PSP contribution noted (Q2) PSP volume +6% (from +2% in 1H); VAS attachment supporting TM$ Improving trajectory
Agentic/AIStrategic innovation focus (Q2) Launch agentic commerce services; multi-year OpenAI partnership for instant checkout and ACP in ChatGPT Expanding partnerships
Macro/consumerN/ASofter baskets late Q3; prudence for Q4; lapping strong 4Q24 Mixed headwind
Risk/operationsN/AAugust service disruption in Germany raised transaction loss provisions (TM$ ~1.5pt headwind) One-off headwind

Management Commentary

  • “Put simply, this is the new PayPal, built for faster, more profitable growth.” — Alex Chriss, CEO .
  • “We are initiating a dividend… strengthening our overall capital return program… with our ongoing share buybacks.” — Alex Chriss ; details: $0.14 per share, ~10% payout of non-GAAP NI .
  • “Pay with Venmo and Buy Now, Pay Later continue to outpace the market, taking share… growing 40% and 20% respectively.” — Jamie Miller, CFO/COO .
  • “We announced… a significant partnership with OpenAI to expand payments and commerce in ChatGPT… and our own agentic commerce services.” — Alex Chriss .

Q&A Highlights

  • Agentic commerce: Strategy unchanged; PayPal positioned as orchestration layer for merchants across LLMs; consumer trust, fraud/buyer protection, and global merchant coverage seen as right-to-win; investments to be ramped in near term .
  • Branded checkout cadence: Consistent mid-single-digit growth; macro drove late-Q3 deceleration (lower AOV); Q4 guidance assumes slower branded growth than Q3; back-end loaded quarter .
  • BNPL economics and mix: Portfolio turns ~40 days; pricing economics on par/better than peers; <30% U.S. originations; upstream presentment targeted to accelerate; in-store expanding .
  • Transaction losses: Temporary August service disruption (Germany) drove higher loss provisions (~1.5pt TM$ headwind); underlying loss rates improving ex incident .
  • 2026 outlook tone: Will invest into generational shifts (digital wallets, BNPL, agentic), creating potential near-term headwinds to growth in TM$/EPS in 2026 to win longer-term .

Estimates Context

  • Q3 2025: Revenue $8.417B vs consensus ~$8.236B*; non-GAAP EPS $1.34 vs consensus ~$1.206*. Q2 2025: $8.288B vs ~$8.081B*; $1.40 vs ~$1.296*. Q1 2025: $7.791B vs ~$7.841B*; $1.33 vs ~$1.161*. Values marked with * retrieved from S&P Global.
  • Consensus likely needs upward revision for FY25 EPS (raised to $5.35–$5.39) and potentially for Q4 EPS within the $1.27–$1.31 non-GAAP range, though management flagged incremental Q4 investments and macro prudence .

Key Takeaways for Investors

  • Q3 was a clean beat with raised FY25 EPS and a newly initiated dividend—signals confidence in durable cash generation and balanced capital returns .
  • Branded experiences are improving (U.S. +10% CN), but Q4 setup is cautious on AOV/macro; monitor conversion uplift from redesigned pay sheet and biometrics scale-up into 2026 .
  • Venmo is at an inflection (usage and monetization levers attaching) with high-ARPA products (debit, Pay with Venmo) driving mix accretion—supportive for medium-term TM$ growth .
  • BNPL scale and upstream presentment should drive share gains and engagement flywheel; Blue Owl externalization supports balance-sheet-light credit growth .
  • Agentic commerce (OpenAI partnership, PayPal agentic services) positions PYPL as a payments/commerce layer across AI surfaces—an optionality-rich, medium-term catalyst .
  • Near term, watch Q4 TM$ (guide midpoint implies ~3.5% growth) as marketing/contra-revenue investments kick in; also monitor transaction loss normalization post-August disruption .
  • Balance sheet remains solid (cash/investments $14.4B, debt $11.4B), with continued buybacks ($1.5B in Q3) and dividend capacity supporting TSR .

Appendix: Additional Data

Capital returns and balance sheet

  • Cash, cash equivalents, and investments: $14.4B; Debt: $11.4B; Q3 buybacks: $1.5B; TTM buybacks: $5.7B .

Strategic updates

  • Agentic commerce services launched (agent-ready, store sync; initial partners Wix, Cymbio, Commerce, Shopware; Perplexity integration expected before year-end) .
  • OpenAI partnership: adopting Agentic Commerce Protocol; PayPal instant checkout in ChatGPT; delegated card processing; ACP server to onboard merchant catalogs into ChatGPT in 2026 .

Dividend

  • $0.14/share payable Dec 10, 2025 (record Nov 19, 2025); targeted ~10% payout of non-GAAP net income; quarterly cadence intended, subject to Board approval and conditions .