PayPal Q2 Earnings Preview: Should You Buy the Stock Now or Wait?

PayPal PYPL is set to report its second-quarter 2025 results on July 29.

PYPL expects low to mid-single-digit revenue growth on a currency-neutral basis for the to-be-reported quarter. Non-GAAP earnings are expected between $1.29 per share and $1.31 per share, suggesting 8-10% growth on a year-over-year basis. 

The Zacks Consensus Estimate for second-quarter revenues is pegged at $8.10 billion, indicating an increase of 2.68% from the year-ago quarter’s reported figure. 

The consensus mark for earnings stands at $1.30 per share, up by a penny over the past 30 days, calling for a rise of 9.24% from the figure reported in the year-ago quarter.

For 2025, the Zacks Consensus Estimate for PayPal’s revenues is pegged at $32.72 billion, implying a rise of 2.90% year over year. The consensus mark for full-year EPS stands at $5.10, calling for a 9.68% year-over-year jump.

This digital payment company has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 14.01%.

Q2 Earnings Whispers for PYPL

Our proprietary model predicts an earnings beat for PayPal this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

PayPal has an Earnings ESP of +0.09% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Shaping PayPal’s Q2 Results

PYPL’s second-quarter results are expected to reflect portfolio strength and a rich partner base. It is expected to have benefited from its scale, diversification and balance sheet strength, which are supporting its growth efforts. The company continued to make progress on its transformation efforts during the second quarter and is poised to benefit from consumers and merchants expanding usage of PayPal. Securing checkout leadership remains PayPal's top priority, with teams focused on driving related initiatives.

Paypal is expected to have benefited from an improving Total Payment Volume (“TPV”). The metric is likely to have gained from a strong relationship between the company and its merchants and consumers. PYPL is expected to have experienced healthy Branded checkout TPV growth, backed by strength across large enterprise platforms, marketplaces within PayPal checkout and Pay with Venmo.

The consensus mark for TPV is pegged at $434.45 billion, indicating 4.2% year-over-year growth. Paypal’s active accounts are likely to reach 438 million, which denotes an increase from the year-ago value of 429 million. Estimates for the number of payment transactions stand at 6.722 billion, which is ahead of the company’s reported figure of 6.580 billion in the same quarter last year. Moreover, the consensus mark for transaction margin is pegged at 46.7%, up from the year-ago figure of 45.8%.

However, within its Braintree business, PayPal is focused on sustainable, high-quality growth, intentionally moving away from unprofitable volume. While this may weigh on gross revenues, it is expected to boost transaction margin dollars.

Projections for PYPL’s Q2 Revenues and Transaction Margin dollars

In this environment, PYPL expects low to mid-single-digit revenue growth on a currency-neutral basis for the to-be-reported quarter.

The Zacks Consensus Estimate for PayPal’s Transaction revenues is pegged at $7.31 billion, which suggests a 2.1% increase from the year-ago quarter.

PYPL is also poised to benefit from its value-added services, and the consensus mark for revenues from other value-added services is pegged at $766.91 million for the second quarter, up from $732.00 million in the year-ago period.

PayPal anticipates its second-quarter transaction margin dollars to range between $3.75 billion and $3.8 billion, calling for a 4.5% year-over-year increase at the midpoint. When excluding interest on customer balances, the company forecasts midpoint growth of around 6.5% in transaction margin dollars.

PayPal remains focused on controlling its cost structure while allocating resources toward critical growth initiatives. These efforts include marketing investments to drive the launch and adoption of new products and services. Amid this, PayPal expects mid-single-digit non-transaction operating expenditure growth in the second quarter.

PYPL’s Price Performance & Valuation

Paypal shares have declined 8.6% year to date, against the Zacks Financial Transaction Services’ rise of 4.7% as well as the S&P 500 composite’s jump of 8.2%. Rivals like Visa Inc. V and Mastercard Incorporated MA continue to expand their offerings, challenging PayPal’s dominance in digital payments. Broader macroeconomic pressures and uncertainty surrounding the tariff policy have also dampened investor sentiment.

Compared to its peers, PayPal’s performance has been notably weaker. While PYPL has struggled, Visa shares have climbed 13%, and Mastercard has risen 7.9% over the same timeframe.

From a valuation standpoint, PayPal shares are trading cheap, as suggested by the Value Score of B. In terms of forward 12-month P/E, PYPL stock is trading at 14.35X compared with the Zacks Financial Transaction Services industry’s 22.21X.

Shares of Visa and Mastercard are currently trading at P/E of 28.44X and 32.34X, respectively.

PYPL: Buy, Sell or Hold?

PayPal’s stock underperformance so far in the year masks a deeper story of strategic reinvention. Despite stiff competition from peers, PayPal is pushing forward with a multi-pronged transformation. The company is transitioning from a transactional payment provider to a holistic commerce partner by consolidating its services into a single PayPal platform to harness the full potential of its two-sided network, supporting both consumers and merchants. Focusing on improving user experience, enhancing merchant relationships and expanding international capabilities are the key moves that could unlock long-term growth.

PayPal’s launch of PayPal World this fall marks a pivotal shift toward global wallet interoperability. The platform will initially unite PayPal, Venmo, Mercado Pago, NPCI’s UPI and Tenpay Global under a cloud native, API framework, facilitating nearly two billion users. By enabling UPI or Weixin Pay users to check out via a familiar PayPal button, the move aims at reducing friction for cross-border commerce.

Apart from riding on the growing demand for peer-to-peer payments and digital wallets and offering a good scope for growth, PayPal is trading cheap, and the current price offers a good entry point for investors.

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This article originally published on Zacks Investment Research (zacks.com).

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