PayPal Holdings PYPL reported second-quarter 2025 non-GAAP earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate by 7.7% and jumped 17.6% year over year. Results reflected better-than-expected growth in revenues.
The stock slipped more than 8% following the report, as the company saw slowing growth in transaction margin dollars. PayPal’s payment transactions declined 5% in the reported quarter.
PayPal saw an uptick in both total payment volume (TPV) and revenues compared to the first quarter, along with another quarter of high single-digit growth in transaction margin dollars. Reflecting this momentum, the company raised its full-year guidance for transaction margin dollars and EPS while maintaining its outlook for free cash flow.
Net revenues of $8.3 billion increased 5.1% year over year on a reported basis and 5% on a forex-neutral basis. The figure topped the consensus mark by 2.3%.
Revenue Details of PYPL
TPV was $443.5 billion for the second quarter, up 6% year over year on a reported basis and 5% on a forex-neutral basis. The transaction margin in dollar terms was $3.8 billion, which grew 6.5% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 8% to $3.5 billion.
Transaction revenues were $7.4 billion (89.8% of net revenues), up 4% year over year. Value Added Services revenues were $847 million (10.2% of net revenues), which rose 15.7% year over year.
Net revenues from the United States totaled $4.71 billion (56.8% of net revenues), up 3.5% on a year-over-year basis. International net revenues were $3.6 billion (43.2% of net revenues), up 7.3% year over year on a reported basis and 7% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 2% in total active accounts to 438 million in the reported quarter. The company’s payment transactions per active account were 58.3 million, which dropped 4% year over year.
PayPal Raises 2025 Guidance
For 2025, PayPal anticipates non-GAAP earnings between $5.15 per share and $5.30 per share, calling for 11-14% growth year over year. This is up from the prior guided range of $4.95-$5.10.
The transaction margin dollar is expected between $15.35 billion and $15.5 billion, suggesting growth in the 5-6% range. This is ahead of the prior projection of $15.2 billion-$15.4 billion.
Non-GAAP non-transaction operating expenses are expected to grow in the low single-digit range.
Free cash flow is expected between $6 billion and $7 billion. Share repurchase is expected to be roughly $6 billion.
For the third quarter of 2025, PayPal expects non-GAAP earnings between $1.18 and $1.22 per share.
Transaction margin dollars are expected between $3.76 billion and $3.82 billion, suggesting growth in the 3-5% range for the current quarter.
ETFs in Focus
The PYPL stock has a 6.1% exposure to Amplify Digital Payments ETF IPAY, a 5.7% weight in Global X FinTech ETF FINX and a 4.2% exposure to Madison Covered Call ETF CVRD. Investors should closely monitor these ETFs as PayPal shares have registered a decline. The ETF approach is better when you want to minimize company-specific concentration risks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report Global X FinTech ETF (FINX): ETF Research Reports Amplify Digital Payments ETF (IPAY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
