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PayPal Holdings PYPL reported third-quarter 2025 non-GAAP earnings per share (EPS) of $1.34, which surpassed the Zacks Consensus Estimate of $1.19 and jumped 11.7% year over year.
Reflecting positive sentiments, shares of PYPL were up more than 11% on the NYSE at the time of posting this article. Results reflected better-than-expected growth in revenues. PayPal witnessed an uptick in both total payment volume (TPV) and revenues year over year, along with another quarter of high single-digit growth in transaction margin dollars. With such results, the company raised its full-year guidance for non-GAAP EPS and transaction margin dollars. However, its total number of payment transactions declined in the reported quarter.
Net revenues of $8.42 billion increased 7.3% year over year on a reported basis and 6% on a forex-neutral basis. The figure topped the Zacks Consensus Estimate of $8.26 billion.
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
TPV was $458.09 billion for the third quarter, up 8.4% year over year on a reported basis and 7% on a forex-neutral basis.
The transaction margin in dollar terms was $3.87 billion, which grew 5.9% on a reported basis. Excluding interest on customer balances, transaction margin dollars increased 7.1% to $3.55 billion.
Transaction revenues were $7.52 billion (89.4% of net revenues), up 6.4% year over year. Value Added Services revenues were $895 million (10.6% of net revenues), which rose 14.7% year over year.
Net revenues from the United States totaled $4.75 billion (56.5% of net revenues), up 5.2% on a year-over-year basis. International net revenues were $3.66 billion (43.5% of net revenues), up 10.1% year over year on a reported basis and 7% on a forex-neutral basis.
PayPal witnessed year-over-year growth of 1.4% in total active accounts to 438 million in the reported quarter. The total number of payment transactions was 6.33 billion, down 4.5% on a year-over-year basis. PYPL’s payment transactions per active account were 57.6, which dropped 6.2% year over year.
PayPal’s operating expenses were $6.90 billion in the third quarter, up 6.8% year over year. However, the operating margin expanded 33 basis points year over year to 18.1%.
The transaction expense rate was 0.89% in the third quarter compared with 0.91% reported in the year-ago quarter.
The transaction margin shrank 60 basis points to 46%.
As of Sept. 30, 2025, cash, cash equivalents and investments were $14.4 billion. The long-term debt balance was $11.4 billion.
PYPL generated $2 billion in cash from operations, while adjusted free cash flow was $2.3 billion in the third quarter of 2025.
The company returned $1.5 billion to shareholders through share repurchases in the quarter.
For 2025, PayPal anticipates non-GAAP EPS between $5.35-$5.39 per share, calling for 15-16% growth year over year. This is up from the prior guided range of $5.15-$5.30.
The transaction margin dollar is expected between $15.45 billion and $15.55 billion, suggesting growth in the 5-6% range. This is ahead of the prior projection of $15.35 billion-$15.5 billion.
Non-GAAP non-transaction operating expenses are expected to grow approximately 3%.
Free cash flow is expected to be between $6 billion and $7 billion. Share repurchase is expected to be roughly $6 billion.
For the fourth quarter of 2025, PayPal expects non-GAAP EPS between $1.27 and $1.31.
Transaction margin dollars are expected between $4.02 billion and $4.12 billion, suggesting growth in the 2-5% range for the current quarter.
Currently, PayPal carries a Zacks Rank #3 (Hold).
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry — Mastercard Incorporated MA and Fidelity National Information Services, Inc. FIS. While Mastercard is scheduled to report on Oct. 30, Fidelity National Information Services is slated to report on Nov. 5.
The Zacks Consensus Estimate for Mastercard’s third-quarter 2025 EPS stands at $4.31, indicating a 10.8% increase year over year. The consensus mark for Fidelity National Information Services’ third-quarter EPS is pegged at $1.48, implying a 5.7% increase year over year.
Both MA and FIS carry a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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