PayPal to Report Q4 Earnings: What Should Investors Do?

PayPal PYPL is set to report its fourth-quarter 2025 results on Feb. 3, before the opening bell.

PayPal expected currency-neutral revenue growth in the mid-single digits for the to-be-reported quarter. Non-GAAP earnings are expected between $1.27 per share and $1.31 per share.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $8.77 billion, indicating an increase of 4.83% from the year-ago quarter’s reported figure.

The consensus mark for earnings stands at $1.29 per share, down by a penny over the past 2 months. However, it calls for a rise of 8.4% from the figure reported in the year-ago quarter.

For 2025, PayPal expected non-GAAP earnings between $5.35 to $5.39 per share, growing at 15%-16%.

For 2025, the Zacks Consensus Estimate for PayPal’s revenues is pegged at $33.27 billion, implying a rise of 4.62% year over year. The consensus mark for full-year EPS stands at $5.36, suggesting a 15.27% 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 10.32%.

Q4 Earnings Whispers for PYPL

However, our proprietary model does not conclusively predict an earnings beat for PayPal this time. 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 not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

PayPal has an Earnings ESP of -0.24% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Shaping PayPal’s Q4 Results

PayPal is evolving into a comprehensive commerce platform, moving far beyond mere payments by leveraging advanced, data-powered tools to accelerate merchant expansion and foster customer loyalty. PYPL’s fourth-quarter results are expected to benefit from its scale, diversification and balance sheet strength. During the fourth quarter, the company continued to make progress on its transformation efforts and is likely to have gained from consumers and merchants expanding usage of PayPal. In the quarter under consideration, PYPL 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.

Despite strong fundamentals, diversified offerings and strategic moves, PayPal is likely to have faced competitive pressure from other digital wallets. Broader macroeconomic pressures and uncertainty surrounding the tariff policy is likely to have also affected its fourth-quarter results. The company’s CFO, Jamie Miller, highlighted that its branded checkout business is expected to grow a couple of points lower in the fourth quarter of 2025 compared with the previous quarter.

The nature of business makes PayPal vulnerable to foreign exchange fluctuations. A significant part of the company’s operations is international and thus, appreciation or depreciation of the U.S. dollar versus foreign currencies could impact the company’s fourth-quarter results.

Q4 Projections for PYPL

The Zacks Consensus Estimate for PayPal’s Transaction revenues is pegged at $7.93 billion, which suggests a 4.5% increase from the year-ago quarter.

PYPL is also poised to benefit from its value-added services. Its consensus mark for revenues from other value-added services is pegged at $835.2 million for the fourth quarter, up 7.3% from the year-ago period.

PayPal anticipated its fourth-quarter transaction margin dollars to range between $4.02 billion and $4.12 billion, indicating a 2% to 5% year-over-year increase. When excluding interest on customer balances, the company forecasts growth of 4% to 6% in transaction margin dollars.

The consensus mark for TPV is pegged at $468.318 billion, indicating 7% year-over-year growth. PayPal’s active accounts are likely to reach 440.3 million, which denotes an increase from the year-ago value of 434 million.

However, estimates for the number of payment transactions stand at 6.607 billion, which is below the company’s reported figure of 6.619 billion in the same quarter last year. The consensus mark for transaction margin is pegged at 46.3%, down from the year-ago figure of 47%.

PayPal remains focused on controlling its cost structure while allocating resources toward critical growth initiatives. The company expected its non-transaction operating expenditure to grow by a low-single-digit percentage in the fourth quarter.

PYPL’s Price Performance & Valuation

PayPal shares have declined 22% in the past three months. The Zacks Financial Transaction Services decreased 4.1%, while the S&P 500 rose 2.3% for the same period. Rivals like Visa Inc. V and Mastercard Incorporated MA continue to expand their offerings, challenging PayPal’s dominance in digital payments.

Compared to its peers, PayPal’s performance has been notably weaker. Visa shares have decreased 1.9%, while Mastercard shares increased 0.9% over the same timeframe.

From a valuation standpoint, PayPal shares are trading cheap, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 9.07X compared with the Zacks Financial Transaction Services industry’s 19.14X.

Shares of Visa and Mastercard are currently trading at P/E of 24.02X and 27.66X, respectively.

PYPL: Buy, Sell or Hold?

PayPal is evolving from being a simple payment processor into a holistic commerce partner. By merging the company’s services into a single platform, it’s strengthening the connections between consumers and merchants. PayPal is focusing on improving its user experience, deepening relationships with merchants, and expanding across global markets. These key actions could unlock long-term growth for the company.

However, PayPal's stock has struggled over the past three months, weighted down by fierce competition in the digital payments space and uncertainty over tariff policies. Concerns for the to-be-reported quarter also include a projected lower branded checkout business and foreign exchange rate volatility. Despite its attractive valuation, the stock appears to be a better sell, and our proprietary model does not anticipate an earnings beat this time.

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

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