PayPal Holdings Inc. (NASDAQ:PYPL) stock slid on Tuesday after it announced dismal fourth-quarter 2025 results and CEO changes.
The Venmo parent reported a quarterly revenue growth of 4% year-over-year to $8.68 billion, lagging the analyst consensus estimate of $8.80 billion.
The adjusted EPS was $1.23, which missed the analyst consensus estimate of $1.28.
Transaction Metrics
Total payment volumes rose by 9% Y/Y, reaching $475.1 billion in the quarter. The payment transactions rose by 2%, totaling 6.8 billion.
On a trailing 12-month basis, the number of payment transactions per active account decreased by 5%, averaging $57.7.
The total number of active accounts increased by 1.1%, reaching 439 million. Sequentially, active accounts rose by 0.3%, or 1.2 million accounts.
The operating margin improved by 19 basis points to 17.4%. The adjusted operating margin decreased by 9 basis points to 17.9%.
The company generated a quarterly operating cash flow of $2.4 billion, free cash flow of $2.2 billion, and an adjusted free cash flow of $2.1 billion.
Cash, cash equivalents, and investments totaled $14.8 billion as of December 31, 2025. Debt totaled $11.6 billion.
PayPal’s Board of Directors declared a dividend of 14 cents per share. The dividend is payable on March 25, 2026, to shareholders of record as of March 4, 2026.
The company returned $1.5 billion to shareholders in the fourth quarter of 2025 by repurchasing about 23 million shares of common stock.
CEO Transition
PayPal announced on Tuesday that its Board has named Enrique Lores as CEO, effective March 1, 2026.
Lores, who has been on PayPal's Board for nearly five years, succeeds Alex Chriss, with Jamie Miller stepping in as Interim CEO until Lores takes over.
The Board's evaluation highlighted that while progress has been made, the pace of change did not meet expectations, prompting this leadership shift.
In his previous role as President and CEO of HP Inc. (NYSE:HPQ), Lores led significant transformations, which the Board hopes will translate into similar success at PayPal.
Earnings Call
PayPal management struck a cautious tone on its earnings call, with CFO Jamie Miller saying the company is no longer committing to the long-term financial targets laid out for 2027 at last year's investor day. Instead, PayPal will provide guidance one year at a time, which Miller said is the more prudent approach given current operating conditions.
Miller also acknowledged that results have fallen short of expectations, pointing to broad pressure across PayPal's retail merchant portfolio, particularly among lower- and middle-income consumers. She said the company needs to do more to win with key merchants, especially during high-volume shopping periods, signaling that competitive intensity and consumer softness continue to weigh on transaction growth and revenue momentum.
Outlook
PayPal expects a first-quarter adjusted EPS decline of mid-single digit.
The company expects a full-year 2026 adjusted EPS change of low-single digit decline to slightly positive.
PYPL Price Action: PayPal Holdings shares were down 15.73% at $44.10 during premarket trading on Tuesday. The stock is trading at a new 52-week low, according to Benzinga Pro data.
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