PayPal (NASDAQ:PYPL) shares rose 1.2% in early U.S. trading on Tuesday after the digital payments company reported third-quarter adjusted earnings above analyst expectations and increased its full-year 2026 profit guidance.
Adjusted earnings per share reached $1.45, compared with the Wall Street consensus estimate of $1.31. Quarterly revenue increased 2% to $8.58 billion, although the figure was below analysts’ expectations of $8.71 billion.
Excluding currency movements, revenue grew 1%.
PayPal also raised its annual forecast for transaction margin dollars and provided fourth-quarter earnings guidance above market expectations.
PayPal reported adjusted earnings of $1.45 per share, exceeding the consensus forecast of $1.31 by $0.14.
Quarterly revenue totaled $8.58 billion, representing an increase of 2% from the previous year, or 1% excluding foreign exchange effects.
However, revenue fell short of the $8.71 billion anticipated by analysts.
Transaction revenue increased 2.5% to $7.71 billion, while revenue from other value-added services declined 2.5% to $873 million.
Transaction margin dollars, a measure of revenue remaining after transaction-related expenses, increased 2% to $3.95 billion.
The results reflected growth in payment activity and transaction revenue, alongside a decline in revenue from other value-added services.
PayPal reported different revenue trends across its U.S. and international operations.
U.S. net revenue increased 5.2% to $5.00 billion during the third quarter.
International revenue declined 2.2% to $3.58 billion.
The geographic figures indicate that revenue growth in the United States contributed to the company’s overall quarterly increase, while international operations recorded a year-over-year decline.
Total company revenue rose 2% to $8.58 billion.
PayPal reported growth in total payment volume, transaction activity and active customer accounts.
Total payment volume increased 6.3% to $487.14 billion during the third quarter.
The number of payment transactions rose 7.3% to 6.80 billion.
Active customer accounts increased 0.5% to 440 million.
The figures showed that payment activity expanded at a faster rate than the company’s active customer account base.
The increase in payment transactions also exceeded the percentage growth in total payment volume.
PayPal’s adjusted operating income increased 2.9% to $1.61 billion.
The company’s adjusted operating margin widened to 18.8%, compared with 18.6% in the corresponding period of the previous year.
Total operating expenses increased 4.1% to $7.18 billion.
Meanwhile, adjusted free cash flow declined to $2.05 billion from $2.28 billion a year earlier.
The figures showed an improvement in adjusted operating profitability, although adjusted free cash flow was lower than in the prior-year quarter.
Goldman Sachs analysts attributed PayPal’s earnings performance to transaction margins and operating costs.
“[PYPL] reported a stronger than expected Q3 on both stronger than expected transaction margins and lower opex,” the analysts said.
They added:
“We believe the moving pieces in the quarter were more or less in line with investor expectations, and with lower transaction costs and higher cost savings driving the stronger results.”
The comments indicated that the analysts viewed transaction costs and operating efficiencies as contributing factors to the company’s earnings performance.
PayPal increased its annual adjusted earnings forecast following its third-quarter results.
The company now expects adjusted earnings per share of $5.60 for 2026, compared with its previous guidance of $5.38.
The revised forecast also exceeds the analyst consensus estimate of $5.39.
PayPal raised its full-year transaction margin dollars forecast to approximately $15.7 billion, up from its previous expectation of around $15.6 billion.
Its capital expenditure outlook remained unchanged at approximately $1 billion.
Chief Executive Officer Enrique Lores said:
“I’m pleased with our third-quarter performance and the momentum we are seeing across the business, and we are raising our full-year non-GAAP guidance for transaction margin dollars and EPS.”
The revised guidance reflects the company’s updated expectations for earnings and transaction profitability during the remainder of the year.
PayPal expects adjusted earnings per share of $1.43 for the fourth quarter.
The forecast is above the analyst consensus estimate of $1.35.
The company also anticipates that transaction margin dollars will be slightly positive, both including and excluding interest earned on customer balances.
The fourth-quarter outlook follows the company’s increase in its annual adjusted earnings and transaction margin forecasts.
PayPal shares advanced 1.2% in early U.S. trading on Tuesday.
The increase was recorded by 09:39 ET, equivalent to 13:39 GMT.
The share price movement followed the company’s announcement of adjusted earnings above expectations and an increase in full-year guidance.
However, the quarterly revenue figure remained below market forecasts, reflecting a difference between the company’s earnings performance and its reported sales growth.
PayPal’s third-quarter results showed higher adjusted earnings, increased payment activity and an improvement in adjusted operating margin.
The company also reported slower growth in active customer accounts, lower international revenue and a decline in adjusted free cash flow.
Its revised 2026 outlook calls for adjusted earnings per share of $5.60 and transaction margin dollars of approximately $15.7 billion.
Fourth-quarter results will provide further information about the company’s ability to meet these forecasts, alongside developments in payment volumes, operating expenses and geographic revenue trends.
PayPal stock price
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