Earnings Call Insights: PayPal Holdings, Inc. (PYPL) Q3 2025
Management View
- CEO James Chriss described PayPal as “a fundamentally stronger company today than it was 2 years ago” and emphasized a “positive inflection across our business” with transaction margin dollar growth, excluding interest on customer balances, on pace for 6% to 7% growth in 2025. He stated, “Revenue growth has accelerated in the past 2 quarters as a result of our deliberate strategy to focus on profitable growth.”
- Chriss announced the initiation of a dividend, highlighting that “this dividend as strengthening our overall capital return program, working in conjunction with our ongoing share buybacks.”
- The company is on pace to deliver “at least 15% non-GAAP EPS growth this year” and sees “confidence in the business’ longer-term growth potential and ability to deliver high single-digit transaction margin dollar growth and non-GAAP EPS growth in the teens or better over the longer term.”
- Branded experiences total payment volume (TPV) grew 8% on a currency-neutral basis, with U.S. growth reaching 10%. BNPL volume maintained 20%+ growth, while Venmo revenue growth accelerated by 10 points compared to two years ago.
- Chriss stated, “Venmo is at a clear inflection with TPV growing 14% in the third quarter, continuing to accelerate from 12% in Q2 and 9% in 2024.”
- Executive VP and CFO Jamie Miller said, “PayPal delivered another quarter with good execution and real momentum across the underlying business. TPV and revenue growth both accelerated by 2 points from the second quarter. Transaction margin dollars excluding interest grew 7%, continuing the momentum we built through the first half.” She added, “Non-GAAP operating income grew 6%, strong operating income, share buyback and a favorable tax rate more than offset headwinds from lower interest rates, contributing to 12% growth in non-GAAP EPS.”
Outlook
- Miller raised full-year guidance for TM (transaction margin) dollars and non-GAAP EPS, stating, “For the fourth quarter, we expect currency-neutral revenue growth in the mid-single digits. We expect fourth quarter TM to be between $4.02 billion and $4.12 billion, which represents about 3.5% growth at the midpoint.”
- She provided full-year non-GAAP EPS guidance of $5.35 to $5.39, representing 15% to 16% growth, and TM dollar guidance raised to a range of $15.45 billion to $15.55 billion, which equates to 5% to 6% growth.
- Guidance reflects increased investment in product attachment, marketing, and global brand awareness campaigns, while planning for “low single-digit non-transaction OpEx in the quarter and expect about 3% growth for the full year.”
Financial Results
- PayPal reported non-GAAP earnings per share up 12%, driven by transaction margin performance.
- Adjusted free cash flow, excluding the timing impact from pay later receivables, was $2.3 billion for the quarter and $4.3 billion year-to-date.
- Total payment volume reached over $458 billion, with branded experiences TPV growing 8% currency-neutral and U.S. branded experiences at 10%.
- Venmo TPV accelerated to 14% growth, and Pay with Venmo monthly active accounts grew by nearly 25% in the quarter.
- Transaction take rate declined by 3 basis points to 1.64%, attributed to product and merchant mix as well as FX hedges.
- The company completed $1.5 billion in share repurchases and ended the quarter with $14.4 billion in cash, cash equivalents, and investments.
Q&A
- Tien-Tsin Huang, JPMorgan: Asked about agentic commerce and coverage across AI partnerships. Chriss responded that “agentic is just an evolution of this strategy” and outlined partnerships with OpenAI, Perplexity, and Google. CFO Miller explained that “some of those investments are likely to be a near-term headwind to how fast TM dollars or earnings grow next year.”
- Harshita Rawat, Bernstein: Inquired about branded growth and macro headwinds. Miller noted, “When we got into September, we began to see macro-related deceleration… we’re seeing basket sizes just trade down.”
- Dan Dolev, Mizuho: Asked about BNPL momentum and market share gains. Chriss said, “We’re seeing good growth… U.S. MAAs are up 21% in Q3. TPV continuing to grow pretty consistently over 20%.”
- Sanjay Sakhrani, KBW: Probed Venmo momentum and monetization. Chriss discussed, “debit card MAAs are up 43%. Pay with Venmo MAAs are up 24%. And this is starting to drive ARPA up.”
- Darrin Peller, Wolfe: Sought color on transaction margin exit growth rates and investment impacts. Miller declined 2026 guidance but noted “some impact from interest rate cuts coming in the fourth quarter” and investments as “near-term headwinds.”
- Jason Kupferberg, Wells Fargo: Asked about TM dollar upside and checkout penetration. Miller said, “we had meaningful contribution across each of branded checkout, Venmo, PSP, VAS and credit.”
- Will Nance, Goldman Sachs: Requested BNPL volume breakdown and Blue Owl impact. Chriss noted U.S. originations under 30% and global expansion, while Miller stated the Blue Owl impact was “net neutral to operating income.”
- Timothy Chiodo, UBS: Asked for BNPL unit economics. Miller emphasized most BNPL is Pay in 4 with an average portfolio turn of 40 days, and pointed to “30% to 40% sort of incremental usage of branded checkout” with BNPL adoption.
Sentiment Analysis
- Analysts expressed optimism about growth in BNPL and Venmo, but questioned the durability of macro-driven growth and the impact of increased investment on near-term margins, with tones ranging from positive to slightly cautious regarding macroeconomic and investment headwinds.
- Management maintained a confident tone in prepared remarks, highlighting “positive inflection,” “exceptionally well placed to win into the future,” and “laser-focused on executing our strategy.” During Q&A, they acknowledged macro pressures and investment headwinds, but continually returned to long-term confidence, with phrases like “this is the new PayPal, built for faster, more profitable growth.”
- Compared to the previous quarter, management’s tone remained confident, with a slight increase in caution about macro-driven deceleration and the impact of higher investment.
Quarter-over-Quarter Comparison
- Guidance for non-GAAP EPS growth was raised from the previous quarter’s 11%-14% range to 15%-16% for the full year.
- Management introduced a new dividend, marking a shift in capital return strategy.
- Transaction margin dollar growth, excluding interest, was on pace for 6%-7% versus the prior quarter’s guidance.
- Branded experiences TPV growth remained at 8%, with more balanced contributions from key segments like Venmo, BNPL, and PSP, compared to a heavier focus on branded checkout previously.
- Macro headwinds and investment spending were called out more explicitly as factors impacting near-term results.
- Analysts continued to focus on Venmo and BNPL momentum, while management highlighted new AI and agentic commerce partnerships as new growth vectors.
Risks and Concerns
- Management cited “choppy global macro trends,” “softer consumer discretionary spending in Europe and the U.S.,” and “recent spending trends and the uncertain macro backdrop” as risks to growth in Q4.
- Transaction losses rose due to a temporary service disruption in August and “higher volume-based expenses,” though management reported improvement in transaction loss rates relative to last quarter.
- Guidance reflects “prudent” planning for potential deceleration and “lapping strong consumer spending in the fourth quarter of last year.”
- Increased investment in product and marketing is expected to be a near-term headwind for transaction margin and EPS growth rates.
Final Takeaway
PayPal management emphasized that the company is now operating from a position of strength, having established a more balanced and profitable growth engine across its branded, PSP, and Venmo businesses. With increased capital returns via buybacks and a new dividend, accelerating momentum in Venmo and BNPL, and new partnerships in AI-driven commerce, the company raised full-year guidance for both non-GAAP EPS and transaction margin dollars. However, management acknowledged macro headwinds and investment spending as factors that may weigh on near-term growth, while reiterating confidence in PayPal’s long-term strategy to capture a larger share of the evolving digital commerce landscape.