PayPal Holdings (NASDAQ:PYPL) boosted its full-year guidance after Q3 earnings topped the consensus estimate by a handy margin, but issued Q4 earnings on the light side. During its third quarter, total payment volume topped Wall Street expectations, but the number of active users barely increased. Meanwhile, operating expenses came in lower than expected, benefiting the bottom line.
The company now expects 2025 non-GAAP EPS of $5.35-$5.39, compared with the $5.25 consensus and its previous guidance of $5.15-$5.30. Q4 non-GAAP EPS guidance is $1.27-$1.31 vs. the average analyst estimate of $1.31.
“PayPal delivered another strong quarter, and we are raising guidance, with broad-based profitable growth across branded experiences, PSP, and Venmo,” said President and CEO Alex Chriss. “We have returned the company to growth and are on pace for 6% to 7% transaction margin dollar growth in 2025, when excluding interest on customer balances. We are also building for an agentic future, partnering with leaders such as Google, OpenAI, and Perplexity.”
Separately, PayPal (NASDAQ:PYPL) announced a deal to embed its digital wallet in OpenAI’s (OPENAI) ChatGPT.
The company also started paying a dividend. PayPal (NASDAQ:PYPL) stock surged 15% in premarket trading.
Q3 non-GAAP EPS of $1.34, topping the $1.20 consensus, fell from $1.40 in Q2 and rose from $1.20 in last year’s Q3.
Q3 revenue of $8.42B, beating the average analyst estimate of $8.23B, increased from $8.29B in the prior quarter and $7.85B in the year-ago period.
Total payment volumes of $458.1B, vs. the Visible Alpha consensus of $443.5B, climbed from $443.5B in Q2 and $422.6B in last year’s Q3.
Total active accounts, at 438M at Sept. 30, 2025, from 438M, rose by 0.3M from June 30 and lagged the Visible Alpha estimate of 438.8M.
PayPal’s (PYPL) transaction margin dollars rose 6% Y/Y to $3.87B, compared with 7% Y/Y growth in Q2. Excluding interest on customer balances, transaction margin dollars increased 7% to $3.6B vs. 8% growth in Q2.
Total operating expenses of $6.90B, lower than the $6.48B Visible Alpha estimate, increased from $6.78B in the previous quarter and declined from $7.85B a year ago.
Net cash provided by operating activities was $1.97B (vs. Visible Alpha estimate of $2.48B) vs. $898M in the prior quarter and $1.61B a year ago. Adjusted free cash flow of $2.28B compared with $656M in Q2 and $1.54B in Q3 2024.
Conference call at 8:00 AM ET.