Shares of PayPal jumped over 4% following a solid Q2 performance that surpassed Wall Street's revenue and earnings expectations. The payments giant reported $8.68 billion in revenue, outpacing the $8.47 billion forecast, while adjusted earnings per share came in at $1.38, beating estimates by a dime.
Payment volume grew a solid 10% to $486.4 billion, higher than analysts’ predicted $473.93 billion, reflecting strong transaction activity. During the quarter, PayPal processed 6.8 billion payments, an 8% rise year over year, with active accounts growing to 439 million and average transactions per user increasing 3% to 60.
Despite these gains, margins came under pressure. GAAP operating income slipped 5% to $1.4 billion, while the GAAP operating margin tightened to 16.4%. Non-GAAP metrics also showed declines, with operating income falling 8% and margins shrinking accordingly. The company attributed part of the earnings hit to strategic investments and crypto holdings, which lowered EPS by about $0.07 per share.
Encouragingly, PayPal boosted its 2026 adjusted earnings outlook to $5.38 per share, surpassing the previous guidance and last year’s $5.31. The company held steady on GAAP EPS guidance, expecting a mid-single-digit decline. PayPal also raised its transaction margin dollar forecast for the full year.
Cash flows remained strong with $2 billion from operations and $1.8 billion free cash flow generated during the quarter. The company carried $15.3 billion in cash and investments, comfortably above its $13.4 billion debt. also PayPal returned $1.5 billion to shareholders via buybacks, repurchasing 33 million shares, and announced a quarterly dividend of $0.14 payable in late September.
CEO Enrique Lores reaffirmed confidence in the company’s ongoing transformation efforts, highlighting steady progress even as challenges remain. Investors are closely watching PayPal's ability to navigate margin pressures while scaling its payment volumes and expanding its user base.
