Key Highlights

  • Non-GAAP EPS was $1.45, up 8%, against $1.31 as screened; GAAP EPS was $1.25, down 4%.
  • Net revenues were $8.6 billion, up 2%, and total payment volume was $487.1 billion, up 6%.
  • Full-year 2026 non-GAAP EPS guidance was raised to about $5.60 from about $5.38.
  • Share repurchases were $1.5 billion in the quarter, retiring about 28 million shares.
  • Free cash flow was $1.4 billion, down 17%, with $15.1 billion of cash and investments.

PayPal Earnings: Did the Raised Outlook Come From Growth or From Buybacks?

PayPal Holdings (NASDAQ:PYPL) reported third-quarter results on Tuesday, October 27, with non-GAAP EPS of $1.45, up 8%, and GAAP EPS of $1.25, down 4%. The screened estimate was $1.31, a surprise of 10.7% as screened. Net revenues rose 2% to $8.6 billion, or 1% on a currency-neutral basis.

The company raised its full-year 2026 non-GAAP EPS outlook to about $5.60 from about $5.38, compared with $5.31 last year.

Weighted diluted shares were 858 million, down from 960 million a year earlier, a calculated decline of about 11%. That reduction is larger than the 8% EPS growth, so buybacks more than account for the gain.

PayPal Volumes and Margin Dollars: How Much Is Underlying Growth?

Total payment volume rose 6% to $487.1 billion, or 7% on a currency-neutral basis. Payment transactions increased 7% to 6.8 billion. Active accounts reached 440 million, up 0.6%,.

Transaction margin dollars rose 2% to $4.0 billion. Excluding interest on customer balances, they rose 3% to $3.7 billion. The company raised its transaction margin dollar outlook for the year but did not publish a specific figure in the release.

Non-GAAP operating income rose 3% to $1.6 billion, with a margin of 18.8%, up 16 basis points. GAAP operating income fell 8% to $1.4 billion, and the GAAP margin was 16.3%, down 173 basis points.

PayPal Restructuring and Cash Flow: Why Did GAAP Earnings Lag?

GAAP restructuring and other expense was $255 million in the quarter, compared with $69 million a year earlier, and $442 million year to date. The charges cover workforce reductions, facilities costs and asset impairments. The non-GAAP restructuring adjustment was $178 million, versus $1 million a year ago.

Cash flow from operations was $1.6 billion, down 19%, and free cash flow was $1.4 billion, down 17%. Adjusted free cash flow was $2.0 billion. Adjusted free cash flow excludes timing of buy now, pay later loans held for sale, which were $3.7 billion versus $1.7 billion at the end of 2025.

The effective tax rate was 21.9% on a GAAP basis and 21.6% on a non-GAAP basis, versus 18.6% and 18.1% a year ago.

PayPal Capital Returns and Guidance: What Is Implied for the Fourth Quarter?

The company repurchased about 28 million shares for $1.5 billion in the quarter, and about 117 million shares for $6.0 billion over the trailing twelve months. Shares outstanding were 837 million at September 30, down from 920 million at the end of 2025. A quarterly dividend of $0.14 per share is payable on December 24 to holders of record on December 4.

Cash and investments totaled $15.1 billion against $13.5 billion of debt. Fourth-quarter guidance is for non-GAAP EPS of about $1.43, versus $1.23 a year earlier, and GAAP EPS of about $1.37. Full-year GAAP EPS is about $5.07.

The chief executive said the strategy is beginning to show up in results, and called the transformation unfinished.

PayPal Earnings: What Should Investors Watch After the Raised Outlook?

Key checkpoints are whether transaction margin dollar growth moves beyond 2% to 3%, whether active account growth builds from 0.6%, and whether restructuring costs fade after $442 million year to date.