PayPal Holdings, Inc. PYPL reported second-quarter 2026 non-GAAP earnings per share (EPS) of $1.38, which beat the Zacks Consensus Estimate of $1.28 by 7.81%. The metric declined 1% year over year. Revenues of $8.68 billion surpassed the consensus mark of $8.51 billion by 2.02% and increased 5% year over year.
The quarter benefited from solid growth in total payment volume (TPV), along with continued momentum in Venmo and Braintree. TPV increased 10% to $486.45 billion, or 9% on a currency-neutral basis.
PYPL’s Revenue Growth Reflects Transaction Gains
Transaction revenues increased 5% year over year to $7.83 billion, supported by Braintree, Venmo and favorable foreign exchange. Revenues from other value-added services were flat at $850 million, as higher credit revenues were offset by lower interest earned on customer balances.
U.S. revenues rose 7% to $5.05 billion, while international revenues increased 2% to $3.63 billion. On a currency-neutral basis, international revenues declined 3%, indicating that domestic growth remained the stronger contributor.
PYPL’s Payment Activity Gains Momentum
The company processed 6.75 billion payment transactions in the second quarter, up 8% year over year. Excluding payment service provider (PSP) transactions, payment transactions increased 7%, reflecting growth across the portfolio.
Transactions per active account rose 3% to 60.0 on a trailing 12-month basis. Excluding PSP, the metric increased 7% to 37.9, marking a second straight quarter of acceleration and highlighting stronger Venmo engagement.
PYPL’s Platform Mix Shows Broad-Based Strength
Venmo TPV advanced 14% year over year to $93.81 billion and represented 19% of total payment volume. Management noted that Venmo delivered a second consecutive quarter of mid-teens growth.
Branded checkout volume grew 2% on a currency-neutral basis, remaining stable with the first quarter. PSP volume increased 13% on a currency-neutral basis, with Braintree growing in the mid-teens, while peer-to-peer and other consumer volume rose 10%.
PYPL’s Margin Profile Faces Investment Pressure
Transaction margin dollars (TM$) increased 1% year over year to $3.90 billion. Excluding interest on customer balances, TM$ rose 3% to $3.62 billion, supported by Venmo, credit and Braintree, along with favorable foreign exchange and lower losses.
Non-transaction-related expenses increased 9% to $2.39 billion. Non-GAAP operating income declined 8% to $1.51 billion, while non-GAAP operating margin contracted 248 basis points to 17.4%, reflecting continued investment in growth and platform initiatives.
PYPL’s Account Metrics Remain Stable
Active accounts were 439 million at quarter-end, up 0.3% year over year. Monthly active accounts (MAA) increased 1% to 228 million, with Venmo driving much of the growth.
Management also highlighted stronger adoption across newer financial services products. Buy now, pay later TPV increased 26%, while MAA for the offering rose more than 20%. Venmo Debit Card MAA grew more than 50%, and Pay with Venmo MAA increased approximately 30%.
PYPL’s Cash Generation Supports Capital Returns
Net cash provided by operating activities surged 121% year over year to $1.98 billion. Free cash flow soared 157% to $1.78 billion, while adjusted free cash flow climbed 179% to $1.83 billion.
PayPal repurchased approximately 33 million shares for $1.5 billion during the reported quarter. The company also paid $122 million in dividends and declared a cash dividend of 14 cents per share, payable Sept. 25, 2026.
PYPL Raises Its Full-Year Outlook
For 2026, PayPal now expects non-GAAP EPS of about $5.38, up from $5.31 in 2025. The Zacks Consensus Estimate for the same is pegged at $5.32.
The company also raised its TM$ outlook to approximately $15.6 billion and expects TM$, excluding interest on customer balances, of about $14.5 billion. Management reiterated adjusted free cash flow of more than $6 billion and share repurchases of roughly $6 billion.
For the third quarter, PayPal expects non-GAAP EPS to decline at a low-single-digit rate from the year-ago levels of $1.34. The Zacks Consensus Estimate for the same is pegged at $1.34.
PYPL’s Zacks Rank
Currently, PayPal carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings release of other stocks in the Financial Transaction Services industry, Fidelity National Information Services, Inc. FIS and Sezzle, Inc. SEZL. While Fidelity National Information Services is scheduled to report on Aug. 4, Sezzle is slated to report on Aug. 6.
The consensus mark for Fidelity National Information Services’ second-quarter 2026 EPS is pegged at $1.47, implying a 8.1% increase year over year. The Zacks Consensus Estimate for Sezzle’s second-quarter 2026 EPS is pinned at 95 cents, indicating a 37.7% increase year over year.
FIS has a Zacks Rank #3, SEZL carries a Zacks Rank #2 (Buy).
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report
Sezzle Inc. (SEZL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).