PayPal Earnings: Revenue Growth Slows to 2% as EPS Outlook Rises

A split quarter for PayPal

PayPal's third-quarter 2026 report beat on earnings and fell short on sales. Net revenue for the three months ended September 30 rose 2% to $8.58 billion, or 1% on a currency-neutral basis. Adjusted earnings per share grew 8% to $1.45, and management raised its full-year non-GAAP guidance for both transaction margin dollars and EPS.12

The 2% growth rate is the main story. PayPal's own quarterly breakdown shows year-over-year revenue growth of 7% in the first quarter of 2026 and 5% in the second, before the drop to 2% in the third. That makes this the slowest growth of the year, after two straight quarters of deceleration.12 Profits are going the other way. Adjusted operating margin edged up 16 basis points to 18.8%, and transaction margin dollars rose 2% to about $3.95 billion.12 The company is turning roughly flat sales into rising per-share earnings. Investors are trying to decide whether that can last.

How the numbers stacked up against Wall Street

Most outlets used the same consensus figures. Analysts had expected about $1.31 in adjusted EPS on $8.71 billion in revenue.35 On that basis, PayPal beat on EPS by about 10.7% and missed on revenue by roughly 1.5%, or about $130 million.1115 A StockStory tally of S&P consensus figures shows the same revenue gap. It also shows total payment volume of $487.1 billion coming in just under the $491.3 billion analysts expected, even though volume grew 6.3% from a year earlier.19

Not everyone used the same benchmark. Chartmill measured the quarter against a revenue consensus of $8.887 billion, which turns the miss into a gap of about 3.4%. On that basis the EPS beat was a smaller 8.5%, measured against a $1.3367 estimate.18 Most coverage used the lower $8.71 billion figure, so the roughly 1.5% miss is the better guide.71119 Either way, the top line fell short.

At least one outlet's figures should be read with caution. BigGo Finance put quarterly revenue at $7.4 billion and transaction margin dollars at about $3.7 billion.16 Those figures don't match the earnings release, which lists net revenue of $8,584 million and transaction margin dollars of $3,950 million. The $3.7 billion figure matches transaction margin dollars excluding interest on customer balances.12 The release is the authoritative source.

GAAP results look weaker than the adjusted numbers. GAAP EPS fell 4% to $1.25, GAAP operating income fell 8% to $1.4 billion, and GAAP net income dropped 14% to about $1.07 billion.12 One reason is $178 million in restructuring charges, up from $1 million a year earlier. Free cash flow fell 17% to $1.43 billion, and adjusted free cash flow fell 10% to about $2.05 billion.12 GuruFocus noted that GAAP EPS came in a penny below an estimate of $1.26.20

Where the growth went missing

The gap between payment volume and revenue explains the quarter. Payment volume grew 6%, or 7% on a currency-neutral basis, and payment transactions rose 7% to 6.8 billion. Active accounts barely moved, up 0.6% to 440 million.12 More money flowed through PayPal's systems, but less of it became revenue.

Geography and product mix account for much of that. U.S. net revenue grew about 5% to $5.0 billion, while international revenue fell roughly 2% to $3.58 billion.17 Revenue from other value-added services fell about 2.5% to $873 million. Transaction revenue grew about 2.5% to $7.71 billion.17 On the earnings call, Citi's Bryan Keane pointed out that international payment volume was roughly flat on a currency-neutral basis, while international revenue growth fell to about negative 4%.11

Management gave several reasons. Executives said Braintree, Venmo and favorable currency moves helped growth. Those gains were partly offset by higher contra-revenue spending, such as incentives that are booked as reductions to revenue, and by the removal of the European Union's de minimis exemption, a tax break on low-value imports.11 BigGo put that de minimis drag at about 70 basis points.16 Before the report, analysts had flagged the same issues: weaker European consumer demand, pricing pressure from flexible pricing meant to stem share loss, the cost of buy-now-pay-later placements, and competitors offering Braintree merchants aggressive terms.4

Taken together, this looks like a business giving up some revenue to defend its position. If that's right, slow sales growth is partly a deliberate choice, not just a sign of weak demand. That would be easier to accept if branded checkout, PayPal's most profitable product, were clearly stabilizing. BigGo described that business as still stagnant, with Venmo, Braintree and financial services making up the difference.16

The guidance raise and what drives it

The new outlook is the strongest part of the report. PayPal now expects full-year non-GAAP EPS of about $5.60, up from roughly $5.38 in July. It reaffirmed GAAP EPS of about $5.07 and guided to about $1.43 in non-GAAP EPS for the fourth quarter.12 The company also expects about $15.7 billion in transaction margin dollars, at least $6.5 billion in adjusted free cash flow, and about $6 billion in share buybacks.7 Chartmill noted that the $5.60 target is above a full-year consensus of about $5.49.18 StockStory said full-year guidance also topped consensus.19

How PayPal reached that number matters. Chief Financial and Operating Officer Jamie Miller said transaction margin dollars beat internal forecasts and operating expenses came in lower than expected, which pushed EPS above guidance.11 Buybacks also helped. PayPal repurchased $1.5 billion of stock during the quarter and returned $6 billion to shareholders over the past 12 months, cutting its weighted average share count by 11%.13 Miller also warned that the third quarter's low spending should not be treated as a new annual run rate, because PayPal plans to keep investing in financial services, marketing and specialized sales teams.11

So the guidance raise reflects cost control and a shrinking share count more than faster growth. One German outlet summed it up: the outlook is progress on earnings, not proof that growth has picked up.8 Chief executive Enrique Lores said the company's strategy is starting to show up in its financial results.12 On the sales line, that claim is not yet backed by the numbers.

Analysts and price targets: a crowded hold

Sentiment was already cautious before the report. MarketBeat's tally of 47 analysts showed a consensus "Hold," with 9 buys, 33 holds and 5 sells, and an average price target of about $56.28. Targets ranged from $32 to $100.1 TipRanks, counting only targets issued in the past three months, showed an average of $57.72 within a range of $40 to $70.2 Both averages were close to where the stock had been trading, so analysts saw little upside.

Recent target changes went both ways. Truist raised its target to $58 from $53 and kept a Hold rating.10 Clear Street raised its target to $60 from $55, also with a Hold.2 Morgan Stanley kept its $45 target. Evercore ISI held at $40. Goldman Sachs trimmed its target to $49 and kept a Sell rating.2 Reports on Morgan Stanley's rating conflict. One preview described it as a Buy even while citing the $45 target and the downside it implied.5 A tracker listing the same analyst shows the rating as a Sell, which better fits a target well below the share price.2 Bank of America started coverage with a Sell on October 15, arguing that unwinding Braintree's historical pricing subsidy could hurt branded adoption. Cleveland Research cut the stock to Underperform on October 19, citing share loss and macroeconomic pressure.48

An EPS beat with a guidance raise doesn't solve the problem bears care about most, which is slowing revenue growth and lost checkout share. Expect most of the post-earnings revisions to be modest target changes within Hold ratings, not upgrades. Citi's earlier move to push its turnaround timeline out to 2028 fits that pattern.2

A muddled market reaction

Early trading reflected the mixed results. Several outlets reported shares falling before the market opened. Chartmill estimated the decline at about 1.2%.1118 Ad-hoc News reported that the stock finished the session up 3.2%. It noted that the gain didn't fit neatly with the early weakness and shouldn't be read as a clear endorsement.8 The stock had closed at $54.99 the day before, after falling 3.6%.3 It was also about 28% below its 52-week high of $79.22.4 With expectations that low, a profit beat and a guidance raise were enough to lift the shares. They weren't enough to change the broader view of the stock.

The bottom line

PayPal shows it can lift earnings through cost discipline and steady buybacks while sales growth slows. That can work for a while. Over time, though, PayPal needs revenue to keep up with payment volume, international results to recover, and branded checkout to show real stabilization.17 Until that happens, the guidance raise is good news for earnings per share, and the growth problem is still there.