PayPal Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net revenues increased 2% year-over-year to $8.6 billion, with a 1% increase on a currency-neutral basis.
• Transaction margin dollars (TM$) increased 2% year-over-year to $4.0 billion; TM$ excluding interest on customer balances increased 3% to $3.7 billion.
• GAAP operating income decreased 8% to $1.4 billion, while non-GAAP operating income increased 3% to $1.6 billion.
• GAAP operating margin contracted 173 basis points to 16.3%; non-GAAP operating margin expanded 16 basis points to 18.8%.
• GAAP earnings per share (EPS) decreased 4% to $1.25; non-GAAP EPS increased 8% to $1.45.
• Cash flow from operations was $1.6 billion, and free cash flow was $1.4 billion.
• Adjusted free cash flow was $2.0 billion, excluding the net timing impact of originating buy now, pay later (BNPL) receivables held for sale and their subsequent repayment and sale.
• GAAP net income decreased 14% to $1.07 billion; non-GAAP net income decreased 3% to $1.25 billion.
• Total payment volume (TPV) increased 6% year-over-year to $487.1 billion, with a 7% increase on a currency-neutral basis.
• Payment transactions increased 7% to 6.8 billion; excluding payment service provider (PSP) transactions, payment transactions also increased 7%.
• Payment transactions per active account (TPA) increased 6% to 60.8 on a trailing 12-month basis.
• Active accounts increased 0.6% year-over-year to 440 million, with a sequential increase of 0.4% (1.6 million).

Guidance and Future Outlook:

• PayPal raised full-year 2026 non-GAAP TM$ and EPS guidance.
• PayPal reaffirmed full-year 2026 GAAP EPS guidance.
• Q4 2026 guidance: GAAP EPS ~$1.37; Non-GAAP EPS ~$1.43.
• Full-year 2026 guidance: GAAP EPS ~$5.07 (previously mid-single digit decline); Non-GAAP EPS ~$5.60 (previously ~$5.38).

Business Segments and Product Lines:

• Transaction revenues were $7.711 billion, representing 90% of total net revenues.
• Revenues from other value-added services were $873 million, representing 10% of total net revenues.
• U.S. net revenues were $5.002 billion (58% of total); International net revenues were $3.582 billion (42% of total).
• Transaction expense rate was 0.87%; Transaction and credit loss rate was 0.08%.
• Transaction margin was 46.0%.

Market and Competitive Landscape:

• Management noted the strategy is beginning to translate into financial results with strong contributions from key growth areas and increasing diversification.
• The company remains focused on execution and is increasingly confident in its path to durable, profitable growth.

Risks and Challenges:

• Forward-looking statements cite risks including competition in highly competitive markets subject to rapid technological change.
• Risks include cyberattacks, security vulnerabilities, global political and economic conditions, inflation, interest rates, and regulatory changes regarding payments, lending, cybersecurity, privacy, and artificial intelligence.
• Risks also encompass the stability of the payments platform, fraud detection capabilities, and reliance on third parties.

Management Commentary and Tone:

• Enrique Lores, President and CEO, stated he was pleased with the third-quarter performance and the momentum seen across the business.
• Management highlighted that the multi-year transformation is making good progress, though more work remains.
• The tone was confident regarding the path to durable, profitable growth and the translation of strategy into financial results.

Other Key Points:

• The Board of Directors declared a cash dividend of $0.14 per share, payable on December 24, 2026, to stockholders of record as of December 4, 2026.
• The company returned $1.5 billion to stockholders in Q3 2026 by repurchasing approximately 28 million shares of common stock.
• On a trailing 12-month basis, the company returned $6.0 billion to stockholders by repurchasing approximately 117 million shares.
• Cash, cash equivalents, and investments totaled $15.1 billion as of September 30, 2026.
• Total debt was $13.5 billion as of September 30, 2026.
• Net cash provided by operating activities decreased 19% year-over-year to $1.59 billion.
• Free cash flow decreased 17% year-over-year to $1.43 billion.
• Adjusted free cash flow decreased 10% year-over-year to $2.05 billion.