November 1, 2026·43 min read
PayPal Holdings, Inc. (PYPL), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Net revenues Q3 2026
$8.58bn
+2.0% year on year (Q3 2025 $8.42bn)
Operating expenses Q3 2026
$7.18bn
+4.1% year on year (Q3 2025 $6.90bn)
Operating margin Q3 2026
16.3%
(1.7 pts) year on year (Q3 2025 18.1%)
Key findings
- Volume +6%, revenue +2%. Q3 2026 total payment volume $487.1bn, +6%; net revenues $8.58bn, +2.0% (1% currency neutral); net revenues equal 1.76% of volume against 1.84% a year earlier.
- Transaction margin dollars (gross profit) $3.95bn, +2.0%, 46.0% of net revenues; excluding interest on customer balances $3.66bn, +3.1%. Chapters 2 to 4 follow checkout volume, Braintree and Venmo, and credit, interest and PYUSD.
- Growth comes from Braintree and Venmo. Q3 2026 transaction revenues: Braintree +$270m, Venmo +$100m, PayPal products ($240m) (10-Q); online branded checkout volume +1% currency neutral, as stated on the call.
- GAAP operating income $1.40bn, (7.8%), margin 16.3% against 18.1%, after restructuring and other of $255m against $69m; non GAAP operating income $1.61bn, +2.9%. CEO Enrique Lores (since 1 Mar 2026) targets at least $1.5bn of gross run rate savings.
- Buybacks shrink the share count. TTM buybacks $6.05bn, 96% of free cash flow; diluted shares 858m against 960m, (10.6%); Q3 2026 diluted EPS $1.25, (3.8%), non GAAP $1.45, +8.2%; FY2026 non GAAP EPS guidance raised to about $5.60.
- Shares at $57.01 on 30 Oct 2026, 10.9x TTM diluted EPS of $5.24, 10.2x the FY2026 non GAAP guidance. Base case $93 in three years; best $150; worst $44.
Figures are read from the Forms 10-K for FY2021 to FY2025 (FY2024 for the risk factor comparison), the Forms 10-Q for Q1 2025 to Q3 2026, the Forms 8-K with all their exhibits, incl. the quarterly earnings releases with their non GAAP tables (Ex 99.1), the commercial paper dealer agreement (Ex 10.1), the KKR receivables purchase and servicing agreements (Ex 10.1, 10.2, 99.1), the CEO offer letter and retention award (Ex 10.1, 10.2), the leadership, Board and reorganization releases (Ex 99.1), the notes officer's certificate and legal opinion (Ex 4.2, 5.1) and the Item 5.07 vote results, the proxy statement of Apr 2026, Schedules 13G and Forms 4 for central index key 1633917, together with the filings of Visa, Mastercard, American Express, Block, Fiserv, Affirm and further payments companies used in chapters 2 to 5. No separate CFO commentary document is filed with the SEC; CFO commentary comes from the earnings releases, the company's Q3 2026 investor newsletter and statements on the Q2 and Q3 2026 calls. Gross profit in this report is transaction margin dollars, a non GAAP measure: net revenues less transaction expense and transaction and credit losses. Accession numbers appear in the Sources appendix. Market prices are closing prices of 30 Oct 2026.
1 Revenue & Business Model
- Storyline: payment volume grows faster than revenue and gross profit as the mix moves from PayPal branded checkout to Braintree processing and Venmo. Transaction margin fell from 55.2% of net revenues in FY2021 to 46.6% in FY2025 and 46.0% in Q3 2026. Chapters 2 to 4 cover the three revenue drivers: checkout and volume, Braintree and Venmo, and credit, interest income and PYUSD.
- Business model: PayPal runs a two sided payments platform for consumers and merchants in about 200 markets, with one reportable segment. Transaction revenues are fees on total payment volume (TPV), incl. currency conversion, cross border and instant transfer fees; revenues from other value added services cover interest and fees on loans, partner revenue share and interest earned on customer balances. Transaction expense (card network and processor fees) and transaction and credit losses are the direct costs; net revenues less both equal transaction margin dollars, which this report labels gross profit.
- Net revenues FY2021 $25.37bn to FY2025 $33.17bn, a 6.9% CAGR; TTM Q3 2026 $34.30bn. Transaction margin dollars $14.00bn in FY2021 and $15.47bn in FY2025; TTM $15.69bn.
- Regions FY2025: United States $18.87bn (56.9%), international $14.30bn (43.1%); Q3 2026 US +5.2%, international (2.2%).
- Scale: TPV $1.79tn in FY2025 (+7%), 25.4bn payment transactions, 439m active accounts at year end and about 23,800 employees (10-K FY2025). In Apr 2026 the company reorganized into three businesses: Checkout Solutions and PayPal; Consumer Financial Services and Venmo; Payment Services and Crypto.
Table 1.1 Net revenues by type and region, FY2021 to FY2025 ($bn unless stated)
| Line | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Transaction revenues ($bn) | 23.40 | 25.21 | 26.86 | 28.84 | 29.80 |
| Revenues from other value added services ($bn) | 1.97 | 2.31 | 2.91 | 2.96 | 3.37 |
| Net revenues ($bn) | 25.37 | 27.52 | 29.77 | 31.80 | 33.17 |
| United States ($bn) | 13.71 | 15.81 | 17.25 | 18.27 | 18.87 |
| International ($bn) | 11.66 | 11.71 | 12.52 | 13.53 | 14.30 |
| International (% of net revenues) | 46.0 | 42.6 | 42.0 | 42.6 | 43.1 |
| Transaction margin dollars ($bn) | 14.00 | 13.77 | 13.70 | 14.66 | 15.47 |
| Transaction margin (%) | 55.2 | 50.1 | 46.0 | 46.1 | 46.6 |
Transaction margin dollars (gross profit) are net revenues less transaction expense and transaction and credit losses, a non GAAP measure.
Table 1.2 Operating measures, FY2021 to FY2025
| Measure | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total payment volume ($tn) | 1.25 | 1.36 | 1.53 | 1.68 | 1.79 |
| Active accounts, year end (m) | 426 | 435 | 426 | 434 | 439 |
| Payment transactions (bn) | 19.3 | 22.3 | 25.0 | 26.3 | 25.4 |
| Cross border share of TPV (%) | 16 | 13 | 12 | 12 | 12 |
TPV rounded as stated in the 10-K MD&A.
2 Checkout and Volume: TPV Up 6%, Revenue Up 2%
- TPV $487.1bn in Q3 2026, +6% (+7% currency neutral), after +10% in Q2 and +11% in Q1 2026; 9M 2026 $1.44tn, +9% (10-Q). Net revenues +2.0%, so revenue fell to 1.76% of TPV from 1.84%.
- Transaction revenues $7.71bn, +2.5%; the 10-Q names product and geographic mix, higher co marketing incentives with large merchants, recorded as revenue reductions, and lower foreign exchange fees, with revenue from PayPal products and services down about $240m.
- Regions: US net revenues $5.00bn, +5.2%; international $3.58bn, (2.2%) ((4%) currency neutral); TPV generated outside the US 35% against 38% a year earlier.
- Accounts and engagement: 440m active accounts, +0.6%; 6.80bn payment transactions, +7%; 60.8 transactions per active account over twelve months against 57.6.
- Branded checkout (stated on the call): online branded checkout volume +1% currency neutral in Q3 2026, growth between 1% and 2% for four quarters in a row; PayPal does not report branded checkout volume or revenue in its filings.
Table 2.1 Volume and revenue measures, last five quarters
| Measure | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Total payment volume ($bn) | 458.1 | 475.1 | 464.0 | 486.4 | 487.1 |
| TPV growth, reported (%) | 8 | 9 | 11 | 10 | 6 |
| TPV growth, currency neutral (%) | 7 | 6 | 8 | 9 | 7 |
| Net revenues ($bn) | 8.42 | 8.68 | 8.35 | 8.68 | 8.58 |
| Net revenues (% of TPV) | 1.84 | 1.83 | 1.80 | 1.78 | 1.76 |
| Payment transactions (bn) | 6.33 | 6.75 | 6.48 | 6.75 | 6.80 |
| Active accounts (m) | 438 | 439 | 439 | 439 | 440 |
| Transactions per active account, TTM | 57.6 | 57.7 | 58.7 | 60.0 | 60.8 |
| US net revenues ($bn) | 4.75 | 4.94 | 4.88 | 5.05 | 5.00 |
| International net revenues ($bn) | 3.66 | 3.73 | 3.47 | 3.63 | 3.58 |
Net revenues as % of TPV derived from the filed figures. Q4 2025 net revenues derived as FY2025 less 9M 2025.
How checkout and card payments are changing
- Volume growth (latest quarter): Square gross payment volume +12.2% (Q2 2026), Visa payments volume +9% in constant dollars (Sep 2026 quarter), American Express billed business +8%, Mastercard gross dollar volume +7.5% and PayPal TPV +6% (Q3 2026).
- Merchant incentives: PayPal records higher co marketing incentives with large merchants as revenue reductions (10-Q Q3 2026); Visa client incentives and Mastercard rebates also grow faster than gross revenue in their Q3 2026 filings.
- US interchange: in Jun 2026 the court gave preliminary approval to the revised Visa and Mastercard merchant settlement, which cuts credit interchange by 10 basis points for five years and loosens honor all cards and surcharging rules.
- Agentic commerce: on 10 Jun 2026 Visa and OpenAI announced an integration letting AI agents pay with Visa credentials; Mastercard launched Agent Pay and in Jun 2026 Agent Pay for Machines.
Table 2.2 Payment volumes against competitors
| Company and measure | Period | Volume ($bn) | Growth (%) | Filed detail |
|---|---|---|---|---|
| PayPal total payment volume | Q3 2026 | 487.1 | 6.0 | net revenues +2.0%; 6.80bn payment transactions |
| Mastercard gross dollar volume | Q3 2026 | 2,952 | 7.5 | Payment network net revenue $5.75bn (+11.0%) |
| American Express billed business | Q3 2026 | 454 | 8.0 | total revenues net of interest expense $20.06bn, +8.9% |
| Block (Square) gross payment volume | Q2 2026 | 74.7 | 12.2 | Square gross profit +13% |
Measures differ: Mastercard local currency, Visa constant dollar, others in US dollars as reported. Visa reports payments volume growth (+9% constant dollar, Sep 2026 quarter) without a dollar total in the data used. Adyen and Stripe do not file with the SEC.
3 Braintree and Venmo: Growth From Lower Margin Volume
- Transaction revenues by product (10-Q): Q3 2026 Braintree +$270m, Venmo +$100m, hedging +$70m, PayPal products ($240m); 9M 2026 Braintree +$1.1bn, Venmo +$230m, PayPal products ($230m). PayPal reports no revenue totals for Braintree or Venmo.
- Transaction expense $4.25bn, +4.6%, rate 0.87% of TPV against 0.89%; Braintree carries higher transaction expense rates and Venmo lower rates, and in 9M 2026 the two offset (10-Q).
- Transaction margin 46.0% in Q3 2026, as a year earlier, after 44.9% in Q2 2026; FY2021 55.2%, FY2025 46.6%. Transaction margin dollars $3.95bn, +2.0%.
- Venmo (stated on the Q3 2026 call): Venmo TPV grew at double digit rates for an eighth quarter; Pay with Venmo volume +43%; Venmo debit card monthly actives 6.7m, +55%; 23% of Venmo users use financial services.
- Braintree (stated on the Q2 2026 call): payment services volume growth 13% against 11% in Q1 2026; Braintree, PayPal Complete Payments and Hyperwallet to share one technology base. Since Apr 2026 Braintree sits in the Payment Services and Crypto business.
Table 3.1 Transaction revenues, expense and margin, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Transaction revenues ($bn) | 7.52 | 7.82 | 7.50 | 7.83 | 7.71 |
| Transaction expense ($bn) | 4.06 | 4.25 | 4.17 | 4.39 | 4.25 |
| Transaction expense rate (% of TPV) | 0.89 | 0.89 | 0.90 | 0.90 | 0.87 |
| Transaction margin dollars ($bn) | 3.87 | 4.03 | 3.81 | 3.90 | 3.95 |
| Transaction margin (% of net revenues) | 46.0 | 46.5 | 45.6 | 44.9 | 46.0 |
How processing and peer to peer payments are changing
- Processing margins: Fiserv Merchant Solutions revenue (1.4%) in Q2 2026 with segment margin 30.0% against 34.6%; PayPal grows Braintree volume at higher transaction expense rates.
- Wallets and peer to peer: Block Cash App gross profit +31% and Square gross profit +13% in Q2 2026; PayPal Venmo revenue +$100m in Q3 2026.
- Remittances move to digital channels: Remitly send volume +27% in Q2 2026, Western Union revenue (1.3%).
Table 3.2 Processing, wallet and transfer businesses against competitors
| Company and line | Period | Value ($bn) | Growth (%) | Filed detail |
|---|---|---|---|---|
| PayPal transaction revenues | Q3 2026 | 7.71 | 2.5 | Braintree +$270m, Venmo +$100m, PayPal products ($240m) |
| Fiserv Merchant Solutions | Q2 2026 | 2.61 | (1.4) | segment operating margin 30.0% against 34.6% |
| Block (Square) gross payment volume | Q2 2026 | 74.7 | 12.2 | Square gross profit +13%; Cash App +31%; Block +25% |
| Remitly send volume | Q2 2026 | 23.5 | 27.0 | revenue $495m, +20.2% |
Fiserv, Block and Remitly had not filed Q3 2026 results with the SEC when the data was collected.
4 Credit, Interest Income and PYUSD: Other Value Added Services
- Revenues from other value added services $873m in Q3 2026, (2.5%); 9M 2026 $2.58bn, +2.3%; FY2025 $3.37bn, +14.2%, with $350m more loan interest and fees and $160m more partner revenue share (10-K).
- Interest on customer balances $289m, (10.0%), as rates fell; transaction margin dollars excluding that interest $3.66bn, +3.1%.
- Credit: transaction and credit losses $386m, (20.1%), 0.08% of TPV against 0.11%; transaction losses $328m, (17%); credit losses $58m against $86m; merchant loan net charge off rate 8.3% against 7.3%. Loans held for sale $3.69bn at 30 Sep 2026.
- Buy now, pay later: volume +25% in Q3 2026 (stated on the call); European receivables are sold to KKR managed funds under a forward flow agreement of up to €65bn through Mar 2028.
- PYUSD and banking: higher PYUSD incentives reduced crypto revenue by about $70m in 9M 2026 (10-Q); PayPal applied in Dec 2025 to form PayPal Bank, a Utah industrial loan company; as reported in the press in Jun 2026, PYUSD supply was about $2.92bn, down 31% from a $4.2bn peak in Mar 2026.
Table 4.1 Other value added services, interest and losses, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Revenues from other value added services ($m) | 895 | 857 | 852 | 850 | 873 |
| Interest on customer balances ($m) | 321 | 293 | 274 | 281 | 289 |
| Transaction margin dollars excl. that interest ($bn) | 3.55 | 3.74 | 3.54 | 3.62 | 3.66 |
| Transaction and credit losses ($m) | 483 | 390 | 378 | 397 | 386 |
| Loss rate (% of TPV) | 0.11 | 0.08 | 0.08 | 0.08 | 0.08 |
Interest on customer balances equals transaction margin dollars less transaction margin dollars excluding that interest, per the earnings releases.
How credit, interest income and stablecoins are changing
- Stablecoin rules: the GENIUS Act was enacted on 18 Jul 2025; the OCC issued its final implementing rule on 21 Oct 2026, effective 18 Jan 2027. Stablecoin market capitalization was $304bn at the end of Q3 2026 (Coinbase 8-K); USDC in circulation $73.3bn at 30 Jun 2026, +19% (Circle 8-K).
- Networks buy stablecoin infrastructure: Mastercard bought BVNK on 3 Aug 2026 for $1.4bn cash plus up to $300m contingent consideration.
- Lower rates reduce float income: PayPal interest on customer balances fell to $1.23bn in FY2025 from $1.28bn and to $289m in Q3 2026 from $321m.
- Buy now, pay later regulation: the revised EU Consumer Credit Directive brings buy now, pay later under credit rules from Nov 2026 (10-K FY2025); Affirm revenue grew 32.1% in its fiscal year to Jun 2026.
Table 4.2 Value added services and stablecoin measures against competitors
| Company and measure | Period | Value | Growth (%) | Filed detail |
|---|---|---|---|---|
| PayPal other value added services | Q3 2026 | $0.87bn revenue | (2.5) | interest on customer balances $289m against $321m |
| Circle USDC in circulation | Q2 2026 | $73.3bn | 19.0 | revenue and reserve income $701m, +6.6% |
| Coinbase stablecoin revenue | Q3 2026 | $307m | (5.5) | subscription and services revenue $570m, (20.4%) |
| American Express total revenues | Q3 2026 | $20.06bn | 8.9 | card lender and network; billed business +8% |
Measures are not like for like. Circle, Coinbase and American Express from their 8-K filings.
5 Financial Analysis & Ratios
- Operating margin 17.0% TTM against 18.3% in FY2025 and 16.8% in FY2021; 9M 2026 16.9% against 18.6%, with restructuring and other of $442m against $251m.
- Gross profit is transaction margin dollars: $15.69bn TTM, 45.8% of net revenues; 9M 2026 $11.66bn, +2.0%, against net revenues +4.6%.
- Net income $1.07bn in Q3 2026, (14.0%); TTM $4.73bn, 13.8% of net revenues. FY2025 GAAP EPS of $5.41 included about $0.14 from strategic investments and crypto assets (8-K Ex 99.1).
- Cash flow: TTM free cash flow $6.30bn and adjusted free cash flow $7.69bn, which excludes the timing of buy now, pay later receivables held for sale; capex $0.79bn, 2.3% of net revenues.
- Capital returns: TTM buybacks $6.05bn and dividends $500m, 104% of free cash flow and 85% of adjusted free cash flow; about 117m shares bought in twelve months; $9.4bn of authorization left; quarterly dividend $0.14 since Dec 2025.
- Balance sheet at 30 Sep 2026: cash and investments $15.07bn, incl. $1.7bn of strategic investments; debt $13.47bn against $11.58bn at FY2025 after $2.0bn of notes in May 2026; equity $19.48bn. Customer funds ($38.4bn of funds receivable and customer accounts) are excluded from cash.
Table 5.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Revenue | 25.4 | 27.5 | 29.8 | 31.8 | 33.2 | 34.3 |
| Transaction margin dollars (gross profit) | 14.0 | 13.8 | 13.7 | 14.7 | 15.5 | 15.7 |
| Research and development | 3.0 | 3.3 | 3.0 | 3.0 | 3.1 | 3.3 |
| Selling, general and administrative | 4.6 | 4.4 | 3.9 | 4.1 | 4.3 | 4.3 |
| Operating income | 4.3 | 3.8 | 5.0 | 5.3 | 6.1 | 5.8 |
| Net income | 4.2 | 2.4 | 4.2 | 4.1 | 5.2 | 4.7 |
| Diluted EPS ($) | 3.52 | 2.09 | 3.84 | 3.99 | 5.41 | 5.24 |
| Operating cash flow | 5.8 | 5.8 | 4.8 | 7.5 | 6.4 | 7.1 |
| Capital expenditure | (0.9) | (0.7) | (0.6) | (0.7) | (0.9) | (0.8) |
| Free cash flow | 4.9 | 5.1 | 4.2 | 6.8 | 5.6 | 6.3 |
| Stock based compensation | 1.4 | 1.3 | 1.5 | 1.2 | 1.0 | 1.0 |
| Cash and investments | 16.3 | 15.9 | 17.3 | 15.5 | 14.8 | 15.1 |
| Total debt | 9.0 | 10.8 | 10.9 | 11.1 | 11.6 | 13.5 |
| Total equity | 21.7 | 20.3 | 21.1 | 20.4 | 20.3 | 19.5 |
Gross profit is transaction margin dollars: net revenues less transaction expense and transaction and credit losses (non GAAP). Research and development is technology and development. Selling, general and administrative is sales and marketing plus general and administrative; customer support and operations and restructuring and other are separate lines. TTM equals Q4 2025 plus 9M 2026.
Table 5.2 What changed, Q3 2026 against Q3 2025
| Metric | Q3 2025 | Q3 2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 8.42 | 8.58 | 2.0% |
| Transaction margin dollars ($bn) | 3.87 | 3.95 | 2.0% |
| Operating income ($bn) | 1.52 | 1.40 | (7.8%) |
| Net income ($bn) | 1.25 | 1.07 | (14.0%) |
| Diluted EPS ($) | 1.30 | 1.25 | (3.8%) |
| Operating cash flow ($bn) | 1.97 | 1.59 | (19.4%) |
| Free cash flow ($bn) | 1.72 | 1.43 | (16.7%) |
| Operating margin (%) | 18.1 | 16.3 | (1.7 pts) |
| Net margin (%) | 14.8 | 12.5 | (2.3 pts) |
Table 5.3 Ratio analysis
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Growth and margins | ||||||
| Revenue growth (%) | n/a | 8.5 | 8.2 | 6.8 | 4.3 | n/a |
| Transaction margin (%) | 55.2 | 50.1 | 46.0 | 46.1 | 46.6 | 45.8 |
| Operating margin (%) | 16.8 | 13.9 | 16.9 | 16.7 | 18.3 | 17.0 |
| Net margin (%) | 16.4 | 8.8 | 14.3 | 13.0 | 15.8 | 13.8 |
| FCF margin (%) | 19.3 | 18.6 | 14.2 | 21.3 | 16.8 | 18.4 |
| Cost and investment intensity | ||||||
| R&D (%) revenue | 12.0 | 11.8 | 10.0 | 9.4 | 9.4 | 9.6 |
| SBC (%) revenue | 5.4 | 4.6 | 5.0 | 3.9 | 3.0 | 2.8 |
| Capex (%) revenue | 3.6 | 2.6 | 2.1 | 2.1 | 2.6 | 2.3 |
| Effective tax rate (%) | (1.7) | 28.1 | 21.5 | 22.2 | 16.8 | 17.1 |
| Returns | ||||||
| ROE (%) | 19.2 | 11.5 | 20.5 | 20.0 | 25.7 | 24.3 |
| ROA (%) | 5.5 | 3.1 | 5.3 | 5.2 | 6.6 | 5.8 |
| ROIC (%) | 24.1 | 18.1 | 26.9 | 25.9 | 29.5 | 27.0 |
| Asset turnover (x) | 0.33 | 0.35 | 0.36 | 0.40 | 0.41 | 0.42 |
| Liquidity and leverage | ||||||
| Current ratio (x) | 1.22 | 1.28 | 1.29 | 1.28 | 1.29 | 1.26 |
| Debt to equity (x) | 0.42 | 0.53 | 0.52 | 0.54 | 0.57 | 0.69 |
| Net cash ($bn) | 7.2 | 5.1 | 6.4 | 4.4 | 3.2 | 1.6 |
| Efficiency and cash quality | ||||||
| Days sales outstanding | 12 | 13 | 13 | 11 | 9 | 8 |
| FCF to net income (x) | 1.17 | 2.11 | 0.99 | 1.63 | 1.06 | 1.33 |
| Shareholder returns (%) FCF | 70 | 82 | 119 | 89 | 111 | 104 |
Transaction margin equals transaction margin dollars over net revenues. Research and development is technology and development. ROE and ROA use average balances for FY2022 to FY2025 and period end balances for FY2021 and TTM. Total assets include about $38bn of customer funds. Days sales outstanding use accounts receivable only, excluding loans and interest receivable. PayPal holds no inventory.
Table 5.4 Valuation snapshot at $57.01 per share, 30 Oct 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 47.4 |
| Enterprise value ($bn) | 45.8 |
| P/E (TTM) (x) | 10.9 |
| EV/Sales (TTM) (x) | 1.3 |
| EV/EBITDA (TTM) (x) | 6.7 |
| FCF yield (%) | 13.3 |
| Price/Book (x) | 2.4 |
Table 5.5 GAAP and non GAAP results and free cash flow
| Line | FY2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| GAAP operating income ($bn) | 6.07 | 1.51 | 1.49 | 1.43 | 1.40 |
| Non GAAP operating income ($bn) | 6.38 | 1.55 | 1.54 | 1.51 | 1.61 |
| GAAP diluted EPS ($) | 5.41 | 1.53 | 1.21 | 1.25 | 1.25 |
| Non GAAP diluted EPS ($) | 5.31 | 1.23 | 1.34 | 1.38 | 1.45 |
| Free cash flow ($bn) | 5.56 | 2.19 | 0.90 | 1.78 | 1.43 |
| Adjusted free cash flow ($bn) | 6.41 | 2.10 | 1.72 | 1.83 | 2.05 |
| Diluted shares (m) | 968 | 939 | 920 | 882 | 858 |
Non GAAP figures and adjusted free cash flow as stated in the earnings releases. Q4 2025 GAAP figures derived as FY2025 less 9M 2025.
Cost structure and profitability
- Transaction expense 49.5% of Q3 2026 net revenues against 48.3% a year earlier, +4.6%; transaction expense rate 0.87% of TPV against 0.89%.
- Transaction and credit losses $386m, (20.1%), 4.5% of net revenues against 5.7%; Q3 2026 includes a $45m reserve release on Japan installment loans moved to held for sale (10-Q).
- Non transaction operating expenses $2.55bn, 29.7% of net revenues against 27.9%, incl. restructuring and other of $255m against $69m; these cover customer support and operations, sales and marketing, technology and development and general and administrative.
- Annual view: transaction expense rose from 40.7% of net revenues in FY2021 to 48.2% in FY2025, while customer support and operations fell from 8.2% to 5.1% and stock based compensation from $1.38bn to $1.00bn.
- GAAP against non GAAP: Q3 2026 operating income $1.40bn GAAP and $1.61bn non GAAP, a gap of $211m against $48m a year earlier, mainly restructuring charges.
Table 5.6 Costs and income as % of net revenues, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Transaction expense (% of net revenues) | 48.3 | 49.0 | 49.9 | 50.5 | 49.5 |
| Transaction and credit losses (% of net revenues) | 5.7 | 4.5 | 4.5 | 4.6 | 4.5 |
| Transaction margin dollars (% of net revenues) | 46.0 | 46.5 | 45.6 | 44.9 | 46.0 |
| Non transaction operating expenses (% of net revenues) | 27.9 | 29.1 | 27.8 | 28.5 | 29.7 |
| Restructuring and other (incl. above) (% of net revenues) | 0.8 | 0.9 | 0.9 | 1.3 | 3.0 |
| GAAP operating income (% of net revenues) | 18.1 | 17.4 | 17.8 | 16.4 | 16.3 |
| Non GAAP operating income (% of net revenues) | 18.6 | 17.9 | 18.4 | 17.4 | 18.8 |
Non transaction operating expenses equal transaction margin dollars less GAAP operating income.
Table 5.7 Expense lines as % of net revenues, FY2021 to FY2025
| Line | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Transaction expense (% of net revenues) | 40.7 | 44.2 | 48.3 | 49.4 | 48.2 |
| Transaction and credit losses (% of net revenues) | 4.2 | 5.7 | 5.6 | 4.5 | 5.2 |
| Customer support and operations (% of net revenues) | 8.2 | 7.7 | 6.4 | 5.6 | 5.1 |
| Sales and marketing (% of net revenues) | 9.6 | 8.2 | 6.1 | 6.3 | 6.9 |
| Technology and development (% of net revenues) | 12.0 | 11.8 | 10.0 | 9.4 | 9.4 |
| General and administrative (% of net revenues) | 8.3 | 7.6 | 6.9 | 6.8 | 6.0 |
| Restructuring and other (% of net revenues) | 0.2 | 0.8 | (0.3) | 1.4 | 1.0 |
| Operating income (% of net revenues) | 16.8 | 13.9 | 16.9 | 16.7 | 18.3 |
FY2023 restructuring and other was a net gain.
6 MD&A & Management Commentary
Q3 2026 earnings call, investor newsletter and results release
- Q3 2026 (8-K Ex 99.1, 27 Oct 2026): net revenues $8.58bn, +2.0% (1% currency neutral); GAAP operating margin 16.3% against 18.1%; non GAAP operating margin 18.8% against 18.6%; GAAP EPS $1.25; non GAAP EPS $1.45, +8.2%, against July guidance of a low single digit decline.
- Volume: TPV $487.1bn, +6% (+7% currency neutral); payment transactions 6.80bn, +7%; active accounts 440m, +1.6m in the quarter.
- Branded checkout (stated on the call): online branded checkout volume +1% currency neutral, between 1% and 2% for four quarters in a row; the EU removal of the de minimis customs exemption reduced growth by about 70 basis points and is expected to persist through Q4; Germany stable, Italy and France growing, the UK described as challenging.
- Growth areas (stated on the call): buy now, pay later volume +25% with new placements at Amazon in Germany and Austria; Pay with Venmo volume +43%; Venmo debit card monthly actives 6.7m, +55%; financial services above 20% of 2026 transaction margin dollars.
- Costs: non transaction operating expenses +1% on a non GAAP basis (investor newsletter); workforce reduced by more than 2,000 and three management layers removed (stated on the call); the 3Q 2026 Plan carries a $152m charge and about $340m of annual savings (10-Q).
- 2027 and beyond (stated on the call): more investment in transaction margin and operating expenses, with non GAAP EPS growth broadly similar to 2026; long term targets of mid single digit transaction margin dollar growth and double digit non GAAP EPS growth.
- Q2 2026 call (28 Jul 2026, stated on the call): branded checkout +2% currency neutral; Venmo TPV +14%; Braintree volume growth 13% against 11% in Q1; Braintree, PayPal Complete Payments and Hyperwallet moving to one technology base; FY2026 transaction margin dollars guided to about $15.6bn.
Table 6.1 Company outlook and every 2026 revision
| Item | Outlook | Source |
|---|---|---|
| FY2026 non GAAP EPS | low single digit decline to slightly positive against $5.31 (3 Feb 2026); reiterated (5 May); about $5.38 (28 Jul); about $5.60 (27 Oct) | 8-K Ex 99.1 releases |
| FY2026 GAAP EPS | mid single digit decline against $5.41 (3 Feb, 5 May, 28 Jul); about $5.07 (27 Oct) | 8-K Ex 99.1 releases |
| Q2 2026 non GAAP EPS | high single digit decline, about (9%) (5 May); actual $1.38, (1.4%) | 8-K Ex 99.1, 5 May and 28 Jul 2026 |
| Q3 2026 EPS | GAAP and non GAAP low single digit decline (28 Jul); actual GAAP $1.25, (3.8%), non GAAP $1.45, +8.2% | 8-K Ex 99.1, 28 Jul and 27 Oct 2026 |
| Q4 2026 EPS | GAAP about $1.37 against $1.53; non GAAP about $1.43 against $1.23 | 8-K Ex 99.1, 27 Oct 2026 |
| FY2026 non GAAP adjustments | about $350m excl. second half transformation charges (28 Jul); about $570m, of which about $70m in Q4 (27 Oct) | 8-K Ex 99.1 releases |
| FY2026 transaction margin dollars | about $15.6bn (Jul); about $15.7bn, about $14.6bn excl. interest on customer balances (Oct) | Q2 call (stated on the call); Q3 2026 investor newsletter |
| Q4 2026 transaction margin dollars | slightly positive growth, also excl. interest on customer balances | Q3 2026 investor newsletter |
| FY2026 non GAAP non transaction operating expenses | mid single digit growth | Q3 2026 investor newsletter |
| FY2026 non GAAP tax rate | about 19%; Q4 19% to 20% | Q3 2026 investor newsletter |
| FY2026 adjusted free cash flow | at least $6bn (Jul); $6.5bn or more (Oct) | Q2 call (stated on the call); Q3 2026 investor newsletter |
| FY2026 buybacks and capex | buybacks about $6bn; capex about $1bn | Q3 2026 investor newsletter |
| Cost savings | at least $1.5bn of gross annual run rate savings over two to three years; more than $700m run rate at the end of 2026 | 10-Q Q3 2026 MD&A; Q3 2026 investor newsletter |
| Q4 2026 branded checkout volume | 1% to 2% currency neutral growth | Q3 2026 call (stated on the call) |
| 2027 and long term | more investment in 2027, non GAAP EPS growth broadly similar to 2026; long term mid single digit transaction margin dollar growth and double digit non GAAP EPS growth | Q3 2026 call (stated on the call) |
Management and CFO commentary
- CFO and COO Jamie Miller, Q3 2026 (investor newsletter): FY2026 transaction margin dollars about $15.7bn ($14.6bn excluding interest on customer balances); adjusted free cash flow $6.5bn or more; buybacks about $6bn; capex about $1bn.
- CFO, Q3 2026 (stated on the call): about 70 basis points of headwind to branded checkout from the European de minimis change; 2027 to bring added investment in transaction margin and operating expenses, with non GAAP EPS growth broadly similar to 2026.
- CFO, Q3 2026: gross run rate savings of at least $1.5bn over two to three years, more than $700m by the end of 2026 (10-Q and investor newsletter).
- Interim CEO and CFO Jamie Miller, 8-K Ex 99.1 of 3 Feb 2026: growth in revenue, transaction margin dollars and EPS in 2025; execution behind plan, particularly in branded checkout.
- CEO Enrique Lores, 8-K Ex 99.1 of 30 Apr 2026: reorganization into three businesses, closer to the consumer, with simpler ways of working and sharper accountability.
- CEO, 8-K Ex 99.1 of 28 Jul and 27 Oct 2026: branded checkout further stabilized; momentum in Venmo and Braintree; full year non GAAP guidance raised twice.
- CFO, 8-K Ex 99.1 of 17 Nov 2025: the KKR agreement keeps a balance sheet light model for credit and preserves flexibility for investment and capital return.
Table 6.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Jamie Miller, Interim CEO, CFO and COO | 3 Feb 2026, 8-K Ex 99.1 | “our execution has not been where it needs to be, particularly in branded checkout” |
| Enrique Lores, President and CEO | 3 Feb 2026, 8-K Ex 99.1 | “The payments industry is changing faster than ever” |
| Enrique Lores, President and CEO | 27 Oct 2026, 8-K Ex 99.1 | “We are beginning to see our strategy translate into our financial results” |
Table 6.3 Key disclosures in the Forms 10-Q and 10-K
| Item | Disclosure |
|---|---|
| 10-Q Q3 2026, revenue | Q3 2026 transaction revenue +3% to $7.71bn: Braintree +$270m, Venmo +$100m, hedging +$70m, PayPal products ($240m) (mix, merchant co marketing incentives, lower FX fees). other value added services (2%) to $873m on lower interest on customer balances. |
| 10-Q Q3 2026, revenue | 9M 2026: Braintree +$1.1bn, Venmo +$230m, PayPal products ($230m); PYUSD incentives cut crypto revenue by about $70m; partner institution revenue +$90m. |
| 10-Q Q3 2026, metrics | Q3 2026 TPV $487.1bn (+6%); 9M TPV $1.44tn, +9%; TPV outside US 35% against 38%; payment transactions 6.80bn (+7%); transaction expense rate 0.87% against 0.89%. |
| 10-Q Q3 2026, losses | Transaction losses $328m (-17%, loss rate 0.07%); credit losses $58m against $86m with $45m reserve release on $1.5bn Japan installment loans moved to held for sale; merchant net charge off rate 8.3% against 7.3%. |
| 10-Q Q3 2026, restructuring | Apr 2026 strategic reorganization targets at least $1.5bn gross annual run rate savings in two to three years; 3Q 2026 Plan charge $152m with about $340m annual savings; restructuring and other $255m in Q3 against $69m. |
| 10-Q Q3 2026, liquidity | Cash, equivalents and investments $15.1bn incl. $1.7bn strategic investments; debt $13.5bn after $2.0bn May 2026 notes; $9.4bn buyback authorization left; 9M buybacks $4.55bn; dividends $370m paid; CSSF designation for EU credit funding raised to $2.5bn. |
| 10-Q Q3 2026, legal | New FTC CID Sep 2026 on fees and purchase protection; UK FCA Competition Act probes (Mar 2026) into PayPal agreements with Visa and Mastercard; 2022 accounts class action dismissed with prejudice Mar 31 2026, appeal filed Apr 30 2026. |
| 10-Q Q3 2026, legal | In re PayPal Branded Checkout Securities Litigation (N.D. Cal., consolidated May 21 2026) alleges undisclosed branded checkout impediments to 2027 targets, class period Feb 7 2024 to Feb 2 2026; five derivative suits filed Mar to Jun 2026, stayed. |
| 10-Q Q3 2026, risk factors | Q1 to Q3 2026 Forms 10-Q restate factors on regulation (crypto and PYUSD), litigation, fraud (AI enabled fraud), economic conditions (armed conflicts), cybersecurity (frontier AI models and autonomous agents) and third party reliance. |
| 10-Q Q3 2026, subsequent events | Dividend of $0.14 declared, payable Dec 24 2026; $1.25bn 2.650% notes due Oct 1 2026 were the only remaining 2026 principal ($1.25bn) at Sep 30 2026. |
| 10-K FY2025, Item 1 Business | 439m active accounts in about 200 markets at Dec 31 2025; FY2025 TPV $1.79tn (+7%), 25.4bn payment transactions (-4%). Revenue: transaction fees plus other value added services (credit interest and fees, partner revenue share, interest on customer balances). |
| 10-K FY2025, Item 1 Business | Applications filed Dec 2025 with Utah DFI and FDIC to form PayPal Bank, an industrial loan company; approval not assured. GENIUS Act (Jul 2025) sets federal stablecoin framework covering PYUSD. EU revised Consumer Credit Directive brings BNPL under regulation from Nov 2026. |
| 10-K FY2025, Item 1 Business | About 23,800 employees at Dec 31 2025 (46% Americas, 42% Asia Pacific, 12% Europe and Middle East); R&D expense $1.5bn in 2025 and 2024, $1.6bn in 2023. |
| 10-K FY2025, Item 7 MD&A | FY2025 revenue +4% to $33.17bn; transaction revenue +3% ($740m PayPal, $340m Venmo, $150m Braintree, $210m hedging); other value added services +14% to $3.37bn on $350m more loan interest and fees and $160m partner revenue share; transaction expense rate 0.89% against 0.93%; operating margin 18% against 17%. |
| 10-K FY2025, Item 7 MD&A | Loans sold under forward flow deals: $26.7bn net proceeds in 2025 against $20.8bn in 2024; consumer loans $5.5bn, merchant loans $1.8bn (+23%); merchant net charge off rate 7.3% against 5.3%. |
| 10-K FY2025, Item 7 MD&A | 2Q 2025 Plan (data center exit to cloud, workforce) to run 18 to 42 months, $280m expected annual savings; restructuring charges $102m in 2025. Effective tax rate 17% against 22% on legal entity restructuring benefit, offset by Pillar Two. |
| 10-K FY2025, Item 7A Market risk | About 43% of 2025 revenue from customers outside the US; FX hedging cut 2025 revenue by $166m; customer balance interest falls with rates (interest on customer balances $1.23bn in 2025 against $1.28bn). |
7 Peer Valuation & Sector Summary
- Sector: digital payments, checkout, processing and buy now, pay later. PayPal TTM net revenues $34.3bn against Visa $45.9bn (FY2026), Mastercard $36.3bn, Block $25.0bn, Fiserv $20.9bn and Affirm $4.26bn.
- Growth (latest quarter): AFRM 32.1% (fiscal year), V 14.8%, MA 14.0%, XYZ 9.3%, PYPL 2.0%, FISV (4.1)%.
- Operating margin TTM: V 61.2%, MA 58.6%, FISV 22.3%, PYPL 17.0%, AFRM 9.8%, XYZ 4.7%. Gross margin PYPL 45.8% (transaction margin) against Block 46.4%.
- Valuation: PYPL 10.9x P/E and 1.3x EV/Sales against V 33.6x and 17.0x, MA 32.8x and 15.7x, FISV 9.5x and 2.6x; Block's P/E of 128x reflects low TTM earnings and Affirm's 12.8x includes a $1.44bn tax benefit.
- FCF margin: PYPL 18.4% against V 48.1%, MA 42.5%, FISV 18.8% and XYZ 15.5%; PayPal market value $47.4bn, net cash $1.6bn.
Table 7.1 Peer comparison, latest reported trailing twelve months
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross or transaction margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | ROE (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| PYPL | 34.3 | 2.0 | 45.8 | 17.0 | 13.8 | 18.4 | 23.8 | 1.6 | 47 | 1.3 | 10.9 |
| V | 45.9 | 14.8 | n/a | 61.2 | 51.2 | 48.1 | 63.5 | (7.9) | 773 | 17.0 | 33.6 |
| MA | 36.3 | 14.0 | n/a | 58.6 | 46.7 | 42.5 | 231.0 | (13.5) | 556 | 15.7 | 32.8 |
| XYZ | 25.0 | 9.3 | 46.4 | 4.7 | 1.4 | 15.5 | 1.6 | (0.5) | 46 | 1.9 | 128.0 |
| FISV | 20.9 | (4.1) | n/a | 22.3 | 13.4 | 18.8 | 10.6 | (27.3) | 27 | 2.6 | 9.5 |
| AFRM | 4.3 | 32.1 | n/a | 9.8 | 45.3 | 23.3 | 45.1 | n/a | 25 | n/a | 12.8 |
PYPL TTM to Sep 2026, growth Q3 2026 year on year; V FY2026 (Oct 2025 to Sep 2026); MA TTM to Sep 2026, growth Q3 2026; XYZ and FISV TTM to Jun 2026, growth Q2 2026, as their Q3 2026 Forms 10-Q were not yet filed; AFRM fiscal year to Jun 2026. PYPL gross margin is transaction margin. AFRM net income includes a $1.44bn income tax benefit, so its net margin and P/E are not comparable; as a lender with funding debt its net cash and EV/Sales are not shown. Block net cash covers cash and equivalents only. Visa, Mastercard, Fiserv and Affirm report no gross profit line. Prices are closes of 30 Oct 2026.
8 Material Events & Contracts
- 11 Forms 8-K from 1 Nov 2025 to 31 Oct 2026: four quarterly results releases (Q4 2025 to Q3 2026), the $5.0bn commercial paper program, the renewed KKR receivables agreement, the CEO change, two Board and leadership notices, the Apr 2026 reorganization, the $2.0bn notes offering and the annual meeting results.
- CEO change (Ex 99.1, 3 Feb 2026): the Board named Enrique Lores CEO from 1 Mar 2026, replacing Alex Chriss, and said the pace of change and execution was below its expectations; Jamie Miller served as interim CEO and David Dorman became independent Chair.
- Reorganization (Ex 99.1, 30 Apr 2026): three businesses, Checkout Solutions and PayPal (Frank Keller), Consumer Financial Services and Venmo, and Payment Services and Crypto (Braintree, small business processing, PYUSD); a Chief AI Transformation and Simplification Officer; program targets at least $1.5bn of gross run rate savings.
- Takeover approach, as reported in the press: on 15 Jul 2026 Reuters reported, citing sources, an offer by a consortium of Advent International and Stripe of $60.50 per share, valuing PayPal at more than $53bn; on 27 Aug 2026 Bloomberg reported, citing people familiar with the matter, that the consortium had dropped its pursuit. PayPal declined to comment and filed no Form 8-K on the approach.
Table 8.1 Forms 8-K filed in the last twelve months
| Date | Items | Event |
|---|---|---|
| 14 Nov 2025 | 1.01, 2.03, 9.01 | Commercial paper program of up to $5.0bn, maturities up to 397 days, backed by $5.0bn revolver; $200m outstanding at Dec 31 2025 and Sep 30 2026 |
| 17 Nov 2025 | 1.01, 2.03, 8.01, 9.01 | Renewed European BNPL receivables sale with KKR managed funds: up to €65bn of receivables from France, Germany, Italy, Spain and UK through Mar 2028, up to €6bn replenishing loan commitment |
| 3 Feb 2026 | 2.02, 9.01 | Q4 2025 revenue $8.68bn (+4%), GAAP EPS $1.53, non GAAP EPS $1.23; FY2025 revenue $33.17bn, transaction margin dollars $15.47bn, non GAAP EPS $5.31; FY2026 guide non GAAP EPS low single digit decline to slightly positive |
| 3 Feb 2026 | 5.02, 7.01, 9.01 | Board named Enrique Lores CEO effective Mar 1 2026, replacing Alex Chriss; Jamie Miller interim CEO; David Dorman independent Chair; Lores package incl. $1.45m salary, $20m make whole RSUs, $25m target one time PSUs |
| 25 Mar 2026 | 5.02, 9.01 | Alyssa Henry (former Square CEO) joins Board; Gail McGovern not standing for reelection |
| 30 Apr 2026 | 5.02, 7.01, 9.01 | Reorganization into three businesses (Checkout Solutions and PayPal; Consumer Financial Services and Venmo; Payment Services and Crypto); Frank Keller named President, Checkout Solutions and PayPal; Diego Scotti and Michelle Gill leaving; program targets at least $1.5bn gross run rate savings |
| 5 May 2026 | 2.02, 9.01 | Q1 2026 revenue $8.35bn (+7%), transaction margin dollars $3.81bn (+3%), GAAP EPS $1.21 (-6%), non GAAP EPS $1.34 (+1%); FY guide reiterated |
| 15 May 2026 | 8.01, 9.01 | $2.0bn senior notes: $650m 4.550% due 2028, $850m 4.950% due 2031, $500m 5.550% due 2036 |
| 21 May 2026 | 5.02, 5.07 | Annual meeting May 19 2026: all 11 directors elected, say on pay 90.2%, 2026 equity plan 72.5%, PwC 91.2%; two shareholder proposals failed (11.2%, 41.1%); Diego Scotti separation |
| 28 Jul 2026 | 2.02, 9.01 | Q2 2026 revenue $8.68bn (+5%), transaction margin dollars $3.90bn (+1%), GAAP EPS $1.25, non GAAP EPS $1.38 (-1%); FY non GAAP EPS guide raised to about $5.38 |
| 27 Oct 2026 | 2.02, 9.01 | Q3 2026 revenue $8.58bn (+2%), transaction margin dollars $3.95bn (+2%), GAAP EPS $1.25 (-4%), non GAAP EPS $1.45 (+8%); FY non GAAP EPS guide about $5.60, GAAP about $5.07; $0.14 dividend |
Table 8.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| European buy now, pay later receivables sale (Ex 10.1, 10.2, 99.1, 17 Nov 2025) | KKR managed funds may buy up to €65bn of receivables from France, Germany, Italy, Spain and the UK through Mar 2028, with a €6bn replenishing loan commitment; PayPal keeps servicing and guarantees seller and servicer obligations. |
| Commercial paper program (Ex 10.1, 14 Nov 2025) | Up to $5.0bn, maturities up to 397 days, backed by the $5.0bn revolving credit facility (undrawn, to Jun 2028); $200m outstanding at 30 Sep 2026. |
| Senior notes (Ex 4.2, 5.1, 15 May 2026) | $2.0bn: $650m 4.550% due 2028, $850m 4.950% due 2031, $500m 5.550% due 2036; repurchase offer at 101% on a change of control with a downgrade below investment grade. |
| Debt at 30 Sep 2026 | $13.47bn, of which $2.53bn short term, incl. the Paidy ¥90bn facility due Feb 2027 and commercial paper; notes coupons 0.972% to 5.500%, maturities to 2062. |
| CEO offer letter (Ex 10.1, 3 Feb 2026) | Salary $1.45m, bonus target 200%; $20m make whole RSUs; 2026 RSUs and PSUs of $16.5m each; $11m of 2027 RSUs; one time $25m target PSUs tied to the share price in years three to five, maximum 250%. |
| Interim CEO retention (Ex 10.2, 3 Feb 2026) | $3m cash award for Jamie Miller, vesting 67% in Feb 2027 and 33% in Feb 2028. |
| Forward flow loan sales | $26.7bn of net proceeds from loans sold in 2025 against $20.8bn in 2024 (10-K FY2025); $1.5bn of Japan installment loans moved to held for sale in Q3 2026; loans held for sale $3.69bn at 30 Sep 2026. |
9 Ownership, Voting Power & Annual Meeting
- One class of common stock, one vote per share; no controlling holder. 830.7m shares at 21 Oct 2026 against 899.7m at 25 Mar 2026 after buybacks; directors and executive officers held 5.66m shares (0.63%).
- Largest filers: The Vanguard Group 90.38m shares (10.05%) per its 13G/A of 30 Jan 2026, then no beneficial ownership in its 13G/A of 27 Mar 2026 after an internal disaggregation; BlackRock 72.52m (8.06%) per its 13G/A of Jan 2024.
- 2026 annual meeting (19 May 2026): all 11 directors elected with 96.6% to 99.3% of votes cast (Enrique Lores 98.3%); say on pay 90.2%; 2026 Equity Incentive Award Plan 72.5%; PwC 91.2%; shareholder proposals on a conflict zones policy (11.2%) and a lower special meeting threshold (41.1%) rejected (8-K percentages, which count abstentions).
- Insiders, Nov 2025 to Oct 2026: no open market purchases; open market sales of 153,832 shares for about $7.6m by four officers. Suzan Kereere sold 82,872 shares for $4.06m; Frank Keller 54,479 shares for $2.57m; Aaron Webster $0.62m; Chris Natali $0.35m. An amended Form 4 for CFO Jamie Miller codes 6,129 shares as a purchase, but its footnote states they were withheld for taxes.
Table 9.1 Annual meeting vote results, 19 May 2026
| Proposal | For (bn votes) | Against (bn votes) | Abstain (bn votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Advisory vote on executive compensation | 0.489 | 0.051 | 0.002 | 90.5 | Approved |
| 2026 Equity Incentive Award Plan | 0.393 | 0.148 | 0.002 | 72.7 | Approved |
| Ratify PricewaterhouseCoopers (PwC) as auditor for 2026 | 0.628 | 0.059 | 0.002 | 91.4 | Ratified |
| Shareholder: policy on services in conflict zones | 0.061 | 0.473 | 0.009 | 11.4 | Rejected |
| Shareholder: reduce threshold to call special meeting | 0.223 | 0.317 | 0.003 | 41.3 | Rejected |
Broker non votes 146.5m on each item except the auditor ratification. The column shows votes for as % of votes for and against; the 8-K percentages in the text also count abstentions. Directors are summarized in the text.
Table 9.2 Largest holders in Schedule 13G filings, as listed in the proxy statement
| Holder | Shares (m) | Outstanding (%) | Filing |
|---|---|---|---|
| The Vanguard Group | 90.38 | 10.05 | 13G/A of 30 Jan 2026 |
| BlackRock, Inc. | 72.52 | 8.06 | 13G/A of Jan 2024 |
Vanguard filed a 13G/A on 27 Mar 2026 reporting no beneficial ownership after an internal disaggregation of its reporting entities.
10 Risk Factors
- Item 1A of the FY2025 Form 10-K holds 29 risk factors against 28 in FY2024 (12,804 words against 12,630): 1 added, 0 removed, 4 materially reworded and 24 unchanged.
- The three Forms 10-Q of 2026 restate selected factors in full: AI enabled fraud and armed conflicts (Q1), cyber threats from frontier AI models and autonomous agents (Q2) and third parties that link PayPal to consumers for financial services (Q3).
Table 10.1 Risk factors and legal matters with filed figures
| Risk | Disclosure and change |
|---|---|
| Branded checkout and securities litigation | In re PayPal Branded Checkout Securities Litigation (consolidated 21 May 2026) alleges undisclosed impediments to 2027 targets, class period 7 Feb 2024 to 2 Feb 2026; five derivative suits filed Mar to Jun 2026 and stayed. |
| Regulatory investigations | New FTC civil investigative demand in Sep 2026 on fees and purchase protection; UK FCA Competition Act probes (Mar 2026) into agreements with Visa and Mastercard; CFPB demands on Regulation E and PayPal Credit (Aug 2024); German FCO proceeding on surcharging. |
| Credit | Merchant loan net charge off rate 8.3% in Q3 2026 against 7.3%; loans and interest receivable $5.62bn and loans held for sale $3.69bn at 30 Sep 2026; EU Consumer Credit Directive applies to buy now, pay later from Nov 2026. |
| Interest rates | Interest on customer balances $289m in Q3 2026 against $321m; $1.23bn in FY2025 against $1.28bn (8-K Ex 99.1). |
| Crypto and PYUSD | PayPal is a digital asset service provider under the GENIUS Act of 2025; the FY2025 factors drop the scenario of PYUSD being deemed a security; PYUSD incentives reduced crypto revenue by about $70m in 9M 2026. |
| Restructuring execution | Restructuring and other $255m in Q3 2026 against $69m; FY2026 non GAAP adjustments about $570m; savings target at least $1.5bn of gross run rate in two to three years. |
| Capital return (new factor) | No assurance of continued buybacks or dividends; buyback programs have no expiration or fixed amount; $9.4bn of authorization left at 30 Sep 2026. |
| Economic conditions and cyber (reworded) | Tariffs, trade tensions, government shutdowns and liquidity strain from lower customer balances added; Aug 2025 service disruption in Germany from a coding error named; AI named 16 times against 13. |
How risk factors changed
- Comparison: 10-K FY2025 filed 3 Feb 2026 acc 0001633917-26-000024 against 10-K FY2024 filed 4 Feb 2025 acc 0001633917-25-000019.
- Factor count rises from 28 to 29 and words from 12,630 to 12,804; the one addition covers the dividend program started in Oct 2025.
- Regulation text names PayPal as a digital asset service provider under the GENIUS Act of 2025 (2 mentions against none) and drops the scenario of PYUSD being deemed a security by the SEC.
- Business interruption factor adds the Aug 2025 service disruption in Germany caused by a coding error, during which fraudulent transactions occurred.
- AI is named 16 times across 3 factors against 13 across 2, and the 2026 Forms 10-Q add AI facilitated fraud and frontier AI model cyber threats.
- Tariffs and trade tensions are added to the economic conditions factor, and 10-Q updates add armed conflicts and military escalation.
Table 10.2 Size of the risk factor section
| Measure | 10-K FY2024 | 10-K FY2025 |
|---|---|---|
| Risk factors (count) | 28 | 29 |
| Words in Item 1A | 12,630 | 12,804 |
Table 10.3 Risk factors added, removed and materially reworded
| Change | Risk factor | What changed |
|---|---|---|
| Added | No assurance of continued buybacks or cash dividends | New factor following the cash dividend program announced in Oct 2025; states repurchase programs have no expiration or fixed amount, dividends are at Board discretion, and both could raise share price volatility and reduce cash reserves. |
| Reworded | ESG laws, regulations and stakeholder expectations | Heading and body rewritten: the factor now leads with disclosure, reporting and diligence laws on environmental, social and governance matters and the costs and penalties of noncompliance, in place of the prior general ESG reputation text. |
| Reworded | Global and regional economic conditions | Body grows from 199 to 312 words; adds escalating trade tensions, tariffs and reciprocal trade measures that have raised volatility, failure to enact budgets, government shutdowns and austerity, and liquidity strain from reductions in customer balances or higher regulatory capital requirements. |
| Reworded | Inaccuracies in key metrics | Body shortens from 258 to 191 words; drops the example on removing detected illegitimate account activity from key metrics. |
| Reworded | Indebtedness | Adds dividend payments to the uses that debt service could limit and adds a negative rating outlook as a trigger for higher borrowing costs; body shortens from 346 to 307 words. |
Table 10.4 Risk factor updates in quarterly reports since the annual filing
| Filing | Change disclosed |
|---|---|
| 10-Q Q1 2026 filed 5 May 2026 | Restates four factors in full (regulation including cryptocurrency and PYUSD, litigation, fraud, economic conditions); the fraud factor adds that fraud could be enhanced or facilitated by AI, and the economic factor adds geopolitical tensions, armed conflicts and military escalation. |
| 10-Q Q2 2026 filed 28 Jul 2026 | Restates the Q1 set and adds the cybersecurity factor, now naming AI enabled threats and vulnerabilities that may be discovered and weaponized by new frontier AI models and autonomous agents. |
| 10-Q Q3 2026 filed 27 Oct 2026 | Restates the Q2 set and adds the third party reliance factor, now covering entities that link PayPal to consumers to provide financial services and adding consumer protection to the compliance areas third parties affect. |
11 Stock Price, Scenarios & Sensitivity
- PYPL closed at $57.01 on 30 Oct 2026, 19.0% below the 52 week high of $70.35 (monthly closes) and 48.2% above the low of $38.46.
- Valuation: 10.9x TTM diluted EPS of $5.24; market value $47.4bn on 830.7m shares; EV/Sales 1.33x; free cash flow yield 13.3%, adjusted 16.2%; dividend yield 0.98% on the $0.14 quarterly dividend.
- Scenario model: net revenues grow from TTM Q3 2026 $34.30bn for three years; GAAP operating margin as stated; other expense $124m a year (TTM); 20% tax rate; share count 830.7m at 21 Oct 2026 reduced by 24% (best), 18% (base) or 9% (worst) through buybacks; price equals TTM Q3 2029 EPS times exit P/E.
Critical factors and core assumptions
Table 11.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| Online branded checkout TPV growth | +1% currency neutral in Q3 2026; 1% to 2% for four quarters | 4% to 5% currency neutral by 2028 | Q3 2026 call and investor newsletter; PayPal products revenue ($240m) in Q3 (10-Q) |
| Transaction margin dollar growth | +2% in Q3 2026; FY2026 guide about $15.7bn (+1.5% against $15.47bn) | Mid single digit annual growth (company long term target) | 8-K Ex 99.1 Q3 2026; Q3 2026 call |
| Cost savings retained | Target at least $1.5bn gross run rate in two to three years; more than $700m by end 2026; non transaction opex +1% in Q3 | Most of savings kept as margin, GAAP operating margin above 20% | 10-Q Q3 2026 MD&A; investor newsletter; 2027 reinvestment flagged |
| Venmo and financial services monetization | Pay with Venmo +43%, Venmo debit card monthly actives 6.7m (+55%), BNPL +25%; financial services above 20% of transaction margin dollars | Double digit growth sustained, Venmo revenue per account up toward stated 4x to 5x gap | Q3 2026 call (stated on the call) |
| Interest on customer balances | $289m in Q3 2026 against $321m; FY2025 $1.23bn | Stabilizes as rate cuts end | 8-K Ex 99.1 releases |
| Share count reduction | 830.7m shares Oct 2026 against 899.7m Mar 2026; $6bn per year buybacks, $9.4bn authorization left | Buybacks continue at $6bn per year funded by adjusted FCF above $6.5bn | 10-Q cover; DEF 14A; investor newsletter |
- Revenue base TTM Q3 2026 $34.30bn; GAAP operating margin 17.0%; transaction margin 45.8%.
- Best case: 6% revenue CAGR, 21% operating margin, 14x P/E, share count 24% lower at 631m; branded checkout back to 4% to 5% growth, savings mostly retained.
- Base case: 4% revenue CAGR, 19% margin, 11x P/E, share count 18% lower at 681m; revenue at the FY2025 to 9M 2026 pace, savings partly reinvested.
- Worst case: 1% revenue CAGR, 15% margin, 8x P/E, share count 9% lower at 756m; branded checkout keeps losing share, interest on customer balances falls and credit losses rise.
- Core assumptions: transaction expense rate 0.87% to 0.90% of TPV; loss rate near 0.08% of TPV; buy now, pay later receivables sold under forward flow agreements; tax rate 20%; share count measured from 830.7m shares outstanding at 21 Oct 2026 (10-Q cover), buybacks near $6bn a year, the FY2026 guided amount.
Scenarios, three years forward
Table 11.2 Scenario analysis, TTM Q3 2026 to TTM Q3 2029
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 1.0 | 4.0 | 6.0 |
| Revenue, TTM Q3 2029 ($bn) | 35.3 | 38.6 | 40.8 |
| Operating margin, TTM Q3 2029 (%) | 15.0 | 19.0 | 21.0 |
| Net income, TTM Q3 2029 ($bn) | 4.1 | 5.8 | 6.8 |
| EPS, TTM Q3 2029 ($) | 5.48 | 8.46 | 10.71 |
| Exit P/E (x) | 8.0 | 11.0 | 14.0 |
| Implied price ($) | 44 | 93 | 150 |
| Change against $57.01 (%) | (23) | 63 | 163 |
| Implied annual return (%) | (8.4) | 17.8 | 38.0 |
Implied annual return excludes dividends ($0.56 per share a year at the current rate). Shares 830.7m at 21 Oct 2026.
Sensitivity analysis
Table 11.3 Sensitivity of implied price to revenue CAGR and operating margin at 11x P/E
| Revenue CAGR \ Operating margin | 15% | 17% | 19% | 20% | 21% |
|---|---|---|---|---|---|
| 1% | $67 | $76 | $85 | $90 | $94 |
| 2% | $69 | $78 | $88 | $92 | $97 |
| 4% | $73 | $83 | $93 | $98 | $103 |
| 5% | $75 | $86 | $96 | $101 | $106 |
| 6% | $78 | $88 | $99 | $104 | $109 |
Cells show implied share price in year 3. Price on 30 Oct 2026 $57.01. Blue cells sit above it, red cells below.
Table 11.4 Sensitivity of implied price to exit P/E and operating margin at 4% revenue CAGR
| Exit P/E \ Operating margin | 15% | 17% | 19% | 20% | 21% |
|---|---|---|---|---|---|
| 8x | $53 | $60 | $68 | $71 | $75 |
| 10x | $67 | $76 | $85 | $89 | $94 |
| 11x | $73 | $83 | $93 | $98 | $103 |
| 12x | $80 | $91 | $102 | $107 | $112 |
| 14x | $93 | $106 | $118 | $125 | $131 |
Cells show implied share price in year 3. Price on 30 Oct 2026 $57.01. Blue cells sit above it, red cells below.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 30 October 2026.
Sources
All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Call statements are taken from PayPal's Q3 2026 investor newsletter and from statements on the Q2 and Q3 2026 earnings calls held by the company; lines that differ from the filed releases are not used. Press reports are named where used.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-K | FY2025 | 3 Feb 2026 | 0001633917-26-000024 |
| 10-K | FY2023 | 7 Feb 2024 | 0001633917-24-000024 |
| 10-K | FY2022 | 9 Feb 2023 | 0001633917-23-000033 |
| 10-Q | Q3 2026 | 27 Oct 2026 | 0001633917-26-000088 |
| 10-Q | Q2 2026 | 28 Jul 2026 | 0001633917-26-000082 |
| 10-Q | Q1 2026 | 5 May 2026 | 0001633917-26-000067 |
| 8-K Ex 99.1 | Q3 2026 | 27 Oct 2026 | 0001633917-26-000086 |
| 8-K Ex 99.1 | Q2 2026 | 28 Jul 2026 | 0001633917-26-000080 |
| 8-K Ex 99.1 | Q1 2026 | 5 May 2026 | 0001633917-26-000065 |
| 8-K Ex 99.1 | Q4 2025 | 3 Feb 2026 | 0001633917-26-000021 |
| 8-K 5.07 | AGM 2026 | 21 May 2026 | 0001633917-26-000076 |
| DEF 14A | 2026 | 7 Apr 2026 | 0001193125-26-145721 |
| 10-Q | Q2 2026 (Block) | 5 Aug 2026 | 0001628280-26-053368 |
| 10-K | FY2025 (Block) | 26 Feb 2026 | 0001628280-26-012254 |
| 10-Q | Q2 2026 (Fiserv) | 7 Aug 2026 | 0000798354-26-000031 |
| 10-K | FY2025 (Fiserv) | 19 Feb 2026 | 0000798354-26-000009 |
| 10-K | FY2026 (Affirm) | 27 Aug 2026 | 0001628280-26-059279 |
Table A.2 Further filings used: PayPal Forms 8-K, prior 10-K and competitors
| Company | Form | Filed | Accession number |
|---|---|---|---|
| PayPal | 10-K FY2024 (risk factors) | 4 Feb 2025 | 0001633917-25-000019 |
| PayPal | 8-K, items 1.01, 2.03, 9.01 | 14 Nov 2025 | 0001193125-25-283161 |
| PayPal | 8-K, items 1.01, 2.03, 8.01, 9.01 | 17 Nov 2025 | 0001193125-25-284822 |
| PayPal | 8-K, items 5.02, 7.01, 9.01 | 3 Feb 2026 | 0001193125-26-035860 |
| PayPal | 8-K, items 5.02, 9.01 | 25 Mar 2026 | 0001633917-26-000059 |
| PayPal | 8-K, items 5.02, 7.01, 9.01 | 30 Apr 2026 | 0001193125-26-197533 |
| PayPal | 8-K, items 8.01, 9.01 | 15 May 2026 | 0001193125-26-226653 |
| Visa | 8-K Ex 99.1 (Sep 2026 quarter) | 27 Oct 2026 | 0001403161-26-000126 |
| Mastercard | 8-K Ex 99.1 | 29 Oct 2026 | 0001141391-26-000122 |
| Mastercard | 8-K Ex 99.1 | 29 Oct 2026 | 0001141391-26-000124 |
| American Express | 8-K Ex 99.1 Q3 2026 | 23 Oct 2026 | 0000004962-26-000405 |
| Block | 8-K Ex 99.1 Q2 2026 | 5 Aug 2026 | 0001193125-26-335117 |
| Fiserv | 8-K Ex 99.1 Q2 2026 | 6 Aug 2026 | 0000798354-26-000028 |
| Remitly | 8-K Ex 99.1 Q2 2026 | 5 Aug 2026 | 0001628280-26-053361 |
| Circle | 8-K Ex 99.1 Q2 2026 | 5 Aug 2026 | 0001876042-26-000246 |
| Coinbase | 8-K Ex 99.1 Q3 2026 | 29 Oct 2026 | 0001679788-26-000121 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 14 Nov 2025 | Ex 10.1 | Commercial paper program, form of dealer agreement | New unsecured commercial paper program of up to $5.0bn, maturities up to 397 days; Revolving credit facility serves as liquidity backstop; PayPal to keep undrawn capacity at least equal to CP outstanding |
| 17 Nov 2025 | Ex 10.1, Ex 10.2 | European BNPL receivables purchase and management agreements (KKR) | forward flow sale of up to €65bn of UK and European BNPL receivables to Alps 2.0 Partners (KKR managed) over a 28 month commitment period; Ex 10.2: PayPal entities keep servicing the sold portfolio; PayPal Holdings guarantees seller and servicer obligations |
| 17 Nov 2025 | Ex 99.1 | PayPal and KKR renew European pay later receivables agreement | Up to €6bn replenishing loan commitment; KKR funds to buy up to €65bn of BNPL receivables originated in France, Germany, Italy, Spain and UK through March 2028; Builds on June 2023 deal under which KKR bought a majority of PayPal's European BNPL receivables |
| 3 Feb 2026 | Ex 99.1 | Q4 and FY2025 results | Q4 2025 revenue $8.7bn (up 4%); transaction margin dollars $4.0bn (up 3%); GAAP EPS $1.53, non GAAP EPS $1.23 (up 3%); FY2025 revenue $33.2bn (up 4%); transaction margin dollars $15.5bn (up 6%); non GAAP EPS $5.31 (up 14%); free cash flow $5.6bn, adjusted $6.4bn |
| 3 Feb 2026 | Ex 10.1, Ex 10.2, Ex 99.1 | CEO change: Enrique Lores appointed, Alex Chriss out | Board named Enrique Lores CEO effective 1 Mar 2026; said pace of change and execution was not in line with Board expectations; David Dorman named independent Board Chair; Jamie Miller interim CEO until 1 Mar 2026 |
| 25 Mar 2026 | Ex 99.1 | Alyssa Henry joins Board; Gail McGovern to retire | Former CEO of Square at Block joins the Board, which rises to 12 directors (11 independent); McGovern, a director since 2015, not standing for reelection in May |
| 30 Apr 2026 | Ex 99.1 | Strategic reorganization into three businesses | New operating model: Checkout Solutions and PayPal; Consumer Financial Services and Venmo; Payment Services and Crypto (Braintree, SMB processing, PYUSD); Frank Keller named President, Checkout Solutions and PayPal; interim leads for the other two units |
| 5 May 2026 | Ex 99.1 | Q1 2026 results | Revenue $8.4bn (up 7%); transaction margin dollars $3.8bn (up 3%); GAAP EPS $1.21 (down 6%); non GAAP EPS $1.34 (up 1%); TPV $464.0bn (up 11%); active accounts 439m; non GAAP operating margin 18.4%, down 229 basis points |
| 15 May 2026 | Ex 4.2, Ex 5.1 | $2.0bn senior notes offering | $650m 4.550% notes due 2028, $850m 4.950% due 2031, $500m 5.550% due 2036; Ex 4.2: officer's certificate under the 2019 base indenture with Computershare as trustee |
| 28 Jul 2026 | Ex 99.1 | Q2 2026 results | Revenue $8.7bn (up 5%); transaction margin dollars $3.9bn (up 1%); GAAP EPS $1.25; non GAAP EPS $1.38 (down 1%); TPV $486.4bn (up 10%); active accounts 439m; non GAAP operating margin 17.4%, down 248 basis points |
| 27 Oct 2026 | Ex 99.1 | Q3 2026 results | Revenue $8.6bn (up 2%); transaction margin dollars $4.0bn (up 2%); GAAP EPS $1.25 (down 4%); non GAAP EPS $1.45 (up 8%); TPV $487.1bn (up 6%); active accounts 440m, up 1.6m in the quarter; non GAAP operating margin 18.8% |
