PayPal Earnings: Adjusted Profit Fell 3%, Fewer Shares Lifted EPS

By Stock Titan Editorial Team Published October 27, 2026, 07:50 AM EDT

Did PayPal beat earnings expectations in Q3 2026?

The figures are in the earnings release PayPal filed with the SEC on October 27, after a short press release at 7:00 a.m. Eastern pointed to its investor site. Revenue for July to September was $8.58 billion, up 2% from a year earlier.

Adjusted earnings per share were $1.45, where PayPal’s own guidance for the quarter had called for a “low-single digit decline” from last year. That figure leaves out restructuring charges and the amortization of past acquisitions.

Revenue growth was 1% without currency moves, inside the “low-single-digit revenue growth” PayPal guided in July.

In our reading, costs explain much of the gap. Operating costs outside transactions rose 1%, against the “high-single-digit growth” PayPal planned for the quarter on the July call.

The presentation says PayPal has reduced headcount by more than 2,000 and cut over a quarter of its managerial roles.

PayPal expects more than $700 million of gross yearly savings by the end of 2026, up from the roughly $400 million it named in July.

The cuts carry into the forecast. For the full year PayPal now sees operating costs outside transactions growing at a mid-single-digit pace, down from the 7% to 8% it guided in July.

The GAAP figures went the other way. Under standard accounting rules, earnings per share fell 4% to $1.25 and net income fell 14% to $1.07 billion.

Most of the gap between the two is a restructuring charge the adjusted figures leave out, $178 million this quarter against almost nothing a year earlier.

Chief executive Enrique Lores said in the release that the company is “beginning to see our strategy translate into our financial results”, and that “there is more work to do”. The quarter shows both, with a raised forecast next to a checkout button that barely grew.

How fast are PayPal checkout, Venmo and Braintree growing?

PayPal splits its payment volume into groups in its earnings presentation, and the groups overlap. Branded checkout covers the PayPal button, Pay with Venmo and eBay, and it grew 1% without currency effects, down from 5% a year earlier.

That was the fourth quarter in a row between 1% and 2% by the company’s count, while checkout’s share of all volume slipped to 27% from 29%.

Show the data

Item	Q3 2025	Q3 2026	Change
Venmo	14%	14%	0 pts
Sending money and debit cards	11%	10%	-1 pts
Processing incl. Braintree	6%	8%	+2 pts
PayPal-branded, online and in store	8%	6%	-2 pts
Branded checkout (online)	5%	1%	-4 pts

The 1% also fell short of PayPal’s own expectation. On the July call, finance chief Jamie Miller said she expected third quarter branded checkout growth “at about 2%”.

PayPal points to Europe. Its presentation cites “tariff-related pressure in Europe” and says the trend improved in the U.S. International revenue fell 4% without currency moves, while U.S. revenue rose 5%.

One European change took effect on the first day of the quarter. From July 1, 2026, the EU charges a temporary €3 customs duty on low-value parcels from outside the bloc. PayPal has not said whether that is the change it means.

Venmo moved $96.8 billion in the quarter, about a fifth of everything PayPal processed, and the company says monthly active Venmo debit card accounts grew 55%.

Braintree grew volume by double digits; it is the payment processing PayPal runs behind other companies’ checkouts. The wider processing group grew 8%, faster than a year earlier but slower than the 13% of the spring quarter.

PayPal credits Venmo and Braintree with much of the growth in transaction margin dollars, but gives no separate figure for either.

Buy now, pay later is the other fast line. Its volume rose 25%, per the presentation, and PayPal added Amazon in Germany and Austria as a partner. In the quarter it made $12.6 billion of the loans it holds to sell on, up 31% from a year earlier.

Is PayPal’s earnings growth coming from buybacks?

PayPal’s own reconciliation shows adjusted net income of $1,245 million, down from $1,288 million. Earnings per share use diluted shares, an average for the quarter that also counts stock awards that could turn into shares.

That count fell to 858 million from 960 million. Over the past year PayPal bought back $6.0 billion of its stock, about 117 million shares.

Divide the quarter’s adjusted profit by last year’s share count and it works out to $1.30 a share, our calculation. That is below the $1.34 of a year ago.

Show the data

Step	Value
Q3 2025	$1.34
Fewer shares	+$0.16
Higher profit before tax	+$0.02
Higher tax rate	-$0.07
Q3 2026	$1.45

The bridge above takes the change one input at a time. The smaller share count added 16 cents, and profit before tax, up about 1%, added 2 cents. The bridge holds profit fixed, so it does not say what profit would have been without the buybacks.

Taxes went the other way. The adjusted tax rate rose to 21.6% from 18.1%, which took 7 cents away.

Adjusted operating income rose 3%; it is measured before interest and taxes.

This is the fourth quarter in a row in which adjusted net income came in below the year before. Over the first nine months of 2026 it fell 7%, while nine-month adjusted earnings per share rose about 2%.

Show the data

Category	Value
Q3 2024	1,024M
Q4 2024	1,014M
Q1 2025	999M
Q2 2025	977M
Q3 2025	960M
Q4 2025	939M
Q1 2026	920M
Q2 2026	882M
Q3 2026	858M

Buying back shares is a disclosed use of cash that PayPal sets out in its guidance. It raises each remaining owner’s part of the profit without making the business itself larger. The next section follows the cash. Our guide to share buybacks explains how companies carry them out.

PayPal dividend, buybacks and debt

The board declared the next quarterly dividend of $0.14 a share, payable on December 24. Shares outstanding stood at 837 million on September 30, down from 920 million at the end of 2025.

PayPal kept its plan to buy back $6 billion of stock this year, and it had spent $4.55 billion of that by the end of September.

Whether cash flow covers the payouts depends on the measure. Buybacks and dividends came to $1.62 billion in the quarter, more than the $1.43 billion of free cash flow.

PayPal’s adjusted free cash flow, $2.05 billion, covered them.

The adjusted measure leaves out a timing effect, because the buy now, pay later loans PayPal makes and then sells pass through operating cash flow. Over nine months, payouts of $4.92 billion exceeded the $4.11 billion of free cash flow, our calculation from the cash flow statement.

So over the year to date PayPal returned more than its free cash flow while its debt rose about $1.9 billion. The company does not link the two, and on the adjusted measure it uses in its guidance the payouts were covered.

Debt stood at $13.5 billion on September 30, still below the $15.1 billion of cash and investments.

Why did PayPal’s transaction margin dollars rise?

Transaction margin dollars are a key PayPal measure: revenue minus transaction costs and losses from fraud and unpaid loans. They rose 2% to $3.95 billion.

Transaction costs rose $185 million, more than the $167 million revenue gain.

Revenue also grew more slowly than volume. The transaction take rate, PayPal’s measure of transaction revenue as a share of volume, fell to 1.58% from 1.64%. PayPal puts that down to product mix and higher investment in branded checkout and buy now, pay later.

Show the data

Step	Value
Q3 2025	$3,871M
More revenue	+$167M
Payment costs	-$185M
Lower losses	+$97M
Q3 2026	$3,950M

Losses carried the line. Transaction and credit losses fell $97 million to $386 million, and PayPal credits “lower fraud losses and risk mitigation strategies” for the drop in the payment side of those losses.

The loan side is different. PayPal released $45 million it had set aside for bad loans, and the money flowed back into profit. That release was $41 million bigger than a year earlier, about half the rise in transaction margin dollars, our calculation.

Net charge-offs rose to $103 million from $90 million; those are loans written off, less recoveries. PayPal ties the release to “further externalization plans” and does not explain the phrase in its release or slides.

Interest also shrank. PayPal earns interest on the money customers leave sitting in their PayPal and Venmo accounts, and that income fell 10% to $289 million in the quarter.

PayPal raises its 2026 earnings forecast

The new guidance lifts transaction margin dollars to about $15.7 billion, from about $15.6 billion.

For the fourth quarter, PayPal expects transaction margin dollars to be “slightly positive” against a year earlier, and adjusted earnings per share of about $1.43.

The GAAP forecast keeps about $570 million of charges the adjusted one leaves out. It stands at about $5.07 a share, below last year’s $5.41.

So the full year looks like the quarter on PayPal’s own forecast, with adjusted earnings per share rising and GAAP earnings per share falling.

Frequently asked questions

The information provided in this article is for educational and informational purposes only. It does not constitute financial advice, investment recommendation, or an endorsement of any particular investment strategy. Past performance does not guarantee future results. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.

See more from StockTitan in Google Search and AI answers. Adds StockTitan as a preferred source · opens Google

Add on Google Not now