PayPal shares jump 4% after Q2 beat; 2026 adjusted EPS outlook raised

PayPal shares climbed more than 4% Tuesday after the payments company posted better-than-expected second-quarter results and increased its 2026 adjusted earnings outlook. The stock traded around $58.36 as investors weighed solid payment volume growth against margin pressure and renewed takeover chatter. For the quarter ended June 30, PayPal reported revenue of $8.68 billion, topping consensus estimates of $8.47 billion and rising 5% from a year earlier. Adjusted earnings were $1.38 per share, above expectations of $1.28. Total payment volume increased 10% year over year to $486.4 billion, ahead of forecasts near $473.93 billion. The company processed 6.8 billion payment transactions, up 8%. Active accounts stood at 439 million, and transactions per active account rose 3% to 60 over the past 12 months. PayPal generated $2.0 billion in operating cash flow and $1.8 billion in free cash flow. It ended the quarter with $15.3 billion in cash and investments and $13.4 billion in debt. Following the stronger quarter, PayPal lifted its full-year 2026 non-GAAP earnings outlook. The company now sees adjusted EPS of about $5.38, above its prior view and higher than the prior-year level of $5.31. It also raised its full-year non-GAAP transaction margin dollars guidance. The GAAP EPS outlook was unchanged and still calls for a mid-single-digit decline. Profitability weakened in the quarter. GAAP operating income fell 5% to $1.4 billion, while non-GAAP operating income declined 8% to $1.5 billion. GAAP operating margin narrowed to 16.4% and non-GAAP operating margin slipped to 17.4%. GAAP EPS decreased to $1.25 from $1.29, and adjusted EPS edged down from $1.40 a year ago. PayPal said its strategic investment portfolio and crypto assets held for investment reduced results by about $0.07 per share, compared with a slight positive contribution in the second quarter of 2025. The company returned $1.5 billion to shareholders through buybacks, repurchasing 33 million shares. It also declared a $0.14 quarterly dividend payable on September 25. CEO Enrique Lores said the company is continuing its business transformation. “While there is still significant work ahead, I have strong conviction in our direction and in our ability to execute,” he said. Lores said PayPal has moved quickly to sharpen its plan and support growth across three areas: checkout solutions and PayPal; consumer financial services and Venmo; and payment services and crypto. The company said branded checkout has further stabilized, while Venmo and Braintree continue to show momentum. Management expects investments in technology and consumer services to build further momentum in 2027. PayPal also plans to expand its financial services efforts beyond Venmo checkout, which Lores said could become the company’s largest future source of transaction margin growth. Takeover speculation remains in focus. Reports earlier this month said Stripe and Advent submitted a joint offer near $60.50 per share, valuing PayPal at more than $53 billion. PayPal’s board reportedly viewed the proposal as undervaluing the company and facing financing and regulatory hurdles. Lores declined to comment directly on the reported offer during the earnings call, saying the company does not address market speculation or potential merger discussions as a matter of policy. He added, “At the same time, we remain open and objective in evaluating opportunities,” and said PayPal would consider paths that could deliver superior shareholder value.