PayPal reports slow growth in key margin figure even as earnings top estimates

• PayPal beat on earnings and revenue for the second quarter.
• Transaction margin dollars rose 7% to $3.84 billion. Growth in that metric was down from 8% in the first quarter when excluding a one-time benefit
• For a second quarter in a row, Venmo revenue grew more than 20% year over year.

PayPal reported better-than-expected results for the second quarter but saw slowing growth in transaction margin dollars, a key measure of profitability. The stock slipped more than 5% following the report.

Here's how the company did compared with Wall Street estimates, based on a survey of analysts by LSEG:

• Earnings per share:$1.40 adjusted vs. $1.30 expected
• Revenue:$8.29 billion vs. $8.08 billion expected

Sales increased 5% from $7.89 billion a year earlier, as CEO Alex Chriss worked to roll off lower-margin revenue streams.

Transaction margin dollars rose 7% to $3.84 billion, marking the company's sixth straight quarter of growth.

Growth in that metric slowed sequentially, down from 8% in the first quarter when excluding a one-time benefit that boosted results earlier this year. Branded checkout volumes also slowed to 5%, compared with 6% in the first quarter when adjusted for Leap Day.

Total payment volume, an indication of how digital payments are faring in the broader economy, beat estimates, coming in at $443.6 billion, compared with the $433.6 billion analysts had projected, according to StreetAccount. The number of active accounts rose 2% to 438 million, versus expectations of 437.8 million.

PayPal shares have fallen 8.4% for the year, as of Monday's close, while the Nasdaq is up about 10% in 2025.

Venmo revenue grew more than 20% from a year earlier, following a 20% jump in the first quarter, though the company didn't provide a dollar figure. Total payment volume for Venmo increased 12%, its highest growth rate in three years.

Chriss has focused on better monetizing key acquisitions such as Braintree and Venmo. DoorDash, Starbucks and Ticketmaster are among businesses now accepting Venmo as one way consumers can pay.

“We delivered another quarter of profitable growth, driven by continued strength across many of our strategic initiatives ranging from PayPal and Venmo branded experiences” to acting as payment service provider and other services, Chriss said in the statement.

For the third quarter, PayPal forecast adjusted earnings per share of $1.18 to $1.22, compared with the average analyst estimate of $1.20. Transaction margin dollars are expected to increase 4% to between $3.76 billion and $3.82 billion, the company said.

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Ahead of PayPal's earnings, some analysts had struck a cautiously optimistic tone. Goldman Sachs noted that branded checkout growth was likely to improve sequentially to around 6%, up from 4% in the first quarter.

Morgan Stanley pointed to stronger e-commerce data and progress on PayPal's checkout initiatives. Advanced integrations are now live at 45% of U.S. merchants, up from 30% in December, and are expected to help branded checkout volumes reaccelerate. The bank also flagged ongoing momentum in Braintree volumes.

PayPal now expects full-year adjusted earnings per share of $5.15 to $5.30, up from its prior forecast of $4.95 to $5.10. While third-quarter guidance is roughly inline with expectations, the updated outlook implies a stronger fourth quarter. The company also projects free cash flow of $6 billion to $7 billion for the year.