PayPal beats profit forecast as revenue misses estimates
Web StoryWatch this story in 15 seconds →Key takeaways
- PayPal earned $1.45 per share after one-time costs. Analysts had expected $1.31 per share.
- Revenue reached $8.58 billion. That missed the $8.7 billion analysts expected.
- PayPal raised its full-year profit forecast to $5.60 per share. Shares still fell 1.2% before the market opened.
PayPal beat its profit forecast for the third quarter of 2026. But its sales fell short of what analysts expected.
The mixed report came out on Tuesday, October 27, 2026. It covers the three months that ended on September 30, 2026.
What happened
PayPal is a payment firm based in San Jose, California. It runs a digital wallet. People use it to pay online and send money to friends.
The headline profit number beat forecasts by a clear margin. Adjusted profit was $1.45 per share, according to the Associated Press. Analysts surveyed by Zacks had expected $1.31 per share.
Zacks called the gap a 10.69% earnings surprise. A year ago, adjusted profit was $1.34 per share.
Adjusted profit leaves out one-time costs. It shows the core business more clearly.
Plain profit tells a softer story. Net income was $1.07 billion, or $1.25 per share. A year ago, net income was $1.25 billion, or $1.30 per share.
Sales grew, but not fast enough for Wall Street. Revenue reached $8.58 billion, up from $8.42 billion a year ago.
Nine analysts surveyed by Zacks had expected $8.7 billion. So revenue missed the forecast by about 1.33%, according to Zacks.
Payment volume kept growing. Total payment volume reached $487.1 billion, up 6% from a year ago. In constant currency, the rise was 7%.
Constant currency strips out shifts in exchange rates. The number of payment deals rose 7% to 6.8 billion, Seeking Alpha reported.
Transaction margin dollars rose 2% to $3.95 billion, the Wall Street Journal reported. This is the money PayPal keeps from each payment after direct costs.
Venmo and Braintree helped drive the rise, the Journal said. Venmo is PayPal's payment app. Braintree is its checkout business for other firms.
Why it matters
A profit beat with a sales miss sends a mixed signal. The profit beat says cost control is working. The sales miss says growth is still slow.
PayPal shares fell 1.2% in premarket trading, Reuters reported. Premarket trading happens before the main market opens. It is an early sign of how investors feel.
The report lands in the middle of a turnaround plan. Chief Executive Enrique Lores took the helm earlier in 2026. He took over after the board removed Alex Chriss, Reuters reported.
The board was unhappy with the pace of change. "We are making good progress in our multi-year transformation," Lores said in a statement.
He added that more work remains. He said the firm is more sure of its path to steady, profitable growth.
Cost cuts are a big part of the plan. PayPal is on track for $700 million in yearly run-rate savings by the end of 2026. Run-rate savings mean savings that repeat each year.
The cuts came with more than 2,000 job losses, Reuters reported. Manager roles fell by more than 25%.
The firm aims for at least $1.5 billion in such savings over the next two to three years. Adjusted operating margin rose to 18.8%, Reuters reported.
That is up 16 basis points from a year ago. A basis point is one hundredth of a percent.
The rise shows PayPal keeps more from each dollar of sales. PayPal also faces tough rivals.
Reuters named Apple and Google as key rivals. Newer fintech firms add more pressure. Fintech means firms that mix finance with tech.
PayPal must win back growth it lost after the pandemic boom faded. Reuters had earlier reported a buyout twist this year.
Stripe and Advent offered $60.50 per share, Reuters reported, citing sources. The offer valued PayPal at about $53 billion. The board saw it as too low, the report said.
The stock has lagged the wider market this year. PayPal shares fell about 5.8% since the start of the year, Zacks reported. The S&P 500 rose 12.1% over the same span.
What happens next
PayPal raised its forecast for the full year. It now expects adjusted profit of about $5.60 per share.
Wall Street had expected $5.38 per share, Reuters reported, citing LSEG data. The firm also lifted its transaction margin dollar goal.
It now expects about $15.7 billion for the year. The prior goal was about $15.6 billion, the Journal reported.
The fourth quarter forecast also beat forecasts. PayPal expects adjusted profit of about $1.43 per share.
Analysts had expected $1.35 per share. A year ago, fourth-quarter profit was $1.23 per share, Reuters reported.
The holiday season is the next big test. Shoppers spend heavily in the final months of the year. Stores roll out Black Friday and Christmas deals.
That rush drives payment volume for firms like PayPal. Investors will watch three things next.
First, will holiday spending lift payment volume? Second, will cost cuts hold without hurting service? Third, will the fourth-quarter profit match the new forecast?
The next report will answer all three. This article is for information only and is not financial advice.
Stock prices can fall as well as rise. Readers should do their own research before they buy or sell shares.
PayPal heads into the holidays with a stronger profit outlook but slower sales growth. The turnaround plan is showing early gains. The next quarter will show if those gains can last.
Related stories
How your APR is divided by 365 to get daily interest
Lenders divide your APR by 365 for a daily rate, then apply it to your average daily balance. This guide walks through every step
What is the difference between APR and effective annual rate?
APR ignores compounding inside the year; the effective annual rate includes it. A 12.99% APR card really costs 13.80% a year. Worked
APY vs interest rate: what compounding does to your money
APY includes compounding; the interest rate does not. A 5% rate compounded monthly is really 5.12% APY. Here is how the math works and what