PayPal's Profit Surge Dwarfed By Q2 Transaction Slump, Stock Falls

PayPal Holdings (NASDAQ:PYPL) stock dropped Tuesday after it reported second-quarter 2025 results.

The company reported a quarterly revenue growth of 5% year-over-year to $8.29 billion, topping the analyst consensus estimate of $8.08 billion. 

The adjusted EPS was $1.40, beating the analyst consensus estimate of $1.29.

Transaction Metrics And Margins

Total payment volumes rose by 6% year-over-year, reaching $443.5 billion in the quarter. However, payment transactions declined by 5%, totaling 6.2 billion.

Also Read: PayPal Rolls Out New Crypto Feature: Here’s Why You Should Care

On a trailing 12-month basis, the number of payment transactions per active account decreased by 4%, averaging $58.3.

The total number of active accounts increased by 2%, bringing the total to 438 million. Sequentially, active accounts rose by 0.4%, or 1.7 million accounts.

The operating margin improved by 134 basis points to 18.1%, while the adjusted operating margin increased by 132 basis points to 19.8%.

The operating cash flow for the second quarter was at 898 million, free cash flow was $692 million, and adjsuted free cash flow was $656 million.

PayPal held $13.7 billion in cash and equivalents as of June 30, with $11.5 billion in debt.

CEO Alex Chriss said PayPal delivered a strong second quarter, achieving another period of profitable growth fueled by momentum across key strategic initiatives—from PayPal and Venmo-branded experiences to PSP and value-added services.

Building on this strength, PayPal raised its full-year guidance for transaction margin dollars and EPS. He expects the company to unlock value through innovations like agentic commerce, ads, stablecoins, and PayPal World.

Outlook

PayPal expects a third-quarter adjusted EPS of $1.18-$1.22, compared to $1.20 for the previous year’s period, and the analyst consensus estimate is $1.20.

PayPal expects a full-year 2025 adjusted EPS of $5.15-$5.30 (prior $4.95-$5.10), compared to $4.65 Y/Y. Current analysts estimate an EPS of $5.09.

PayPal stock declined over 8% year-to-date despite gaining 18% in the last three months.

It grappled with rising interest rates and a slowing consumer spending environment, taking a toll on digital payment volumes. Additionally, PayPal faces intense competition from other fintech companies and platforms like Apple (NASDAQ:AAPL) Apple Pay.

Price Action: At the last check on Tuesday, PayPal stock was down 7.58% at $72.29 premarket.

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