Earnings

PayPal (PYPL) Q4 2025 Earnings — Core Brief Edition

Core-Brief

08 Feb 2026 — 4 min read

Headline: Solid FY25 profit delivery and diversification, but branded online checkout momentum broke late in the year—prompting a CEO change and a 2026 “rebuild year” guide with heavier investment and flatter margins.

Key Metrics

FY25 TPV: $1.8T (+7% YoY; +6% currency-neutral).
Q4 TPV: $475B (+9% YoY; +6% currency-neutral).
FY25 Revenue: $33.2B (+4% YoY).
Q4 Revenue: +4% YoY spot (+3% currency-neutral).
Non-GAAP EPS (Q4): $1.23 (+3% YoY).
Non-GAAP EPS (FY25): $5.00 (+14% YoY).
Transaction revenue (Q4): $7.8B (+3% YoY).
Transaction revenue (FY25): $29.8B (+3% YoY).
Other value-added services revenue (Q4): $857M (+10% YoY).
Other value-added services revenue (FY25): $3.4B (+14% YoY).
Transaction take rate (Q4): 1.65% (down 9 bps YoY; ~7 bps ex-FX hedges).
Non-GAAP operating income (Q4): $1.6B (+3% YoY).
Non-GAAP operating income (FY25): $6.4B (+9% YoY).
Transaction margin dollars (TM$) ex-interest: +4% YoY in Q4; +6% in FY25.
Monthly active accounts (MAA): 231M (+1% YoY).
Transactions per active account (TPA, ex-PSP): +5% YoY (engagement holding).
Venmo revenue (FY25, ex-interest): $1.7B (~+20% YoY).
Venmo active accounts: 100M+; Venmo MAAs (Q4): 67M (+7% YoY).
Pay with Venmo TPV (Q4): +32% YoY; MAAs +26% YoY.
BNPL TPV (FY25): $40B+ (+20%+ YoY); BNPL TPV (Q4): +23% YoY.
Branded experiences TPV (Q4): +4% YoY; +6% for FY25.
Online branded checkout TPV (Q4): +1% currency-neutral (down from +5% in Q3).
Capital return: $6.0B FY25 buybacks; $1.5B in Q4. Initiated first dividend: $0.14/share quarterly.
Liquidity / leverage (end of Q4): $14.8B cash & investments; $11.6B debt.
Adj. FCF (ex timing of pay-later receivable origination/sales): $2.1B Q4; $6.4B FY25.

Segment & Strategy Highlights

Online Branded Checkout (the problem child) 🧩

Q4 slowdown driven by three ~equal drags:
1. US retail weakness (pressure in lower/middle-income cohorts; holiday execution needs improvement).
2. International headwinds (Germany): macro softness + normalization of prior leadership + rising APM competition.
3. High-growth vertical decel (travel/ticketing, crypto, gaming) amid tough comps and some operational/deployment issues.
Operational learning: “build it and they’ll adopt” didn’t work—large merchants need more hands-on integration support; biometrics/passkeys + competitive presentment proved critical.

Fix-it plan: Experience → Presentment → Selection (2026 focus) 🎯

Experience: scale “vaulted” flows + reduce friction in initial signup/checkout; non-vaulted >30% of global checkout; optimized cohorts show ~~1 pt conversion lift; biometric/passkey tests show +2 to +5 pts conversion lift at large/complex merchants.
Presentment: upstream placement + BNPL messaging + “second button” materially matters; when placed above competitors with BNPL/co-marketing, selection rate >2x vs below; upstream BNPL currently <15% of traffic, but shows >10% lift in branded checkout volume where deployed.
Selection/loyalty: use rewards + co-marketing + app engagement to drive repeat usage (“habituation”).
Merchant focus shift: concentrate on strategic merchants (~25% of branded checkout volume today) with dedicated teams; deploy experience + biometrics together (not sequentially).

Product, Tech, AI / Agentic Commerce 🤖

Agentic commerce vision: “trusted catalog” AI agents can discover/transact safely.
Store Sync connects merchants (e.g., Abercrombie & Fitch, Fabletics, PacSun, Wayfair) to chat platforms for in-chat discovery/purchase.
Live with Perplexity (ahead of Thanksgiving) and now Microsoft Copilot.
Agreement to acquire Symbiote to bring Store Sync tech in-house.
Management: agentic commerce won’t materially impact 2026 growth, but aims to position PayPal as default payment option as AI shopping scales.

Credit & Risk 🛡️

Transaction losses improved to 6 bps of TPV in Q4 vs 8 bps average over first three quarters—credited to strengthened onboarding, fraud prevention, and risk management.
Value-added services increasingly tied to auth performance / cost reduction; expanded service catalog to 16 paid services by year-end.

Balance Sheet & Capital 💰

FY25 buybacks: $6.0B; Q4: $1.5B.
Dividend initiated: $0.14/share quarterly.
End-Q4: $14.8B cash/investments; $11.6B debt.

Guidance / Outlook (explicit) 🔭

Q1 2026

Revenue: low single-digit growth (currency-neutral).
TM dollars: slightly down to roughly flat; ex-interest: roughly flat to slight decline.
Non-transaction Opex: mid single-digit growth.
Non-GAAP EPS: down mid single digits.

FY 2026

TM dollars: slightly down to roughly flat; ex-interest on customer balances: ~+3%.
Non-transaction Opex: ~+3%.
Non-GAAP EPS: down low single digits to slightly positive.
Branded checkout volume growth: slightly positive to low single digits for FY26 (vs weak Q4 exit; January running “slightly better” than Q4).
Share repurchases: ~$6.0B assumed.
Adjusted FCF: ≥$6.0B guided.
Strategy framing change: no longer committing to the multi-year 2027 outlook from last year’s Investor Day; will guide one year at a time until branded inflection timing is clearer.

Investment headwind disclosed: targeted growth investments create ~3 pts headwind to TM$ growth in 2026 (about 2/3 aimed at branded checkout + BNPL; remainder to Venmo, loyalty, agentic).

Bottom Line

PayPal’s FY25 showed that diversification is real—Venmo monetization, PSP profitability, and BNPL can carry profit even when branded checkout stalls. But branded checkout remains the engine (>50% of profit dollars), and Q4’s deceleration forced a governance reset: new CEO Enrique Lores (effective March 1) with a mandate to tighten execution. 2026 is positioned as an investment-heavy “rebuild” year—expecting gradual improvement via focused merchant execution, biometrics + upstream presentment, and loyalty/app engagement flywheels.