PayPal raises full-year non-GAAP EPS guidance as third-quarter non-GAAP EPS rises 8%
GAAP earnings per share fell 4% to $1.25, while restructuring and other charges rose to $255 million from $69 million. The company reaffirmed its GAAP EPS guidance for the full year.
Key takeaways
- PayPal Holdings, Inc. (PYPL) reported third-quarter 2026 net revenues of $8.58 billion, up 2% from a year earlier, on Oct. 27. Non-GAAP EPS was $1.45, up 8%, and GAAP EPS was $1.25, down 4%. The company raised full-year non-GAAP EPS guidance to about $5.60 and reaffirmed GAAP EPS guidance of about $5.07.
PayPal Holdings, Inc. (PYPL) reported third-quarter net revenues of $8.58 billion, up 2% from a year earlier, and raised its full-year non-GAAP earnings per share guidance, according to an 8-K filing made Tuesday. The results cover the quarter ended Sept. 30.
Here's how the company did:
- Net revenues: $8.58 billion vs. $8.42 billion a year earlier
- Non-GAAP earnings per diluted share: $1.45 vs. $1.34 a year earlier
- GAAP earnings per diluted share: $1.25 vs. $1.30 a year earlier
- Non-GAAP operating income: $1.61 billion vs. $1.57 billion a year earlier
- GAAP operating income: $1.40 billion vs. $1.52 billion a year earlier
Net revenues rose 2%, or 1% on a currency-neutral basis, the company said.
Transaction margin dollars, a non-GAAP measure, were $3.95 billion, up 2%. Excluding interest on customer balances, they rose 3% to $3.66 billion. The company calculates the measure as total net revenues less transaction expense and transaction and credit losses.
Total payment volume rose 6% to $487.1 billion, or 7% on a currency-neutral basis. Payment transactions rose 7% to 6.8 billion, and active accounts rose 0.6% to 440 million.
Margins and charges
GAAP operating margin contracted 173 basis points to 16.3%. Non-GAAP operating margin expanded 16 basis points to 18.8%.
Restructuring and other expenses were $255 million, up from $69 million a year earlier. For the year to date, the line totals $442 million, compared with $251 million a year earlier.
GAAP net income was $1.07 billion, down 14% from $1.25 billion. The GAAP effective tax rate was 21.9%, against 18.6% a year earlier.
Diluted weighted average shares were 858 million, compared with 960 million a year earlier. Shares outstanding were 837 million at Sept. 30, down from 920 million at Dec. 31, 2025.
The filing says the strategic investment portfolio and crypto assets had an immaterial effect on GAAP EPS this quarter, against a positive effect of about $0.01 a year earlier.
Guidance changes
PayPal raised its full-year non-GAAP guidance for transaction margin dollars and EPS and reaffirmed its GAAP EPS guidance.
| Measure | October 2026 guidance | July 2026 guidance | Prior year period |
|---|---|---|---|
| Q4 GAAP EPS | ~$1.37 | N/A | $1.53 |
| Q4 non-GAAP EPS | ~$1.43 | N/A | $1.23 |
| FY GAAP EPS | ~$5.07 | Mid-single digit decline | $5.41 |
| FY non-GAAP EPS | ~$5.60 | ~$5.38 | $5.31 |
Full-year non-GAAP EPS guidance is about $5.60, against about $5.38 in July. Full-year GAAP EPS guidance is about $5.07, against a July outlook of a mid-single digit decline.
For the fourth quarter, the company expects GAAP EPS of about $1.37, against $1.53 a year earlier, and non-GAAP EPS of about $1.43, against $1.23. The filing gives no July figure for fourth-quarter EPS. The company expects non-GAAP adjustments of about $70 million in the fourth quarter and about $570 million for the full year.
“I’m pleased with our third-quarter performance and the momentum we are seeing across the business, and we are raising our full-year non-GAAP guidance for transaction margin dollars and EPS,” President and CEO Enrique Lores said. “We are beginning to see our strategy translate into our financial results, with strong contributions from our key growth areas and increasing diversification.”
Revenue by type and geography
Transaction revenues were $7.71 billion, up 3% from a year earlier. Revenues from other value added services were $873 million, down 2%.
Interest on customer balances, which is reported within other value added services, was $289 million, down from $321 million.
U.S. net revenues rose 5% to $5.00 billion. International net revenues fell 2% to $3.58 billion, or 4% on a currency-neutral basis.
The transaction expense rate was 0.87% of total payment volume, against 0.89% a year earlier. The transaction and credit loss rate was 0.08%, down from 0.11%.
Cash flow and capital return
Cash flow from operations was $1.6 billion, down 19% from a year earlier. Free cash flow was $1.4 billion, down 17%, and adjusted free cash flow was $2.0 billion, down 10%.
Adjusted free cash flow excludes the net timing impact of originating buy now, pay later (BNPL) receivables held for sale and their later repayment and sale.
The company repurchased about 28 million shares for $1.5 billion in the quarter. Over the trailing 12 months, it returned $6.0 billion through repurchases of about 117 million shares.
Cash, cash equivalents and investments totaled $15.1 billion, and debt totaled $13.5 billion, both as of Sept. 30.
The board declared a cash dividend of $0.14 per share, payable Dec. 24 to stockholders of record at the close of business on Dec. 4. The filing does not state the prior quarterly dividend rate, so it does not say whether this payment is an increase.
The release does not give a headcount figure tied to the restructuring charges.