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PayPal Holdings, Inc. (PYPL)

Business Summary

PayPal Holdings, Inc. operates a global, two-sided network facilitating digital payments and simplifying commerce experiences for consumers and merchants across approximately 200 markets . The company's mission is to revolutionize commerce globally by making selling, shopping, and sending/receiving money simple, personalized, and secure, whether online or in-person . As of December 31, 2025, PayPal had 439 million active accounts . The business generates revenue primarily by charging fees for completing payment transactions and other payment-related services, typically based on the volume of activity processed . Additional revenue streams include currency conversion, instant transfer fees, cryptocurrency purchase/sale facilitation, partnerships, interest and fees from credit products, interest on customer balances, referral fees, subscription fees, and gateway services .

The company's core business model revolves around its two-sided platform, connecting consumers and merchants. For consumers, it offers digital wallets (PayPal, Venmo), online and in-person payment options, financial management tools (including cryptocurrency), and P2P payment solutions (PayPal, Venmo, Xoom) . Consumer credit products include Buy Now, Pay Later (BNPL) in the U.S., Germany, France, U.K., Australia, and Japan (via Paidy), as well as interest-bearing installment products in the U.S. and Germany, and co-branded credit cards in the U.S. and U.K. . For merchants, PayPal provides branded checkout solutions, unbranded payments processing, BNPL solutions, in-person point-of-sale solutions, business financing (PayPal Working Capital and PayPal Business Loan), payouts, and risk tools .

In 2025, PayPal processed $1.79 trillion of total payment volume (TPV) , representing a 7% increase over 2024 . The number of payment transactions decreased by 4% to 25.4 billion , while active accounts increased by 1% to 439 million . The number of payment transactions per active account was 57.7 , a 5% decrease from 2024 . Cross-border TPV remained at 12% of total TPV , and 37% of TPV was generated outside the U.S. .

Total net revenues for 2025 were $33.172 billion , an increase of 4% from $31.797 billion in 2024 . Operating income increased by 14% to $6.065 billion from $5.325 billion in 2024 , resulting in an operating margin of 18% compared to 17% in 2024 . Net income rose by 26% to $5.233 billion from $4.147 billion in 2024 . Diluted EPS was $5.41 , a 35% increase from $3.99 in 2024 . Net cash provided by operating activities was $6.416 billion , a 14% decrease from $7.450 billion in 2024 . Cash and cash equivalents stood at $8.049 billion as of December 31, 2025, with total cash, cash equivalents, and investments at $12.848 billion . Total long-term debt was $9.987 billion , and the aggregate principal amount of debt outstanding was $10.9 billion .

Transaction revenues increased by $956 million, or 3% , in 2025, driven by approximately $740 million from PayPal and Venmo products and services and approximately $150 million from Braintree products, despite a decline in Braintree's transaction count due to a focus on profitable growth . This growth was partially offset by a $210 million unfavorable impact from hedging activities . Revenues from other value-added services increased by $419 million, or 14% , primarily due to a $350 million increase in interest and fee revenue from loans receivable portfolios and a $160 million increase from a partner institution's revenue share , partially offset by a $110 million decline from Honey and lower interest on customer balances .

Operating expenses increased by 2% to $27.107 billion . Transaction expense rose by 2% to $15.987 billion , while the transaction expense rate decreased to 0.89% from 0.93% in 2024 , mainly due to a lower proportion of TPV from higher-cost Braintree products and changes in merchant mix . Transaction and credit losses increased by 19% to $1.720 billion , with transaction losses rising by $223 million, or 20% , primarily due to fraud incidents impacting PayPal products . Credit losses increased by $55 million . Customer support and operations expenses decreased by 4% to $1.704 billion , largely due to a $110 million decline in employee-related costs and $40 million in software expenses . Sales and marketing expenses increased by 14% to $2.283 billion , driven by approximately $340 million higher spend on marketing and brand advertising . Technology and development expenses increased by 4% to $3.103 billion , primarily due to increases in contractor and consultant costs of approximately $80 million , cloud computing services of approximately $70 million , and software maintenance costs of approximately $60 million . General and administrative expenses decreased by 8% to $1.979 billion , mainly due to a $120 million decline in employee-related costs and an $80 million decline in indirect tax expense and contingency reserves . Restructuring and other expenses decreased by $107 million , primarily due to a $170 million decrease in restructuring charges , partially offset by a $60 million increase in net loss from fair value adjustments on loans held for sale .

In the second quarter of 2025, management initiated a large-scale restructuring, the "2Q 2025 Plan," to reengineer technology infrastructure, improve scalability, reduce network latency, decrease operational costs, and optimize the workforce . This plan is expected to be executed over 18 to 42 months, with the workforce component substantially completed in 2027 and technology infrastructure in 2028 . Associated restructuring charges in 2025 were $102 million , consisting of $96 million in employee severance and benefits and $6 million in other restructuring costs . The company expects to incur an additional $90 million to $100 million in employee severance and benefits , $40 million to $60 million in asset impairment and accelerated depreciation , and $110 million to $140 million in other restructuring costs over the plan's term . Annualized cost savings of approximately $280 million are expected from the impacted workforce and operational costs for technology infrastructure . In the first quarter of 2025, a workforce reduction related to a new international regulation resulted in $36 million in employee severance and benefits costs , completed in the third quarter of 2025 , with no anticipated cost savings .

Business Outlook & Financial Sufficiency

PayPal expects to continue to pay comparable cash dividends on a quarterly basis in the future, subject to market conditions and approval by its Board of Directors at its sole discretion . The company's strategy to drive growth includes accelerating growth in its branded checkout business by improving user experience, reducing friction, and enhancing rewards to drive consumer selection and increase merchant conversion rates . This is expected to increase customer engagement and contribute to growth in monthly active accounts, payment transactions, TPV, and net revenues .

Another key growth area is expanding the value proposition for consumers and merchants to drive daily use . This involves providing consumers with simple, secure, and flexible ways to shop and move money across different markets, merchants, and platforms, including BNPL options, purchase protection programs, and simplified shopping experiences . The company aims to be technology and platform agnostic, expanding capabilities for consumers to shop and pay online, in-person, and through AI agents . For merchants, the strategy includes partnering to grow and expand their business online and offline, offering risk management and seller protection programs, and delivering payment-adjacent capabilities .

PayPal is also focused on unlocking the power of data by responsibly utilizing data from its two-sided platform to personalize consumer offerings, create more value for customers, improve platform interconnectedness, and tap into new sources of revenue and profitable growth . Increasing omnichannel engagement is another strategic priority, achieved through PayPal-branded debit and credit cards, rewards programs, and seamless integration into digital wallets that support in-person payments, thereby giving consumers more reasons to use PayPal and Venmo for all types of purchases . Building and expanding strategic partnerships is crucial for providing better customer experiences, offering greater choice and flexibility, acquiring new customers, and reinforcing PayPal's role in the payments and commerce ecosystem . Finally, the company is seeking new areas of growth by innovating the future of commerce, focusing on new products and services in both digital and physical worlds, including crypto and digital currencies (like PayPal USD stablecoin), agentic commerce, advertising-related services, and cross-wallet interoperability through PayPal World, while also improving existing products .

Operationally, PayPal is investing in state-of-the-art technology, architecture, and processes to deliver high-quality products and services more efficiently and effectively, referred to as the "One PayPal platform" strategy . The "2Q 2025 Plan" is a transformative initiative to reengineer existing technology infrastructure to improve scalability, reduce network latency, decrease operational costs, and optimize the workforce . This plan involves exiting certain data centers to migrate to more efficient cloud-based solutions . The workforce component is expected to be substantially completed in 2027 , and the technology infrastructure component in 2028 . The company expects annualized cost savings of approximately $280 million associated with the impacted workforce and operational costs for technology infrastructure, with a portion of these savings to be reinvested to drive business priorities .

Regarding capital allocation, PayPal repurchased approximately $6.0 billion of its common stock in 2025 . As of December 31, 2025, approximately $13.9 billion remained available for future repurchases under the February 2025 stock repurchase program . In October 2025, the Board of Directors approved the initiation of a quarterly cash dividend program and declared a cash dividend of $0.14 per share , totaling approximately $130 million . The company expects to continue comparable quarterly cash dividends, subject to market conditions and Board approval . Research and development expense was $1.5 billion in 2025 . Capital expenditures, represented by purchases of property and equipment, were $852 million in 2025 .

Management Sentiments & Priorities

Management's message to shareholders emphasizes PayPal's mission to revolutionize commerce globally by enabling simple, personalized, and secure digital payments for consumers and merchants . The company is focused on driving profitable growth and differentiating itself through its two-sided platform, trusted brands, platform-agnostic approach, global scale, customer-back innovation, robust risk and compliance management, and regulatory licenses . Key strategic priorities for the period ahead include accelerating growth in the branded checkout business by improving user experience and enhancing rewards to drive consumer selection and increase merchant conversion rates . Another priority is expanding the value proposition for consumers and merchants to drive daily use, which involves offering flexible payment options, purchase protection, simplified shopping experiences, and partnering with merchants to grow their businesses . Finally, management is focused on unlocking the power of data by responsibly utilizing insights from its two-sided platform to personalize offerings, improve platform interconnectedness, and identify new sources of revenue and profitable growth . The company expects to continue paying comparable quarterly cash dividends, subject to market conditions and Board approval .

Risk Factors

PayPal faces substantial and increasingly intense competition globally, with rapid technological changes, shifting customer preferences, and new product introductions from a wide range of businesses, including larger established players and more agile smaller companies . The global payments industry is subject to extensive and evolving government regulation and oversight across areas such as banking, credit, money transmission, cryptocurrency, privacy, cybersecurity, consumer protection, antitrust, and anti-money laundering . Non-compliance could lead to significant fines, penalties, lawsuits, loss of licenses, and reputational harm . Cybersecurity threats, including sophisticated cyberattacks and AI-enabled threats, pose a continuous risk of data breaches, service disruptions, and financial losses, potentially resulting in regulatory actions, litigation, and damage to reputation . Business interruptions or system failures due to various causes, including cyberattacks, natural disasters, or human error, could impair the availability of products and services, leading to significant losses and recovery costs . The company's credit products expose it to risks of customer defaults, and the accuracy of proprietary risk models may be affected by economic conditions or regulatory changes . Reliance on third-party partners for critical functions, including payment processing and credit origination, introduces operational, legal, and reputational risks . Factors reducing cross-border trade, such as foreign exchange fluctuations or new tariffs, could negatively impact revenues and profits . Failure to effectively deal with fraud, abusive behaviors, and bad transactions may increase loss rates and diminish customer confidence . Acquisitions and strategic transactions involve integration challenges, potential exposure to new risks, and may not achieve anticipated benefits . International operations expose the company to local regulatory, legal, and economic risks, including data localization laws and foreign exchange fluctuations . Adverse global and regional economic conditions, such as inflation, international conflicts, and high interest rates, could reduce consumer spending, increase credit losses, and strain liquidity . Damage to PayPal's reputation or brands from public scrutiny or negative events could harm business and operating results . Inaccuracies in key metrics could also harm reputation . Evolving ESG regulations and stakeholder expectations may impose significant costs and reputational risks . Defaults by counterparty financial institutions could lead to significant losses . Ineffective management of customer funds could harm the business . Indebtedness and potential credit rating downgrades could increase borrowing costs and limit financing options . Changes in tax laws, including the implementation of a global minimum tax rate (Pillar Two), could adversely affect the effective tax rate and cash flows . The inability to attract and retain highly skilled employees, particularly in technology, is a risk . Finally, risks are associated with information disseminated through products and services, potentially leading to claims of defamation or intellectual property infringement .

References

  1. [1] Item 1, Business — Overview
  2. [2] Item 1, Business — Overview
  3. [3] Item 1, Business — Overview
  4. [4] Item 1, Business — Overview
  5. [5] Item 1, Business — Overview
  6. [6] Item 1, Business — Consumer and Merchant Payment Solutions
  7. [7] Item 1, Business — Consumer and Merchant Payment Solutions
  8. [8] Item 1, Business — Consumer and Merchant Payment Solutions
  9. [9] Item 1, Business — Key Performance Metrics
  10. [10] Item 1, Business — Key Performance Metrics
  11. [11] Item 1, Business — Key Performance Metrics
  12. [12] Item 1, Business — Key Performance Metrics
  13. [13] Item 7, MD&A — Key Metrics and Financial Results
  14. [14] Item 7, MD&A — Key Metrics and Financial Results
  15. [15] Item 7, MD&A — Key Metrics and Financial Results
  16. [16] Item 7, MD&A — Key Metrics and Financial Results
  17. [17] Item 7, MD&A — Overview of Results of Operations
  18. [18] Item 7, MD&A — Overview of Results of Operations
  19. [19] Item 7, MD&A — Overview of Results of Operations
  20. [20] Item 7, MD&A — Overview of Results of Operations
  21. [21] Item 7, MD&A — Overview of Results of Operations
  22. [22] Item 7, MD&A — Overview of Results of Operations
  23. [23] Item 7, MD&A — Overview of Results of Operations
  24. [24] Item 7, MD&A — Overview of Results of Operations
  25. [25] Item 7, MD&A — Overview of Results of Operations
  26. [26] Item 7, MD&A — Overview of Results of Operations
  27. [27] Item 7, MD&A — Overview of Results of Operations
  28. [28] Item 7, MD&A — Overview of Results of Operations
  29. [29] Item 7, MD&A — Sources of Liquidity
  30. [30] Item 7, MD&A — Sources of Liquidity
  31. [31] Item 7, MD&A — Available Credit and Debt
  32. [32] Item 7, MD&A — Available Credit and Debt
  33. [33] Item 7, MD&A — Net Revenue Analysis
  34. [34] Item 7, MD&A — Net Revenue Analysis
  35. [35] Item 7, MD&A — Net Revenue Analysis
  36. [36] Item 7, MD&A — Net Revenue Analysis
  37. [37] Item 7, MD&A — Net Revenue Analysis
  38. [38] Item 7, MD&A — Revenues from other value added services
  39. [39] Item 7, MD&A — Revenues from other value added services
  40. [40] Item 7, MD&A — Revenues from other value added services
  41. [41] Item 7, MD&A — Revenues from other value added services
  42. [42] Item 7, MD&A — Operating Expenses
  43. [43] Item 7, MD&A — Operating Expenses
  44. [44] Item 7, MD&A — Operating Expenses
  45. [45] Item 7, MD&A — Operating Expenses
  46. [46] Item 7, MD&A — Transaction expense
  47. [47] Item 7, MD&A — Operating Expenses
  48. [48] Item 7, MD&A — Transaction and credit losses
  49. [49] Item 7, MD&A — Transaction and credit losses
  50. [50] Item 7, MD&A — Transaction and credit losses
  51. [51] Item 7, MD&A — Operating Expenses
  52. [52] Item 7, MD&A — Customer support and operations
  53. [53] Item 7, MD&A — Customer support and operations
  54. [54] Item 7, MD&A — Operating Expenses
  55. [55] Item 7, MD&A — Sales and marketing
  56. [56] Item 7, MD&A — Operating Expenses
  57. [57] Item 7, MD&A — Technology and development
  58. [58] Item 7, MD&A — Technology and development
  59. [59] Item 7, MD&A — Technology and development
  60. [60] Item 7, MD&A — Operating Expenses
  61. [61] Item 7, MD&A — General and administrative
  62. [62] Item 7, MD&A — General and administrative
  63. [63] Item 7, MD&A — Restructuring and other
  64. [64] Item 7, MD&A — Restructuring and other
  65. [65] Item 7, MD&A — Restructuring and other
  66. [66] Item 7, MD&A — Restructuring and other
  67. [67] Item 7, MD&A — Restructuring and other
  68. [68] Item 7, MD&A — Restructuring and other
  69. [69] Item 7, MD&A — Restructuring and other
  70. [70] Item 7, MD&A — Restructuring and other
  71. [71] Item 7, MD&A — Restructuring and other
  72. [72] Item 7, MD&A — Restructuring and other
  73. [73] Item 7, MD&A — Restructuring and other
  74. [74] Item 7, MD&A — Restructuring and other
  75. [75] Item 7, MD&A — Restructuring and other
  76. [76] Item 7, MD&A — Restructuring and other
  77. [77] Item 7, MD&A — Restructuring and other
  78. [78] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities — Dividends
  79. [79] Item 1, Business — Strategy
  80. [80] Item 1, Business — Strategy
  81. [81] Item 1, Business — Strategy
  82. [82] Item 1, Business — Strategy
  83. [83] Item 1, Business — Strategy
  84. [84] Item 1, Business — Strategy
  85. [85] Item 1, Business — Strategy
  86. [86] Item 1, Business — Strategy
  87. [87] Item 1, Business — Strategy
  88. [88] Item 1, Business — Strategy
  89. [89] Item 1, Business — Strategy
  90. [90] Item 7, MD&A — Restructuring and other
  91. [91] Item 7, MD&A — Restructuring and other
  92. [92] Item 7, MD&A — Restructuring and other
  93. [93] Item 7, MD&A — Restructuring and other
  94. [94] Item 7, MD&A — Restructuring and other
  95. [95] Item 7, MD&A — Restructuring and other
  96. [96] Item 7, MD&A — Capital return program
  97. [97] Item 7, MD&A — Capital return program
  98. [98] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities — Dividends
  99. [99] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities — Dividends
  100. [100] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities — Dividends
  101. [101] Item 1, Business — Research and Development
  102. [102] Item 7, MD&A — Investing activities
  103. [103] Item 1A, Risk Factors — We face substantial and increasingly intense competition worldwide in the global payments industry.
  104. [104] Item 1A, Risk Factors — Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.
  105. [105] Item 1A, Risk Factors — Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.
  106. [106] Item 1A, Risk Factors — Cyberattacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition.
  107. [107] Item 1A, Risk Factors — Business interruptions or systems failures may impair the availability of our websites, applications, products or services, or otherwise harm our business.
  108. [108] Item 1A, Risk Factors — Our credit products expose us to additional risks.
  109. [109] Item 1A, Risk Factors — We rely on third parties in many aspects of our business, which creates additional risk.
  110. [110] Item 1A, Risk Factors — Any factors that reduce cross-border trade or make such trade more difficult could harm our business.
  111. [111] Item 1A, Risk Factors — Failure to deal effectively with fraud, abusive behaviors, bad transactions, and negative customer experiences may increase our loss rate and could severely diminish merchant and consumer confidence in and use of our services and negatively impact our business.
  112. [112] Item 1A, Risk Factors — Acquisitions, dispositions, strategic investments, and other strategic transactions could result in operating difficulties and could harm our business.
  113. [113] Item 1A, Risk Factors — Our international operations subject us to increased risks, which could harm our business.
  114. [114] Item 1A, Risk Factors — Global and regional economic conditions could harm our business.
  115. [115] Item 1A, Risk Factors — If our reputation or our brands are damaged, our business and operating results may be harmed.
  116. [116] Item 1A, Risk Factors — Real or perceived inaccuracies in our key metrics may harm our reputation and negatively affect our business.
  117. [117] Item 1A, Risk Factors — Evolving laws, regulations and stakeholder expectations with respect to environmental, social and governance matters could harm our reputation and adversely affect our business.
  118. [118] Item 1A, Risk Factors — If one or more of our counterparty financial institutions default on their financial or performance obligations to us or fail, we may incur significant losses.
  119. [119] Item 1A, Risk Factors — If we are unable, or perceived as unable, to effectively manage customer funds, our business could be harmed.
  120. [120] Item 1A, Risk Factors — There are risks associated with our indebtedness.
  121. [121] Item 1A, Risk Factors — Changes in tax laws, exposure to unanticipated additional tax liabilities, or implementation of reporting or record-keeping obligations could have a material adverse effect on our business.
  122. [122] Item 1A, Risk Factors — We may be unable to attract, retain, and develop the highly skilled employees we need to support our business.
  123. [123] Item 1A, Risk Factors — We are subject to risks associated with information disseminated through our products and services.
  124. [124] Item 1, Business — Overview
  125. [125] Item 1, Business — Our Strengths
  126. [126] Item 1, Business — Strategy
  127. [127] Item 1, Business — Strategy
  128. [128] Item 1, Business — Strategy
  129. [129] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities — Dividends

Analysis on 5/19/2026