PayPal Raises Adjusted EPS Forecast to $5.60, Maintains $6 Billion in Buybacks
Key Facts
PayPal raised its forecast for 2026 adjusted diluted non-GAAP earnings per share to about $5.60, from about $5.38 in its July guidance, as it reported third-quarter results. The company said its annual outlook includes adjusted free cash flow of at least $6.5 billion, and continues to factor in about $6 billion in share repurchases. The latter figure is part of existing guidance, not an announcement of a new buyback program of that size. In the third quarter, the company returned $1.5 billion through the repurchase of about 28 million shares, bringing the 12-month total to $6 billion across about 117 million shares. Alongside returning capital, management said it would increase selective investment in growth opportunities in which its confidence is rising as it looks toward 2027.
The results showed a divergence between business growth and revenue trends. Net revenue was $8.584 billion in the third quarter, compared with $8.417 billion in the same period of 2025, a year-over-year increase of 2%. Total payment volume rose 6% to $487.1 billion, or 7% excluding the impact of currency, while revenue growth was 1% on the same basis. In the second quarter, revenue growth was faster at 5% to $8.7 billion, and payment volume grew 10% to $486.4 billion. That puts the third-quarter slowdown in revenue growth against continued increases in the value of payments across the network.
On profitability, adjusted earnings per share rose 8% to $1.45 in the third quarter, but GAAP earnings per share fell 4% to $1.25. Net income declined 14% to $1.073 billion, compared with $1.248 billion a year earlier. The adjusted operating margin expanded to 18.8%, up 16 basis points year over year, while the GAAP operating margin contracted 173 basis points to 16.3%. For the full year, PayPal kept its GAAP earnings-per-share forecast at about $5.07, compared with $5.41 in 2025. The differing directions of adjusted and GAAP measures stand out in both the quarterly results and annual guidance.
PayPal said transaction margin dollars are expected to rise to about $15.7 billion in 2026, or $14.6 billion excluding interest on customer balances. The company, meanwhile, forecast mid-single-digit growth in non-transaction operating expenses for the year. Adjusted free cash flow was $2.0 billion in the third quarter; the measure excludes the net timing impact between creating buy now, pay later receivables held for sale and their subsequent repayment and sale. The chief executive said the company was "beginning to see its strategy reflected in its financial results," pointing to strong contributions from key growth areas and increasing diversification. In April 2026, the company announced a reorganization aimed at generating gross annualized savings of at least $1.5 billion over two to three years, with a significant portion to be reinvested in growth priorities.
On user activity, active accounts increased 0.6% to 440 million. Transactions per active account over the trailing 12 months also rose 6% to 60.8, putting growth in usage frequency above growth in the account base. Cash, cash equivalents and investments totaled $15.1 billion on September 30, 2026, while debt was $13.5 billion. PayPal declared a cash dividend of $0.14 per share, payable December 24 to shareholders of record on December 4, 2026. The stock closed at $57.01 on October 30, after closing at $54.99, $56.09, $56.55 and $56.95 in the four preceding recorded sessions.