Oct 27, 2026 earnings call — PayPal pushes financial services, cost cuts, Venmo growth
PayPal raised full-year transaction margin dollars to approximately $15.7 billion and EPS to approximately $5.60.
Revenue $8.6B (est $8.7B) · EPS $1.45 (est $1.31)
Key quotes
"First, financial services are becoming a much more important part of our business. They already represent more than 20% of transaction margin dollars in 2026 and are growing double-digits."
"We are on track to achieve our target of at least $1.5 billion in gross run-rate cost savings over two to three years, including more than $700 million exiting the fourth quarter."
"Our new modular risk platform is using real-time data and AI to cut credit decision times nearly in half in Canada, Italy, and Spain."
Analyst Q&A 11
why company is worth more
Q (Andrew Schmidt · KeyBanc): They asked what drives the board and management's view of intrinsic value and why they are confident they can achieve it.
A: They said they have strong conviction in their ability to execute the plan and to achieve sustainable double-digit EPS growth in the midterm. That growth will be driven by mid-single-digit transaction margin growth from Venmo, processing, and branded checkout, plus financial services, operating leverage from cost reductions, and use of free cash flow for buybacks and selective M&A. The board will objectively analyze options but currently prefers executing the plan.
"Let me share that we have strong conviction in our ability to execute the plan that we have outlined in our prepared remarks and to achieve sustainable double-digit EPS growth in the midterm." — Enrique Lores (CEO)
making Venmo central to customers
Q (Dan Dolev · Mizuho): They asked how PayPal can make Venmo a bigger part of the portfolio and improve monetization.
A: They said they are making Venmo central by expanding financial services and new experiences like P2P transfer by scanning and splitting receipts. Only 23% of customers use current financial services; the debit card grew more than 60% year-on-year and Pay with Venmo TPV grew more than 40% this quarter. They see a 4x to 5x opportunity to increase ARPA and expect continued double-digit TPV growth for Venmo.
"Our goal, as I briefly mentioned in the prepared remarks, is to make Venmo increasingly central to our customers' everyday financial lives." — Enrique Lores (CEO)
financial services impact and funding
Q (Tien-Tsin Huang · JPMorgan): They asked for an update on the financial services product roadmap, how it will add transaction margin dollars, and whether the company will stay balance-sheet light.
A: They said financial services (Pay Later, debit, credit) are a key driver of future transaction margin dollar growth because consumers using them have 2x to 5x higher ARPA. They will expand product offerings and geographies and offer cards with Pay Later flexibility to extend into stores. On funding, they'll take a balanced approach between on-balance-sheet and off-balance-sheet growth, using flexible funding sources and strong credit underwriting.
"Yes, we continue to see financial services as a key driver of future transaction margin dollar growth." — Enrique Lores (CEO)
advantages in agent-driven commerce
Q (Timothy Chiodo · UBS): They asked why PayPal may be well-positioned for agentic (agent-driven) commerce and what unique advantages it has.
A: They said agentic commerce is a priority and they are both building internally and partnering with companies like Meta. PayPal's advantage is its core value proposition of trust and security, which helps validate that consumers can pay and merchants have real products. They are working with leaders so consumers and merchants can transact via PayPal, and expect the role to expand beyond commerce to other services like peer-to-peer transfers.
"The key advantage that we have is really driven by our core value proposition to consumers and merchants." — Enrique Lores (CEO)
Europe branded growth and de minimis
Q (Harshita Rawat · Bernstein): They asked about market dynamics in Europe, confidence in improving branded growth there, and how long EU de minimis tariff headwinds will last into Q4.
A: They said the EU de minimis tariff impacts are expected to persist into the fourth quarter. Outside those de minimis effects, core European markets are stabilizing or improving—Germany is slightly improving and they recently launched Pay Later in Germany and Austria with Amazon. They have been building local consumer teams and infrastructure over the last three to four months and are applying the U.S. merchant playbook in Europe next year to drive growth.
"Our expectation on the EU de minimis tariff impacts is that they will persist into the fourth quarter." — Jamie Miller
why international revenue fell
Q (Bryan Keane · Citi): They asked why international revenue declined more than TPV, whether Asia is weakening, and how long until international returns to normalized growth.
A: They said the international revenue weakness is mainly from EU tariffs and branded checkout headwinds; the 70 basis point tariff impact they cited is a global number and is larger when applied just to international revenue. They are encouraged by growth in Germany, Italy and France, and are rolling out the merchant playbook and Pay Later across Europe to help restore international growth.
"But when you start to look at revenue, and in particular international, that is where you are seeing the impact of the EU tariffs and branded checkout." — Jamie Miller
2027 transaction margin outlook
Q (Andrew Bauch · BMO): They asked what transaction margin dollar growth should look like in 2027 specifically and what bridges exist from current 2% to the mid-single-digit target.
A: They said the mid-single-digit target is a medium-term goal and they are not giving specific 2027 guidance now; they will provide more detail in February. They expect to invest in transaction margin dollars and OpEx in 2027 while targeting a similar non-GAAP EPS growth profile next year as this year. They view 2027 as an investment year to build momentum for stronger growth in 2028 and beyond.
"If I start with that, as Enrique talked about before, we expect stronger transaction margin dollars growth over the next coming years, a more balanced composition with Venmo, PSP, and financial services increasing growth over time." — Jamie Miller
merchant differences and timing
Q (Sanjay Sakhrani · KBW): They asked why cohorts differ between direct merchants and marketplaces, where opportunities are largest, and whether easier comps mean faster TMD growth next year.
A: They said the playbook includes several elements—updating checkout, integrating Pay Later, and co-marketing—and the mix applied varies by merchant based on specific economics. They provided examples of traction: a U.S. sports entertainment platform grew more than 40% in the last six months with Venmo up over 50%, and a U.S. omnichannel retailer saw BNPL share grow from 7% to 20%. They cautioned that branded checkout investments are underwritten over a two- to three-year horizon, and about three years for the largest merchants.
"What you see in the graph, and we don't have exactly the same formula applied to every merchant." — Enrique Lores (CEO)
M&A criteria and 2027 investments
Q (Darrin Peller · Wolfe): They asked about M&A appetite (size, timing, type) and how planned 2027 investments should affect margins and EPS.
A: They said any M&A must pass three filters: align to strategy (e.g., grow financial services, Venmo, or processing), show a strong financial return that exceeds buying back shares, and have a strong operational integration plan. They will continue returning capital via buybacks and dividends but remain disciplined on M&A. On 2027 investments, they expect to ramp product, go-to-market, and marketing spend, will not simply run-rate 2H OpEx, and expect some timing mismatch across quarters while keeping a roughly consistent profile for transaction margin, OpEx and EPS.
"Any M&A action that we will do will have to go through what I call three filters." — Enrique Lores (CEO)
PSP attach strategy
Q (Dan Perlin · RBC): They asked what the PSP sales motion looks like to increase attach rates for value-added services, what investment is needed, and clarification on the percent attach.
A: They said the PSP opportunity is both growing core processing capabilities and improving attach of value-added services like payouts, risk as a service, and invoicing. They are investing in a specialized sales force focused on driving attach and monetization, and have increased attach from 5% to 6% year-over-year. They said there is much more room to improve attach rates going forward.
"We grew our attach from 5% to 6%, so year-on-year, 1 point, but we have much more room for improvement, and this is where we're going to be focused." — Enrique Lores (CEO)
Q4 branded growth outlook
Q (Jason Kupferberg · Wells Fargo): They asked why Q4 branded growth wouldn't accelerate despite easier comps and asked for quantification of recent U.S. acceleration.
A: They said they expect the EU tariff headwind to continue into the fourth quarter, so they are planning for consistency and guided around 1%-2% for Q4. They are encouraged by U.S. merchant playbook momentum and feel they are entering the holiday season in a better position than last year, but emphasized it is early and more work remains.
"The short answer on the fourth quarter is that we expect the EU tariff headwind to continue, and we're really planning for consistency." — Jamie Miller