PayPal Holdings, Inc.

What they do

PayPal operates a two-sided network linking consumers and merchants, processing payments online and in person. For consumers it offers digital wallets through PayPal and Venmo, money transfer, and tools to manage finances, including buying and selling cryptocurrencies. For merchants, from large enterprises to small and medium businesses, it provides online branded checkout, unbranded payment processing through Braintree, PayPal buy now, pay later, in-person point of sale, business financing, payouts and risk tools. Revenue comes mainly from fees charged for completing payment transactions and other payment-related services, generally based on payment volume processed on its platform.

Revenue drivers

• Merchant payment processing fees — The primary revenue source: fees charged for completing payment transactions and other payment-related services, typically based on the volume of activity processed on the platform. This includes branded checkout with PayPal and Venmo and unbranded processing through Braintree. Total payment volume was $1.79 trillion in 2025.
• Currency conversion and instant transfers — Revenue from customers for currency conversion and instant transfers from PayPal or Venmo accounts to bank accounts or debit cards. PayPal generally does not charge customers to fund or draw from their accounts.
• Other value-added services (OVAS) — Includes revenue from partnerships, interest and fees from consumer and merchant credit products, interest earned on certain assets underlying customer balances, referral fees, subscription fees, and gateway services. Interest on customer balances is reported within OVAS.
• Cryptocurrency facilitation — Revenue generated to facilitate the purchase and sale of cryptocurrencies for customers.

Recent performance

In the second quarter of 2026, net revenues increased 5% to $8.7 billion, or 3% currency-neutral. Total payment volume rose 10% to $486.4 billion, and payment transactions increased 8% to 6.8 billion. Transaction margin dollars increased 1% to $3.9 billion, or 3% to $3.6 billion excluding interest on customer balances. GAAP operating income decreased 5% to $1.4 billion, with GAAP operating margin contracting 171 basis points to 16.4%, and GAAP EPS decreased 3% to $1.25. Active accounts increased 0.3% to 439 million.

Strategy

In April 2026, PayPal announced a strategic reorganization of its business and executive leadership team intended to accelerate execution of long-term growth priorities, simplify the operating structure, streamline decision-making, and drive innovation. The program focuses on realigning the operating structure and accelerating adoption of artificial intelligence and automation, and is expected to deliver at least $1.5 billion in gross annualized run-rate savings over the next two to three years. The company intends to reinvest a significant portion of the savings into highest-priority growth initiatives. A first phase of actions is expected to be completed by the end of the year and has the potential to generate approximately $400 million of run-rate gross savings, with a portion realized in the fourth quarter, and could result in a transformation-related charge within a range of approximately $120 million to $140 million during the second half. Management cited progress across three businesses, with branded checkout stabilizing and momentum in Venmo and Braintree, while diversifying the business model through financial services.

Risks

• Cybersecurity and data privacy — PayPal has experienced and expects to continue to experience cybersecurity and data privacy incidents, and evolving threats including AI-enabled attacks, ransomware and social engineering could harm its reputation, business and financial condition.
• Regulatory environment — PayPal operates globally in a rapidly evolving regulatory environment with heightened focus on anti-money laundering, countering terrorist financing, privacy, cybersecurity and consumer protection, and non-compliance could have a material adverse impact.
• Transformation execution — The April 2026 strategic reorganization and business simplification program may not achieve the expected at least $1.5 billion in gross annualized run-rate savings, and the first phase could result in a transformation-related charge of approximately $120 million to $140 million in the second half.
• Payment transactions decline — PayPal processed 25.4 billion payment transactions in 2025, a decrease of 4% compared to 2024, even as total payment volume grew 7%.

Outlook

Management raised full-year non-GAAP guidance based on second-quarter execution and confidence in the trajectory of the business. The company said its transformation is well underway and it is executing with discipline on priorities to deliver durable, profitable growth over the long term. The first phase of the restructuring actions is expected to be completed by the end of the year, with a portion of savings realized in the fourth quarter.