Digital payments platform PayPal (NASDAQ:PYPL) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 7.3% year on year to $8.42 billion. Its non-GAAP profit of $1.34 per share was 11.2% above analysts’ consensus estimates.
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PayPal (PYPL) Q3 CY2025 Highlights:
- Revenue: $8.42 billion vs analyst estimates of $8.24 billion (7.3% year-on-year growth, 2.2% beat)
- Adjusted EPS: $1.34 vs analyst estimates of $1.20 (11.2% beat)
- Adjusted EBITDA: $2.09 billion vs analyst estimates of $1.66 billion (24.8% margin, 25.6% beat)
- Adjusted EPS guidance for the full year is $5.37 at the midpoint, beating analyst estimates by 2.4%
- Operating Margin: 18.1%, in line with the same quarter last year
- Market Capitalization: $68.71 billion
StockStory’s Take
PayPal’s third quarter results were well received by the market, reflecting the company’s progress on its strategic transformation. Management attributed the uptick in performance to accelerated revenue growth from core businesses such as branded payment experiences, Venmo, and enterprise payments. CEO Alex Chriss highlighted that deliberate actions to focus on profitable growth, deepen customer engagement, and expand omnichannel initiatives have begun to deliver results. The quarter also saw notable momentum in Buy Now, Pay Later (BNPL) and a return to growth in PayPal’s enterprise payments segment. Management pointed to increased transaction activity and broader product adoption as evidence that recent investments are yielding positive outcomes.
Looking ahead, PayPal’s updated guidance is grounded in expanding adoption of its redesigned checkout, scaling omnichannel offerings, and accelerating Venmo and BNPL monetization. Management emphasized upcoming investments to amplify product attachment, particularly in the U.S., and the international rollout of successful domestic initiatives. CEO Alex Chriss described three generational shifts—toward digital wallets, BNPL, and agentic commerce powered by artificial intelligence—as critical future growth drivers. He expressed confidence that PayPal’s scale, partnerships, and innovation pipeline position the company to capitalize on these trends, even as increased investment may moderate near-term earnings growth.
Key Insights from Management’s Remarks
Management credited the quarter’s performance to increased engagement across PayPal’s ecosystem, broad-based transaction growth, and the impact of product innovation, while highlighting the importance of strategic investments to support long-term growth.
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Venmo monetization accelerates: Venmo’s revenue growth topped 20% year-over-year, fueled by higher adoption of debit cards and Pay with Venmo, as well as new partnerships targeting young, digitally native users. Management noted that average revenue per account (ARPA) is rising, with meaningful upside as more users engage with multiple Venmo products.
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Buy Now, Pay Later (BNPL) momentum: BNPL volumes maintained over 20% growth, underpinned by continued expansion into new geographies and a shift toward earlier placement in the shopping journey. CEO Alex Chriss described BNPL as a “generational shift,” with adoption driving higher engagement and transaction values.
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Redesigned checkout adoption: PayPal’s redesigned pay sheet and increased biometric authentication are driving conversion gains of 2-5% in optimized cohorts. Although deployment is now at 25% of global transactions, management acknowledged the rollout is complex and remains a work in progress.
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Omnichannel and branded experiences: The company’s transition from an online payment provider to a commerce platform is reflected in 8% branded experiences growth, with particular strength in U.S. omnichannel adoption. Cross-channel engagement is creating a flywheel effect, boosting both online and offline activity.
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Agentic commerce partnerships: PayPal announced new collaborations with OpenAI, Google, and Perplexity to enable payments and commerce through AI-powered platforms. Management views these partnerships as foundational for future growth, providing merchants with simplified integration to multiple large language models (LLMs) and consumers with greater payment flexibility.
Drivers of Future Performance
PayPal’s outlook is shaped by scaling its next-generation checkout and digital wallet solutions, expanding BNPL and Venmo adoption, and investing in AI-driven commerce, while navigating macroeconomic and investment headwinds.
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Expansion of AI and agentic commerce: Management sees partnerships with AI platforms as a long-term growth lever, allowing PayPal to serve as a single integration point for merchants across leading large language models (LLMs). CEO Alex Chriss emphasized that this will expand PayPal’s reach and relevance as consumer commerce habits evolve.
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International and omnichannel scaling: The company plans to extend U.S. successes—such as redesigned checkout and omnichannel adoption—into international markets. Management expects these efforts to drive user engagement and transaction growth, but notes the rollout will be gradual due to technical complexity and market variation.
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Investment-driven margin headwinds: CFO Jamie S. Miller signaled that increased spending on product development, marketing, and customer incentives may moderate short-term earnings growth. These investments target product attachment and user habituation, aiming for durable, multi-year revenue expansion despite near-term margin pressure.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace and global reach of PayPal’s redesigned checkout and omnichannel initiatives, (2) adoption and monetization of BNPL and Venmo products, and (3) the effectiveness of new AI and agentic commerce partnerships in driving merchant and consumer engagement. Execution of targeted investments and international scaling will be critical signposts of sustained growth.
PayPal currently trades at $74.19, up from $70.21 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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