PayPal reported continued payment volume growth during the second quarter of 2026 and raised its full-year adjusted earnings guidance as management advances a transformation plan across branded checkout, Venmo and Braintree. The company generated GAAP net income of $1.10 billion, down 12% from $1.26 billion in the second quarter of 2025. Diluted earnings declined 3% to $1.25 per share from $1.29 per share.
On a non-GAAP basis, PayPal generated net income of $1.22 billion, down 11% from $1.37 billion a year earlier. Adjusted diluted earnings declined 1% to $1.38 per share from $1.40 per share.
The quarter’s GAAP earnings included an approximately $0.07 negative effect from PayPal’s strategic investment portfolio and cryptocurrency assets, compared with an approximately $0.01 positive contribution in the prior-year quarter.
Net revenue increased 5% to $8.68 billion from $8.29 billion. On a currency-neutral basis, revenue grew 3%.
Total payment volume increased 10% to $486.45 billion, or 9% on a currency-neutral basis.
Total payment volume represents the value of payments processed through PayPal’s platforms and is an important measurement of activity across the company’s consumer, merchant and processing businesses.
PayPal processed 6.8 billion payment transactions during the quarter, an increase of 8%. Excluding unbranded payment service provider transactions, transaction volume grew 7%.
Payment transactions per active account increased 3% on a trailing 12-month basis to 60. Excluding payment service provider activity, transactions per active account increased 7%.
Active accounts increased 0.3% year over year to 439 million. Sequentially, the total declined by approximately 200,000 accounts.
The relatively stable active account total indicates that PayPal’s transaction growth was driven more by payment frequency and transaction volume than by substantial expansion of its user base.
Transaction margin dollars increased 1% to $3.90 billion. Excluding interest earned on customer balances, transaction margin dollars rose 3% to $3.62 billion.
Transaction margin dollars represent the revenue remaining after transaction expenses, transaction losses, credit losses and certain other costs directly associated with processing payments.
GAAP operating income declined 5% to $1.43 billion, while non-GAAP operating income decreased 8% to $1.51 billion.
GAAP operating margin contracted by 171 basis points to 16.4%. Adjusted operating margin declined by 248 basis points to 17.4%, compared with 19.8% in the prior-year quarter.
The margin contraction indicates that operating expenses increased faster than revenue during the period.
PayPal reported higher transaction expenses, customer support and operations costs, technology spending, and general and administrative expenses.
Those increases were partially offset by lower transaction and credit losses and reduced sales and marketing expenses.
PayPal generated $1.98 billion in operating cash flow, more than double the $898 million reported during the second quarter of 2025.
Free cash flow increased 157% to $1.78 billion, while adjusted free cash flow reached $1.83 billion, an increase of 179%.
Adjusted free cash flow excludes timing differences between the origination of buy now, pay later receivables classified as held for sale and the subsequent sale of those receivables.
The adjustment is intended to reduce fluctuations created by the timing of loan originations and asset sales.
PayPal ended the quarter with $15.3 billion in cash, cash equivalents and investments, compared with total debt of $13.4 billion.
The company returned approximately $1.5 billion to shareholders by repurchasing about 33 million shares during the quarter.
Over the trailing 12 months, PayPal repurchased approximately 111 million shares for $6 billion.
PayPal’s board also declared a quarterly cash dividend of $0.14 per share. The dividend is payable on September 25, 2026, to shareholders of record at the close of business on September 4.
Following the quarter, PayPal raised its full-year non-GAAP transaction margin dollar and adjusted earnings guidance while reaffirming its GAAP earnings outlook.
The company now expects full-year non-GAAP earnings of approximately $5.38 per share, compared with $5.31 in 2025.
Its previous guidance called for results ranging from a low-single-digit decline to slightly positive growth.
PayPal continues to expect full-year GAAP earnings per share to decline by a mid-single-digit percentage from the $5.41 reported for 2025.
The non-GAAP outlook includes approximately $350 million in estimated adjustments but excludes potential transformation-related charges during the second half of the year.
For the third quarter, PayPal expects both GAAP and non-GAAP earnings per share to decline by a low-single-digit percentage.
The comparison is against GAAP earnings of $1.30 per share and adjusted earnings of $1.34 per share in the third quarter of 2025.
President and CEO Enrique Lores said PayPal has sharpened its transformation strategy across its three primary businesses.
Management reported further stabilization in branded checkout, continued momentum across Venmo and Braintree, and progress diversifying PayPal through additional financial services.
Branded checkout refers to transactions in which consumers deliberately select PayPal as their payment method.
Braintree provides payment processing infrastructure to merchants, while Venmo supports consumer payments and an expanding range of commerce and financial services.
PayPal is seeking to generate more consistent and profitable growth by improving these businesses, maintaining operating discipline and returning capital to shareholders.
KEY QUOTE:
“I’m encouraged by the progress we made this quarter. We moved with urgency to sharpen our transformation plan and advance our growth strategies across our three businesses.”
“Branded checkout has further stabilized and we’re building on the strong momentum in Venmo and Braintree as well as diversifying our business model through financial services.”
“Based on the strength of our execution and confidence in the trajectory of the business, we’re raising our full-year non-GAAP guidance. Our transformation is well underway, and we’re executing with discipline on our priorities to deliver durable, profitable growth over the long term.”
Enrique Lores, President and CEO of PayPal
