SAN JOSE, Calif., (October 27, 2026) – PayPal Holdings, Inc. (NASDAQ: PYPL) today reported results for the third quarter ended September 30, 2026.
“I’m pleased with our third-quarter performance and the momentum we are seeing across the business, and we are raising our full-year non-GAAP guidance for transaction margin dollars and EPS. We are beginning to see our strategy translate into our financial results, with strong contributions from our key growth areas and increasing diversification. We are making good progress in our multi-year transformation, and while there is more work to do, we are increasingly confident in our path to durable, profitable growth and remain focused on execution.”
Enrique Lores
President and CEO
—————————————————————————————————————————————
3Q'26 Financial Results
•Net revenues increased 2% to $8.6 billion; 1% currency-neutral (“FXN”).
•Transaction margin dollars1 (“TM$”) increased 2% to $4.0 billion; TM$ excluding interest on customer balances1,2 increased 3% to $3.7 billion.
•GAAP operating income decreased 8% to $1.4 billion; non-GAAP operating income increased 3% to $1.6 billion.
•GAAP operating margin contracted 173 basis points to 16.3%; non-GAAP operating margin expanded 16 basis points to 18.8%.
•GAAP EPS decreased 4% to $1.253; non-GAAP EPS increased 8% to $1.45.
•Payment transactions increased 7% to 6.8 billion. Excluding payment service provider transactions4 (“PSP”), payment transactions increased 7%.
•Payment transactions per active account (“TPA”) on a trailing 12-month basis increased 6% to 60.8. TPA ex-PSP4 increased 6%.
•Active accounts increased 0.6% to 440 million. On a sequential basis, active accounts increased by 0.4%, or by 1.6 million.
Cash Flow
•Cash flow from operations of $1.6 billion and free cash flow of $1.4 billion.
•Adjusted free cash flow of $2.0 billion, which excludes the net timing impact between originating buy now, pay later (“BNPL”) receivables as held for sale and the subsequent repayment and sale of those receivables.
Balance Sheet and Liquidity
•Cash, cash equivalents, and investments totaled $15.1 billion as of September 30, 2026.
•Debt totaled $13.5 billion as of September 30, 2026.
•Returned $1.5 billion to stockholders by repurchasing approximately 28 million shares of common stock in 3Q'26.
◦On a trailing 12-month basis, returned $6.0 billion to stockholders by repurchasing approximately 117 million shares of common stock.
Dividend Program
•PayPal’s Board of Directors declared a cash dividend of $0.14 per share on the Company’s common stock, payable on December 24, 2026, to stockholders of record as of the close of business on December 4, 2026.
All growth rates reference 3Q'26 year-over-year growth unless otherwise noted.
1.TM$, TM$ excluding interest on customer balances, non-GAAP operating income, non-GAAP operating margin, non-GAAP EPS, free cash flow, and adjusted free cash flow are non-GAAP financial measures. “Non-GAAP Measures of Financial Performance” and subsequent tables at the end of this press release provide reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures.
2. Interest on customer balances is reported within other value added services (“OVAS”) revenue and primarily comprises interest and revenue earned on customer assets.
3. Impact from PayPal’s strategic investment portfolio and crypto assets held for investment was immaterial in 3Q'26 GAAP EPS, compared to a ~$0.01 positive impact in 3Q'25.
4. Payment transactions ex-PSP and TPA ex-PSP exclude unbranded card processing transactions and accounts.
3Q 2026 Results
1
3Q'26 Financial Results
Presented in millions, except per share data and percentages
3Q'26
3Q'25
YoY Growth
FXN
YoY Growth
Total payment volume
$487,138
$458,088
6%
7%
GAAP
Net revenues
$8,584
$8,417
2%
Operating income
$1,402
$1,520
(8)%
Operating margin
16.3%
18.1%
(173)bps
Effective tax rate
21.9%
18.6%
3.3pts
Net income (loss)
$1,073
$1,248
(14)%
Earnings per diluted share
$1.25
$1.30
(4)%
Net cash provided by operating activities
$1,592
$1,974
(19)%
Non-GAAP
Net revenues
$8,584
$8,417
2%
1%
Transaction margin dollars
$3,950
$3,871
2%
Transaction margin dollars excluding interest on customer balances
$3,661
$3,550
3%
Operating income
$1,613
$1,568
3%
Operating margin
18.8%
18.6%
16bps
Effective tax rate
21.6%
18.1%
3.5pts
Net income
$1,245
$1,288
(3)%
Earnings per diluted share
$1.45
$1.34
8%
Free cash flow
$1,431
$1,718
(17)%
Adjusted free cash flow
$2,047
$2,279
(10)%
Financial Guidance
2026 Guidance: Following another strong quarter, PayPal is raising full year non-GAAP TM$ and EPS guidance and reaffirming GAAP EPS guidance. Please see PayPal’s 3Q'26 earnings presentation for more detail.
October 2026 Guidance
July 2026 Guidance
Prior year period
4Q'26
GAAP EPS
~$1.37
N/A
$1.53
Non-GAAP EPS1
~$1.43
N/A
$1.23
FY'26
GAAP EPS2
~$5.07
Mid-single digit decline
$5.41
Non-GAAP EPS3
~$5.60
~$5.38
$5.31
Please see “Non-GAAP Measures of Financial Performance” for reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures and important additional information.
1. Estimated non-GAAP amounts for the three months ending December 31, 2026 reflect adjustments of approximately $70 million.
2. FY'25 GAAP EPS included a positive impact of ~$0.14 from PayPal’s strategic investment portfolio and crypto assets held for investment.
3. Estimated non-GAAP amounts for the full year ending December 31, 2026 reflect adjustments of approximately $570 million.
3Q 2026 Results
2
Conference Call & Webcast
PayPal Holdings, Inc. will host a conference call to discuss third quarter 2026 results at 8:00 a.m. Eastern Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures, can be accessed through the company’s Investor Relations website at https://investor.pypl.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.
Disclosure Channels
PayPal Holdings, Inc. uses the following channels as means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD:
The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to PayPal’s press releases, filings with the Securities and Exchange Commission (“SEC”), public conference calls, and webcasts.
About PayPal
Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy.
Presentation
All growth rates represent year-over-year comparisons, except as otherwise noted. FXN results are calculated by translating the current period local currency results by the prior period exchange rate. FXN growth rates are calculated by comparing the current period FXN results with the prior period results, excluding the impact from hedging activities. All amounts in tables are presented in U.S. dollars, rounded to the nearest million, except as otherwise noted. As a result, certain amounts and rates may not sum or recalculate using the rounded dollar amounts provided.
Non-GAAP Financial Measures
This press release includes financial measures defined as “non-GAAP financial measures” by the SEC including: non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, transaction margin dollars, transaction margin dollars excluding interest on customer balances, non-GAAP operating margin, transaction margin, non-GAAP effective tax rate, free cash flow, and adjusted free cash flow. For an explanation of the foregoing non-GAAP measures, please see “Non-GAAP Measures of Financial Performance” included in this press release. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, see “Non-GAAP Measures of Financial Performance,” “Reconciliation of GAAP Operating Income to Non-GAAP Operating Income, Transaction Margin Dollars, and Transaction Margin Dollars Ex-Interest on Customer Balances and GAAP Operating Margin to Non-GAAP Operating Margin and Transaction Margin,” “Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income, GAAP Diluted EPS to Non-GAAP Diluted EPS, and GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate,” and “Reconciliation of Operating Cash Flow to Free Cash Flow and Adjusted Free Cash Flow.”
3Q 2026 Results
3
Forward-looking statements
This press release contains forward-looking statements relating to, among other things, the future results of operations, financial condition, expectations, and plans of PayPal Holdings, Inc. and its consolidated subsidiaries (“PayPal”) that reflect PayPal’s current projections and forecasts. Forward-looking statements can be identified by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” "continue," “strategy,” “future,” “opportunity,” “plan,” “guidance,” “project,” “forecast,” and other similar expressions. Forward-looking statements may include, but are not limited to, statements regarding our guidance and projected financial and operating results for the fourth quarter and full year 2026; our capital return program, including share repurchases and dividend payments, if any; our plans with respect to PayPal's business structure and operating model, and the anticipated benefits; our plans to reduce our cost structure, including anticipated cost savings; the timing and impact of product launches and acquisitions; and the projected future growth of PayPal’s businesses. Forward-looking statements are based upon various estimates and assumptions, as well as information known to PayPal as of the date of this press release, and are inherently subject to numerous risks and uncertainties.
Our actual results could differ materially from those estimated or implied by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to compete in markets that are highly competitive and subject to rapid technological change, and to develop and deliver new or enhanced products and services on a timely basis; cyberattacks and security vulnerabilities, and associated impacts; the effect of global and regional political, economic, market and trade conditions, including military conflicts, supply chain issues, tariffs or uncertainty thereof, and related events that affect payments or commerce activity, including inflation and interest rates; the impact of catastrophic events, such as global pandemics, that may disrupt our business, as well as our customers, suppliers, vendors and other business partners; the stability, security and performance of our payments platform; the effect of extensive government regulation and oversight related to our business, products and services in a variety of areas, including, but not limited to, laws covering payments, lending and consumer protection; the impact of complex and changing laws and regulations worldwide, including, but not limited to, laws covering cybersecurity, privacy, data protection, and artificial intelligence; the impact of payment card, bank, or other network rules or practices; risks related to our credit products, including our ability to realize benefits from our agreements with third parties such as our agreements to sell our loan receivables; changes in how consumers fund transactions; our ability to effectively detect and prevent the use of our services for fraud, abusive behaviors, illegal activities, or improper purposes; our ability to manage regulatory and litigation risks, and the outcome of legal and regulatory proceedings; our reliance on third parties in many aspects of our business; damage to our reputation or brands; fluctuations in foreign currency exchange rates; changes in tax rates and exposure to additional tax liabilities; changes to our capital allocation, management of operating cash or incurrence of indebtedness; our ability to timely develop and upgrade our technology systems, infrastructure and customer service capabilities; the impact of proposed or completed acquisitions, divestitures, strategic investments, or entries into new businesses or markets; and our ability to attract, hire, and retain highly talented employees. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or contemplated after the date hereof.
More information about factors that could adversely affect PayPal’s results of operations, financial condition and prospects, or that could cause actual results to differ from those expressed or implied in forward-looking statements is included under the captions “Risk Factors,” “Legal Proceedings” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in PayPal’s most recent annual report on Form 10-K and its subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting PayPal’s Investor Relations website at https://investor.pypl.com or the SEC’s website at www.sec.gov. All information in this release speaks as of October 27, 2026. For the reasons discussed above, you should not place undue reliance on the forward-looking statements in this press release. PayPal assumes no obligation to update such forward-looking statements.
Common stock, $0.0001 par value; 4,000 shares authorized; 837 and 920 shares outstanding as of September 30, 2026 and December 31, 2025, respectively
—
—
Preferred stock, $0.0001 par value; 100 shares authorized, unissued
—
—
Treasury stock at cost, 517 and 423 shares as of September 30, 2026 and December 31, 2025, respectively
(37,680)
(33,138)
Additional paid-in-capital
22,265
21,582
Retained earnings
35,384
32,470
Accumulated other comprehensive income (loss)
(486)
(658)
Total equity
19,483
20,256
Total liabilities and equity
$
81,622
$
80,173
3Q 2026 Results
5
PayPal Holdings, Inc.
Unaudited Condensed Consolidated Statements of Income (Loss)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
(In millions, except per share amounts)
Net revenues
$
8,584
$
8,417
$
25,619
$
24,496
Operating expenses:
Transaction expense
4,248
4,063
12,798
11,735
Transaction and credit losses
386
483
1,161
1,330
Customer support and operations
434
447
1,342
1,258
Sales and marketing
508
521
1,572
1,592
Technology and development
831
801
2,473
2,299
General and administrative
520
513
1,514
1,477
Restructuring and other
255
69
442
251
Total operating expenses
7,182
6,897
21,302
19,942
Operating income
1,402
1,520
4,317
4,554
Other income (expense), net
(28)
13
(240)
111
Income before income taxes
1,374
1,533
4,077
4,665
Income tax expense
301
285
787
869
Net income (loss)
$
1,073
$
1,248
$
3,290
$
3,796
Net income (loss) per share:
Basic
$
1.26
$
1.31
$
3.74
$
3.92
Diluted
$
1.25
$
1.30
$
3.71
$
3.88
Weighted average shares:
Basic
849
950
880
968
Diluted
858
960
887
978
3Q 2026 Results
6
PayPal Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
(In millions)
Cash flows from operating activities:
Net income (loss)
$
1,073
$
1,248
$
3,290
$
3,796
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Transaction and credit losses
386
483
1,161
1,330
Depreciation and amortization
251
245
735
729
Stock-based compensation
233
257
767
792
Deferred income taxes
85
182
(90)
93
Net (gains) losses on strategic investments
6
(10)
181
(69)
Accretion of discounts on investments, net of amortization of premiums
(2)
(20)
(21)
(77)
Adjustments to loans and interest receivable, held for sale
80
70
206
122
Other
37
52
116
(245)
Originations of loans receivable, held for sale
(12,647)
(9,682)
(36,426)
(24,040)
Proceeds from repayments and sales of loans receivable, originally classified as held for sale
12,185
9,048
35,558
23,160
Changes in assets and liabilities:
Accounts receivable
46
126
124
11
Transaction loss allowance for cash losses, net
(378)
(419)
(980)
(1,074)
Other current assets and non-current assets
121
18
178
(371)
Accounts payable
(55)
44
(53)
(6)
Other current liabilities and non-current liabilities
171
332
(37)
(119)
Net cash provided by operating activities
1,592
1,974
4,709
4,032
Cash flows from investing activities:
Purchases of reverse repurchase agreements
(10)
—
(10)
(201)
Maturities of reverse repurchase agreements
10
—
10
288
Purchases of property and equipment
(161)
(256)
(600)
(658)
Proceeds from sales of property and equipment
2
—
21
3
Purchases and originations of loans receivable
(4,296)
(4,414)
(12,322)
(15,904)
Proceeds from repayments and sales of loans receivable, originally classified as held for investment
4,067
4,735
11,662
15,945
Purchases of investments
(5,572)
(4,387)
(18,555)
(15,951)
Maturities and sales of investments
4,559
7,432
14,218
19,027
Acquisitions, net of cash acquired
—
—
(122)
—
Funds receivable
408
1,553
(416)
(1,232)
Collateral posted related to derivative instruments, net
(2)
109
134
(207)
Other
—
—
—
(15)
Net cash provided by (used in) investing activities
(995)
4,772
(5,980)
1,095
Cash flows from financing activities:
Borrowings from repurchase agreements
27
2,544
27
2,949
Repayments of repurchase agreements
(27)
(2,544)
(27)
(2,949)
Proceeds from issuance of common stock
—
—
60
74
Purchases of treasury stock
(1,501)
(1,500)
(4,553)
(4,551)
Tax withholdings related to net share settlements of equity awards
(53)
(68)
(238)
(317)
Borrowings under financing arrangements
410
746
3,924
2,237
Repayments under financing arrangements
(424)
(747)
(2,100)
(1,954)
Funds payable and amounts due to customers
(815)
(250)
508
663
Collateral received related to derivative instruments and reverse repurchase agreements, net
11
(10)
129
(155)
Payments of dividends to stockholders
(118)
—
(370)
—
Other
—
—
(6)
(6)
Net cash used in financing activities
(2,490)
(1,829)
(2,646)
(4,009)
3Q 2026 Results
7
PayPal Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows—(continued)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
(In millions)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
9
(44)
(12)
245
Net change in cash, cash equivalents, and restricted cash
(1,884)
4,873
(3,929)
1,363
Cash, cash equivalents, and restricted cash at beginning of period
21,973
18,980
24,018
22,490
Cash, cash equivalents, and restricted cash at end of period
$
20,089
$
23,853
$
20,089
$
23,853
Supplemental cash flow disclosures:
Cash paid for interest
$
18
$
19
$
230
$
210
Cash paid for income taxes, net
$
195
$
196
$
420
$
1,033
3Q 2026 Results
8
PayPal Holdings, Inc.
Unaudited Summary of Consolidated Net Revenues
Our revenues are classified into the following two categories:
•Transaction revenues: Net transaction fees charged to merchants and consumers on a transaction basis based on the TPV completed on our payments platform. Growth in TPV is directly impacted by the number of payment transactions that we enable on our payments platform. We generate additional revenue from merchants and consumers: on transactions where we perform currency conversion, when we enable cross-border transactions (i.e., transactions where the merchant and consumer are in different countries), when we facilitate the instant transfer of funds for our customers from their PayPal or Venmo account to their bank account or debit card, when we facilitate the purchase and sale of cryptocurrencies, as contractual compensation from sellers that violate our contractual terms (for example, through fraud or counterfeiting), and other miscellaneous fees.
•Revenues from other value added services: Net revenues derived primarily from revenue earned through partnerships, referral fees, subscription fees, gateway fees, and other services we provide to our consumers and merchants. We also earn revenues from interest and fees earned on our portfolio of loans receivable, and interest earned on certain assets underlying customer balances.
Net Revenues by Type
Three Months Ended
September 30, 2026
June 30, 2026
March 31, 2026
December 31, 2025
September 30, 2025
(In millions, except percentages)
Transaction revenues
$
7,711
$
7,832
$
7,501
$
7,819
$
7,522
Current quarter vs prior quarter
(2)
%
4
%
(4)
%
4
%
1
%
Current quarter vs prior year quarter
3
%
5
%
7
%
3
%
6
%
Percentage of total
90
%
90
%
90
%
90
%
89
%
Revenues from other value added services
$
873
$
850
$
852
$
857
$
895
Current quarter vs prior quarter
3
%
—
%
(1)
%
(4)
%
6
%
Current quarter vs prior year quarter
(2)
%
—
%
10
%
10
%
15
%
Percentage of total
10
%
10
%
10
%
10
%
11
%
Total net revenues
$
8,584
$
8,682
$
8,353
$
8,676
$
8,417
Current quarter vs prior quarter
(1)
%
4
%
(4)
%
3
%
2
%
Current quarter vs prior year quarter
2
%
5
%
7
%
4
%
7
%
Net Revenues by Geography
Three Months Ended
September 30, 2026
June 30, 2026
March 31, 2026
December 31, 2025
September 30, 2025
(In millions, except percentages)
U.S. net revenues
$
5,002
$
5,048
$
4,882
$
4,943
$
4,753
Current quarter vs prior quarter
(1)
%
3
%
(1)
%
4
%
1
%
Current quarter vs prior year quarter
5
%
7
%
9
%
4
%
5
%
Percentage of total
58
%
58
%
58
%
57
%
56
%
International net revenues
$
3,582
$
3,634
$
3,471
$
3,733
$
3,664
Current quarter vs prior quarter
(1)
%
5
%
(7)
%
2
%
2
%
Current quarter vs prior year quarter
(2)
%
2
%
4
%
3
%
10
%
(FXN) Current quarter vs prior year quarter
(4)
%
(3)
%
—
%
1
%
7
%
Percentage of total
42
%
42
%
42
%
43
%
44
%
Total net revenues
$
8,584
$
8,682
$
8,353
$
8,676
$
8,417
Current quarter vs prior quarter
(1)
%
4
%
(4)
%
3
%
2
%
Current quarter vs prior year quarter
2
%
5
%
7
%
4
%
7
%
(FXN) Current quarter vs prior year quarter
1
%
3
%
5
%
3
%
6
%
3Q 2026 Results
9
PayPal Holdings, Inc.
Unaudited Supplemental Operating Data
Three Months Ended
September 30, 2026
June 30, 2026
March 31, 2026
December 31, 2025
September 30, 2025
(In millions, except percentages)
Active accounts(1)
440
439
439
439
438
Current quarter vs prior quarter
—
%
—
%
—
%
—
%
—
%
Current quarter vs prior year quarter
1
%
—
%
1
%
1
%
1
%
Number of payment transactions(2)
6,796
6,750
6,475
6,754
6,331
Current quarter vs prior quarter
1
%
4
%
(4)
%
7
%
2
%
Current quarter vs prior year quarter
7
%
8
%
7
%
2
%
(5)
%
Payment transactions per active account(3)
60.8
60.0
58.7
57.7
57.6
Current quarter vs prior quarter
1
%
2
%
2
%
—
%
(1)
%
Current quarter vs prior year quarter
6
%
3
%
(1)
%
(5)
%
(6)
%
TPV(4)
$
487,138
$
486,448
$
463,955
$
475,135
$
458,088
Current quarter vs prior quarter
—
%
5
%
(2)
%
4
%
3
%
Current quarter vs prior year quarter
6
%
10
%
11
%
9
%
8
%
(FXN) Current quarter vs prior year quarter
7
%
9
%
8
%
6
%
7
%
Transaction Expense Rate(5)
0.87
%
0.90
%
0.90
%
0.89
%
0.89
%
Transaction and Credit Loss Rate(6)
0.08
%
0.08
%
0.08
%
0.08
%
0.11
%
Transaction Margin(7)
46.0
%
44.9
%
45.6
%
46.5
%
46.0
%
Amounts in the table are rounded to the nearest million, except as otherwise noted. As a result, certain amounts may not recalculate using the rounded amounts provided.
(1) An active account is an account registered directly with PayPal or a platform access partner that has completed a transaction on our platform, not including gateway-exclusive transactions, within the past 12 months. A platform access partner is a third party whose customers are provided access to PayPal’s platform or services through such third-party’s login credentials, including individuals and entities that utilize Hyperwallet’s payout capabilities. A user may register on our platform to access different products and may register more than one account to access a product. Accordingly, a user may have more than one active account. The number of active accounts provides management with additional perspective on the overall scale of our platform, but may not have a direct relationship to our operating results.
(2) Number of payment transactions is the total number of payments, net of payment reversals, successfully completed on our payments platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
(3) Number of payment transactions per active account reflects the total number of payment transactions within the previous 12-month period, divided by active accounts at the end of the period. The number of payment transactions per active account provides management with insight into the average number of times an account engages in payments activity on our payments platform in a given period. The number of times a consumer account or a merchant account transacts on our platform may vary significantly from the average number of payment transactions per active account.
(4) TPV is the value of payments, net of payment reversals, successfully completed on our payments platform or enabled by PayPal via a partner payment solution, not including gateway-exclusive transactions.
(5) Transaction expense rate is transaction expense divided by TPV.
(6) Transaction and credit loss rate is transaction and credit losses divided by TPV.
(7) Transaction margin is a non-GAAP financial measure. Transaction margin is net revenues less transaction expense and transaction and credit losses, divided by net revenues. Subsequent tables at the end of this press release provide reconciliation to the closest GAAP measure.
3Q 2026 Results
10
PayPal Holdings, Inc.
Non-GAAP Measures of Financial Performance
To supplement the company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, transaction margin dollars, transaction margin dollars excluding interest on customer balances, non-GAAP operating margin, transaction margin, non-GAAP effective tax rate, free cash flow, and adjusted free cash flow.
These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP. These measures should be used to evaluate the company’s results of operations only in conjunction with the corresponding GAAP measures.
Reconciliation of all non-GAAP measures to the most directly comparable GAAP measures can be found in the subsequent tables included in this press release. PayPal does not reconcile forward-looking non-GAAP guidance because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated.
These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance and its prospects for the future. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses, as the case may be, that may not be indicative of its core operating results and business outlook. In addition, because the company has historically reported certain non-GAAP results to investors, the company believes that the inclusion of non-GAAP measures provides consistency in the company’s financial reporting.
For its internal budgeting process, and as discussed further below, the company’s management uses financial measures that do not include amortization or impairment of acquired intangible assets, impairment of goodwill, transaction expenses from the acquisition or disposal of a business, restructuring-related charges, gains and losses on strategic investments including related crypto assets held for investment, certain other gains, losses, benefits, or charges that are not indicative of the company’s core operating results, and the income taxes associated with the foregoing. In addition to the corresponding GAAP measures, the company’s management also uses the foregoing non-GAAP measures in reviewing the financial results of the company.
The company excludes the following items from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, non-GAAP operating margin, and non-GAAP effective tax rate:
Amortization or impairment of acquired intangible assets, impairment of goodwill, and transaction expenses from the acquisition or disposal of a business. We incur amortization or impairment of acquired intangible assets and goodwill in connection with acquisitions and may incur significant gains or losses or transactional expenses from the acquisition or disposal of a business and therefore exclude these amounts from our non-GAAP measures. We exclude these items because management does not believe they are reflective of our ongoing operating results.
Restructuring. These consist of expenses related to workforce reduction including employee severance and benefits costs and stock-based compensation expense, real estate and facilities charges, other asset impairments, accelerated depreciation charges, and other restructuring costs including non-recurring third-party costs. The company excludes significant restructuring charges primarily because management does not believe they are reflective of ongoing operating results as they are not normal, recurring cash operating expenses necessary to operate our business.
Gains and losses on strategic investments including related crypto assets held for investment. The gains and losses we record on our strategic investments are tied to the performance of the portfolio companies. The gains and losses we record on crypto assets held for investment are influenced by factors like market sentiment including trading, regulatory changes, and underlying company performance. We exclude such gains and losses in full because we do not actively trade our strategic investments or crypto assets nor do we rely on them to fund our ongoing operations.
Certain other significant gains, losses, benefits, or charges that are not indicative of the company’s core operating results. These are significant gains, losses, benefits, or charges during a period that are the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. The company excludes these amounts from its non-GAAP results because management does not believe they are indicative of our current or ongoing operating results.
Tax effect of non-GAAP adjustments. This adjustment is made to present the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.
Transaction margin dollars represents operating income, excluding the following expenses: (i) Customer support and operations, (ii) Sales and marketing, (iii) Technology and development, (iv) General and administrative, and (v) Restructuring and other. Transaction margin dollars is a measure used by management to evaluate the economic value generated by activity on the company’s platform, including the impact of transaction and credit losses. Accordingly, we believe that transaction margin dollars provides useful information to investors and others in understanding and evaluating our financial results in the same manner as management. Transaction margin dollars can also be calculated as total net revenues less transaction expense and transaction and credit losses.
Transaction margin dollars excluding interest on customer balances: Interest earned on certain assets underlying customer account balances is primarily driven by the movement in interest rates and level of account balances. The company excludes interest revenue earned on customer balances from transaction margin dollars because the impact of changes in interest rates on customer balances is not within the company’s control. Management uses this metric to further isolate the economic value generated by activity on the company’s platform.
3Q 2026 Results
11
PayPal Holdings, Inc.
Non-GAAP Measures of Financial Performance—(continued)
Free cash flow represents operating cash flows less purchases of property and equipment. The company uses free cash flow as a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property, buildings, and equipment, which can then be used to, among other things, invest in the company’s business, make strategic acquisitions and investments, and repurchase stock. Adjusted free cash flow excludes the net timing impact between originating loan receivables as held for sale and the subsequent repayment and sale of receivables from free cash flow. Excluding this activity provides a clearer picture of the cash generated by the business. A limitation of the utility of free cash flow or adjusted free cash flow as measures of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.
In addition to the non-GAAP measures discussed above, the company also analyzes certain measures, including net revenues and operating expenses, on an FX-neutral basis to better measure the comparability of operating results between periods. The company believes that changes in foreign currency exchange rates are not indicative of the company’s operations and evaluating growth in net revenues and operating expenses on an FX-neutral basis provides an additional meaningful and comparable assessment of these measures to both management and investors. FX-neutral results are calculated by translating the current period’s local currency results with the prior period’s exchange rate. FX-neutral growth rates are calculated by comparing the current period’s FX-neutral results by the prior period’s results, excluding the impact from hedging activities.
3Q 2026 Results
12
PayPal Holdings, Inc.
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income, Transaction Margin Dollars, and Transaction Margin Dollars Ex-Interest on Customer Balances and
GAAP Operating Margin to Non-GAAP Operating Margin and Transaction Margin
Three Months Ended September 30,
2026
2025
(In millions, except percentages)
(unaudited)
GAAP operating income
$
1,402
$
1,520
Amortization of acquired intangible assets
33
47
Restructuring
178
1
Total non-GAAP operating income adjustments
211
48
Non-GAAP operating income
$
1,613
$
1,568
Transaction margin adjustments:
Customer support and operations
434
447
Sales and marketing
485
482
Technology and development
829
800
General and administrative
512
506
Restructuring and other
77
68
Non transaction-related expense
2,337
2,303
Transaction margin dollars
3,950
3,871
Interest on customer balances
289
321
Transaction margin dollars ex-interest on customer balances
$
3,661
$
3,550
GAAP net revenues
$
8,584
$
8,417
GAAP operating margin
16
%
18
%
Non-GAAP operating margin
19
%
19
%
Transaction margin
46
%
46
%
3Q 2026 Results
13
PayPal Holdings, Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income, GAAP Diluted EPS to Non-GAAP Diluted EPS, and
GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate
Three Months Ended September 30,
2026
2025
(In millions, except per share data and percentages)
(unaudited)
GAAP income before income taxes
$
1,374
$
1,533
GAAP income tax expense
301
285
GAAP net income (loss)
1,073
1,248
Non-GAAP adjustments to net income (loss):
Non-GAAP operating income adjustments (see table above)
211
48
Net (gains) losses on strategic investments and crypto assets held for investment
3
(9)
Tax effect of non-GAAP adjustments
(42)
1
Non-GAAP net income
$
1,245
$
1,288
Diluted net income (loss) per share:
GAAP
$
1.25
$
1.30
Non-GAAP
$
1.45
$
1.34
Shares used in GAAP diluted share calculation
858
960
Shares used in non-GAAP diluted share calculation
858
960
GAAP effective tax rate
22
%
19
%
Tax effect of non-GAAP adjustments to net income (loss)
—
%
(1)
%
Non-GAAP effective tax rate
22
%
18
%
Reconciliation of Operating Cash Flow to Free Cash Flow and Adjusted Free Cash Flow
Three Months Ended September 30,
2026
2025
(In millions)
(unaudited)
Net cash provided by operating activities
$
1,592
$
1,974
Less: Purchases of property and equipment
(161)
(256)
Free cash flow
1,431
1,718
Net timing impact for loan receivables held for sale
