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PayPal raised its full-year adjusted earnings forecast Tuesday as payment activity increased and its cost-cutting program advanced, even as third-quarter profit under standard accounting rules fell.
The payments company said it now expects adjusted earnings of about $5.60 a share in 2026, up from approximately $5.38 in its July outlook. It reaffirmed its standard-accounting earnings guidance, now expressed as about $5.07 a share.
The split between those measures is important. PayPal’s adjusted earnings per share rose 8% in the third quarter, but its adjusted net income fell 3%. A lower share count helped the per-share result: the company spent $1.5 billion repurchasing roughly 28 million shares during the quarter.
More payments, modest revenue growth
PayPal processed $487.1 billion in payments, an increase of 6% from a year earlier, or 7% excluding currency movements. Payment transactions rose 7% to 6.8 billion, while active accounts increased just 0.6% to 440 million.
That pattern points to greater activity across the platform rather than a large jump in its user base. Transactions per active account over the trailing 12 months rose 6% to 60.8, PayPal said.
Revenue increased 2% to $8.584 billion. PayPal’s earnings presentation said payment volume growth was driven primarily by double-digit growth at its Braintree processing business and mid-teens growth at Venmo. Branded checkout volume rose 1% on a currency-neutral basis, with improvement in the United States partly offset by pressure from tariff-related changes in Europe.
For merchants, the distinction is more useful than the headline payment total alone: processing more transactions does not automatically produce the same rate of revenue growth for the company handling them. PayPal’s transaction margin dollars, a non-GAAP measure of revenue after transaction costs and transaction and credit losses, rose 2% to $3.95 billion.
Job cuts and AI customer service
PayPal said in its presentation that it remains on track for more than $700 million in gross annualized cost savings by the end of 2026 and at least $1.5 billion over two to three years. Annualized savings describe the expected continuing pace of savings, not necessarily the amount already saved this year.
The company said it has reduced headcount by more than 2,000 and cut managerial roles by more than 25% as part of efforts to simplify its structure. Those are reductions reported in Tuesday’s update, not a separate announcement of another 2,000 future layoffs.
PayPal also said AI chat agents now support customer service across 190 countries and six languages and have resolved more than 24 million contacts year to date. Alongside vendor consolidation and changes in where it invests, the company counts that technology among the drivers of its cost plan.
Reported profit falls
Net income under generally accepted accounting principles fell 14% to $1.073 billion from $1.248 billion. Earnings declined to $1.25 a share from $1.30, and operating income fell 8% to $1.402 billion. The reported operating margin narrowed to 16.3% from 18.1%.
On an adjusted basis, operating income rose 3% to $1.613 billion and the operating margin increased to 18.8% from 18.6%. Adjusted earnings reached $1.45 a share, compared with $1.34 a year earlier. Adjusted figures exclude items included in the standard-accounting results and should not be treated as the same measure.
For the fourth quarter, PayPal forecast adjusted earnings of about $1.43 a share and standard-accounting earnings of approximately $1.37. It also declared a 14-cent quarterly dividend, payable December 24 to shareholders of record December 4.
JBizNews Desk | San Jose, California
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