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    PYPL
    Earnings call· Jun 2025(Q2 FY25)

    PayPal Holdings Q2 FY25 earnings call PYPL

    Jul 29, 2025 Source

    Executive summary

    PayPal Q2 FY25 — Strong Profitable Growth and Strategic Momentum

    PayPal delivered strong profitable growth in Q2 FY25, driven by momentum in branded experiences, Venmo, and PSP. The company is transforming into a dynamic commerce platform, leveraging its scale and trusted brands to innovate across online, offline, and emerging technologies like AI and stablecoins. Strategic initiatives are gaining traction, positioning PayPal for accelerated growth in line with its 3-year outlook, despite some macro uncertainties and working capital timing shifts.

    Highlights

    5

    • Transaction margin dollars grew 8% year-over-year, excluding interest on customer balances.

    • Non-GAAP earnings per share increased 18% year-over-year.

    • Venmo revenue grew more than 20%, with TPV up 12% (highest growth rate in 3 years).

    • Buy Now, Pay Later (BNPL) volume grew more than 20%, and monthly active accounts climbed 18%.

    • Debit card TPV across PayPal and Venmo grew more than 60%, with monthly active accounts up more than 65%.

    Concerns

    4

    • Adjusted free cash flow was negatively impacted by timing shifts in working capital.

    • Transaction take rate declined by 4 basis points.

    • Higher transaction losses, with a 9 bps uptick in the quarter, due to normalization and new product introductions.

    • Branded online checkout TPV growth was impacted by a 1% headwind from tariffs on Asia-based marketplaces.

    Guidance & targets

    11
    CategoryTargetConfidence
    Currency-neutral revenue growth
    lower end of mid-single digits or approximately 4% or so
    high materiality
    High
    Transaction margin dollars
    $3.76 billion and $3.82 billion
    high materiality
    High
    Transaction margin dollars (excluding interest on customer balances)
    approximately 6% at the midpoint
    high materiality
    High
    Non-transaction OpEx growth
    up to high single-digit
    medium materiality
    High
    Non-GAAP earnings per share
    $1.18 to $1.22
    high materiality
    High
    Transaction margin dollars
    $15.35 billion and $15.5 billion
    high materiality
    High
    Transaction margin dollars (excluding interest on customer balances)
    6% to 7%
    high materiality
    High
    Non-GAAP earnings per share
    $5.15 to $5.30
    high materiality
    High
    Share buyback
    approximately $6 billion
    medium materiality
    High
    Free cash flow
    approximately $6 billion to $7 billion
    high materiality
    High
    Full year transaction loss run rate
    about 8 bps
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Branded Experiences
    Includes online checkout, PayPal and Venmo debit, and Tap to Pay. Driven by strong performance across its pillars.
    TPV growth: 8% currency-neutral
    		—8% currency-neutral——
    Online Branded Checkout
    Consistent with recent quarters, despite headwinds from platforms and merchants in Asia due to tariffs. Would have been 6% without tariff impact.
    TPV growth: 5% currency-neutral
    		—5% currency-neutral——
    Venmo
    Delivered highest revenue growth rate since 2023 and highest TPV growth rate in 3 years, driven by product innovations and marketing campaigns. Expanding acceptance for campus spending through Big 12 and Big Ten deals.
    Revenue growth: >20%TPV growth: 12%Pay with Venmo TPV growth: >45%Pay with Venmo monthly active accounts increase: ~25%
    		—>20%——
    PSP
    Volume growth in line with Q1. Braintree volume was roughly flat in the quarter, expected to return to growth in Q3 after strategic reset.
    Volume growth: 2%
    		—2%——

    Operational metrics

    27
    Transaction margin dollars (excluding interest on customer balances)
    8%YoY
    Q2 FY25

    Continuation of last quarter's momentum and meaningful improvement compared to the past 3 years.

    Non-GAAP operating income
    13%YoY
    Q2 FY25

    Driven by top line growth and cost discipline.

    Non-GAAP operating margin
    nearly 20%up 130 bps
    Q2 FY25

    Increased by approximately 130 basis points.

    Total active accounts
    438 millionup nearly 2 million from Q1
    Q2 FY25 end

    Continued steady progress.

    Monthly active accounts
    226 millionup 2% YoY
    Q2 FY25 end

    Continued steady progress.

    Transactions per active account (excluding PSP processing)
    4%YoY
    Q2 FY25

    More people using PayPal and Venmo more often.

    Total payment volume (TPV)
    $444 billion6% at spot and 5% currency-neutral
    Q2 FY25

    Overall company TPV.

    BNPL volume growth
    >20%YoY
    Q2 FY25

    BNPL continues to deliver strong growth quarter after quarter.

    BNPL monthly active accounts growth
    18%YoY
    Q2 FY25

    Strong growth in BNPL adoption.

    Pay with Venmo monthly active accounts increase
    ~25%YoY
    Q2 FY25

    As merchant network continues to broaden.

    Venmo debit card monthly active accounts growth
    >40%YoY
    Q2 FY25

    Result of newly redesigned and simplified onboarding.

    PayPal and Venmo debit card TPV growth
    >60%YoY
    Q2 FY25

    Strong momentum in omnichannel strategy.

    PayPal and Venmo debit card monthly active accounts growth
    >65%YoY
    Q2 FY25

    Strong momentum in omnichannel strategy.

    New PayPal and Venmo debit card users (U.S.)
    ~2 million
    Q2 FY25

    Adoption is strong and accelerating.

    PayPal Everywhere NFC enrollments (Germany)
    >3 million
    since launch in Q2 FY25

    Seeing impressive engagement trends early on.

    SMB volume on PayPal Complete Payments
    >50%
    Q2 FY25

    Notable improvement since last quarter.

    Transaction revenue
    $7.4 billion4% spot and currency-neutral
    Q2 FY25

    Accelerated growth.

    Transaction revenue (excluding Braintree)
    7%accelerated from 4% in Q1
    Q2 FY25

    Acceleration in growth.

    Net loan receivables
    $6.9 billionup 7% sequentially
    Q2 FY25 end

    Pleased with quality, diversification, and performance of credit portfolio.

    Transaction losses
    9 bpsuptick
    Q2 FY25

    Combination of normalization in loss rates and new product introductions.

    Non-transaction-related OpEx growth
    2%increase
    Q2 FY25

    Actively managing cost structure while reinvesting in key growth initiatives.

    Restructuring costs
    $92 million
    Q2 FY25

    Related to workforce actions and key tech transformation initiatives.

    Share repurchases
    $1.5 billion
    Q2 FY25

    Completed in the quarter.

    Share repurchases (last 4 quarters)
    $6 billion
    LTM Q2 FY25

    Total share repurchases over the past four quarters.

    Cash, cash equivalents and investments
    $13.7 billion
    Q2 FY25 end

    Balance at quarter end.

    Debt
    $11.5 billion
    Q2 FY25 end

    Balance at quarter end.

    Interest rate headwind
    ~2 points
    H2 FY25

    Expected impact on transaction margin dollars in Q3 and Q4 due to anticipated rate cuts.

    Industry KPIs

    4
    MetricValueDetails
    Capital returns$1.5 billionUSD
    Payments volume gdv$444 billionUSD
    Net revenue yield take rate1.68%%
    Value added services revenue$847 millionUSD

    Product announcements

    7
    ProductTypeDetails
    PayPal Worldlaunch
    PayPal Credit physical cardlaunch
    PayPal Everywhere (Germany)launch
    Off-site adslaunch
    Storefront adslaunch
    PYUSD expansionexpansion
    Pay with Crypto powered by PayPallaunch

    Deals & partnerships

    5
    Big 12 and Big Ten college athletic conferencesDistribution deals for institutional revenue share payments and Venmo acceptance on campus.

    College athletes can receive revenue share payments through PayPal or Venmo. Venmo brand embedded in college sports. Venmo acceptance for campus spending (bookstores, ticketing, concessions, merchandise).

    WixExpanded partnership to give merchants access to PayPal's full suite of payment tools.

    Deepens relationships with popular platforms for SMBs.

    Mercado Pago, Tenpay Global, UPIPartners in the PayPal World global platform for seamless cross-border transactions.

    Five of the largest digital wallets (PayPal, Venmo, Mercado Pago, Tenpay Global, UPI) coming together on a seamless global platform.

    Perplexity, Anthropic, SalesforceWorking with PayPal to create new agentic commerce experiences.

    Major players in AI collaborating with PayPal to enable customers to find products, check out directly within AI clients, and track purchases.

    Coinbase, Fiserv, MastercardCollaborating across the ecosystem to expand PYUSD's prominence.

    Partners in expanding PYUSD as a commerce-first stablecoin with a network of exchanges, custodians, and other payments partners.

    Risks & headwinds

    5
    Macro uncertainty and tariffsH2 FY25

    Low end of full year guidance could absorb up to a couple of points of deceleration in e-commerce spending. Branded online checkout TPV had a 1% headwind in Q2.

    Mitigation: Closely watching tariffs and other trading friction; focused on execution around strategic initiatives.

    Interest rate headwindsH2 FY25

    Expected ~2 points impact on transaction margin dollars, approximately $125 million, in Q3 and Q4.

    Mitigation: Factored into guidance.

    Tougher prior year comparison for credit growthH2 FY25

    Slightly less contribution from credit expected.

    Mitigation: Factored into guidance.

    Higher transaction lossesFY25

    9 bps uptick in Q2; full year run rate expected to be about 8 bps.

    Mitigation: Normalization of loss rates, working out issues with new product introductions, optimizing through AI and automation.

    Working capital timing shiftsQ2 FY25, expected to reverse in H2 FY25

    Negatively impacted adjusted free cash flow in Q2.

    Mitigation: Expected to reverse in the second half of the year.

    What to watch in Q3 FY25

    5

    Branded online checkout TPV growth

    Next few quarters and into '26
    Current5% currency-neutral (would have been 6% without tariff headwind)
    TargetAccelerated growth

    Why it matters

    This is a key indicator of core business health and the effectiveness of strategic initiatives to drive engagement and conversion.

    Bending the growth curve takes time for a company of our scale, but we remain confident that the actions we are taking today position us well to accelerate over time⏳.

    Q&A highlights

    8

    How meaningful was the tariff headwind on branded online checkout TPV in Q2, and is it stabilizing in July?

    Tariffs caused a 1% headwind, meaning branded checkout TPV would have been 6% without it. Less pressure is observed in July, and underlying trends are consistent. The company remains focused on execution to accelerate growth over time.

    “without that pressure, our branded checkout really would have been at 6%. And so it's a small amount, but we've started to see it stabilize a little bit as we get into this month.”

    asked by Ramsey El-Assal · answered by James Chriss

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation & Innovation

    PayPal is transitioning from a payments company to a dynamic commerce platform, focusing on anticipating customer needs across online, in-store, and AI agents. The company is building a system that integrates branded experiences, PSP profitability, and next-gen growth vectors like AI, ads, and crypto, with a significant acceleration in innovation pace. This strategy aims to leverage PayPal's scale and trusted brands to unlock new, personalized shopping experiences.

    02

    Branded Experiences Momentum

    Branded Experiences TPV grew 8% currency-neutral, driven by upgraded checkout experiences, strong BNPL growth, and Venmo's resurgence. Mid-teens percent of global transactions are now on the latest experience, with over 60% in the U.S., showing expected uplift. BNPL volume grew over 20% with 18% MAU growth, while Venmo revenue grew over 20% and TPV increased 12%. Omnichannel efforts, including debit cards and the PayPal Everywhere launch in Germany, are also showing strong adoption and engagement.

    03

    PayPal World Launch

    The company announced 'PayPal World,' a global platform connecting five major digital wallets: PayPal, Venmo, Mercado Pago, Tenpay Global, and UPI. This initiative aims to enable seamless cross-border transactions and expand access for PayPal merchants to billions of new customers through their existing branded checkout integrations. The platform is expected to go live beginning in the fall, maintaining current branded checkout economics for merchants.

    04

    PSP Business Inflection Point

    The PSP business, including Braintree, has reached a positive inflection point after a strategic reset to prioritize profitability over growth. Braintree volume was roughly flat in Q2, but is expected to return to growth in Q3, driven by profitable new business and value-added services like Hyperwallet Payouts. Over half of SMB volume now flows through PayPal Complete Payments, with recent expansion into Singapore and an expanded partnership with Wix.

    05

    Next-Gen Growth Vectors (AI, Ads, Crypto)

    PayPal is actively shaping the future of commerce through agentic AI partnerships with companies like Perplexity, Anthropic, and Salesforce. New ad products, including off-site and storefront ads, are expanding internationally to Germany and the U.K. The stablecoin PYUSD is positioned for cross-border transactions, with expanded availability on Stellar and Arbitrum, and the recent 'Pay with Crypto' announcement enabling instant conversion for over 100 cryptocurrencies.

    06

    Financial Performance & Capital Allocation

    The company delivered 8% transaction margin dollar growth (ex-interest) and 18% non-GAAP EPS growth, driven by top-line growth and cost discipline. Adjusted free cash flow was $656 million, with full-year FCF guidance maintained at $6 billion to $7 billion. Share repurchases totaled $1.5 billion in the quarter, bringing the trailing twelve-month total to $6 billion, demonstrating a focus on returning capital to shareholders.

    AI-generated summary of the company’s earnings call. Not investment advice.