PayPal reports Q4 revenue of $8.68B, missing the $8.80B estimate

PayPal’s stock collapsed 20% on Tuesday after it delivered weak Q4 earnings, missed revenue expectations, and warned about a sluggish year ahead.

The company pulled in $8.68 billion in revenue for the quarter, missing Wall Street’s forecast of $8.80 billion. That wasn’t all. Adjusted profit came in at $1.23 per share, shy of the $1.28 analysts had penciled in.

On the same day, the company kicked out its CEO Alex Chriss, who had only been in the seat since 2023. He was hired to fix slowing growth and hold off brutal competition from tech giants and newer fintechs. Apparently, he didn’t deliver.

The board said his “pace of change and execution” wasn’t fast enough. HP’s Enrique Lores will now take over as CEO starting March 1. Until then, CFO Jamie Miller is holding the reins.

PayPal Q4 performance shows weak margins and missed targets

Net revenue for Q4 2025 rose 4% to $8.68 billion, but that still didn’t hit the target. On a currency-neutral basis, growth was just 3%.

PayPal’s GAAP operating income climbed to $1.5 billion, up 5%, while non-GAAP operating income rose 3% to $1.6 billion. Margins were mixed, as GAAP margin improved slightly to 17.4%, but non-GAAP margin dropped 9 basis points to 17.9%.

GAAP earnings per share jumped 38% year-over-year to $1.53, while non-GAAP EPS only grew 3% to $1.23. This was one of the key reasons for the market’s brutal reaction. Transaction margin dollars also edged up 3% to $4.03 billion, but when you take out interest from customer balances, that only went up 4%, hitting $3.74 billion.

PayPal’s total payment volume (TPV) hit $475.1 billion, up 9% from the same quarter a year ago. However, payment transactions only rose 2%, totaling 6.8 billion. If you exclude payment service provider (PSP) volumes, transactions were up 6%, reaching 4.3 billion.

Trailing 12-month payment transactions per active account dropped 5% to 57.7, but excluding PSPs, that stat actually rose 5%. The number of active accounts increased by 1.1% to 439 million, adding 1.2 million sequentially.

Full-year numbers show slow revenue, weak cash, and soft guidance

For the entire fiscal year 2025, PayPal reported $33.2 billion in revenue, up 4% from 2024. Total payment volume hit $1.79 trillion, up 7%, and full-year GAAP EPS was $5.41, a 35% increase. Non-GAAP EPS was $5.31, up 14%. But despite these increases, net cash from operations fell by 14%, from $7.45 billion to $6.42 billion.

Free cash flow took a beating too. It fell 18% to $5.56 billion. Adjusted free cash flow came in at $6.41 billion, down 3%. The company blamed this partly on the timing impact of its Buy Now, Pay Later (BNPL) operations, specifically the way receivables were held and sold.

PayPal ended the year with $14.8 billion in cash, equivalents, and investments. Debt stood at $11.6 billion. The company bought back 23 million shares in Q4, returning $1.5 billion to investors. Over 12 months, it returned $6.0 billion via 86 million shares repurchased.

The board also declared a cash dividend of $0.14 per share, payable on March 25, 2026, to those holding stock as of March 4. The plan is to keep issuing quarterly dividends, but the board made clear that it depends on market conditions and its own discretion.

2026 forecast disappoints with lower earnings projections

Looking ahead, PayPal’s 2026 guidance gave investors no reason to stay bullish. For Q1 2026, GAAP earnings per share are expected to fall by mid-single digits from $1.29 last year. Non-GAAP EPS is also projected to decline from $1.33.

For the full year, GAAP EPS is expected to come in lower than $5.41, with a mid-single digit drop. Non-GAAP EPS is projected to be flat or slightly positive compared to the $5.31 posted in 2025. That’s basically a stall in earnings growth.

“Our execution has not been where it needs to be, particularly in branded checkout,” Jamie said. She tried to add that the company has been growing across several areas but admitted that wasn’t enough. “We are fully aligned on the path forward as PayPal enters its next chapter of growth,” she said.

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