PayPal (PYPL) raised its full-year adjusted earnings guidance after reporting second-quarter results above Wall Street's views, sending the payments company's shares higher Tuesday.
The company now expects 2026 non-GAAP earnings of about $5.38 a share, versus its prior outlook range of a low-single-digit decline to slightly positive. Analysts polled by FactSet are looking for $5.32. PayPal now projects transaction margin dollars to increase to about $15.6 billion, compared with its previous expectations of a "slight decline."
Second-quarter non-GAAP EPS decreased to $1.38 from $1.40 a year earlier, beating the Street's $1.28 estimates. Net revenue rose 5% to $8.68 billion, also topping the Street's view for $8.47 billion. Payment volume surged 10% to $486.45 billion, while the number of payment transactions rose 8% to 6.75 billion.
"During the second quarter, we made meaningful progress on our reorganization and sharpened our view of the highest-impact actions needed to accelerate our growth strategy," Chief Financial and Operating Officer Jamie Miller said on an earnings conference call, according to a FactSet transcript
"At the same time, we saw stronger-than-expected underlying business performance, including transaction margin trends," Miller told analysts. "Against that backdrop, we have invested more heavily in a number of high-priority areas, which helped drive higher non-transaction-related operating expense in the quarter and will continue into third quarter."
PayPal shares were up 4.7% in afternoon trade.
"We are making good progress on our plan to deliver at least $1.5 billion of gross run-rate savings over the next two to three years," Chief Executive Enrique Lores said on the call. "This work will power our next chapter of growth by creating a more focused organization, modernizing our technology platform, and improving our cost structure."
For the ongoing quarter, PayPal expects a low-single digit decline in non-GAAP EPS, while transaction margin dollars will be slightly positive.
Earlier this month, Reuters reported, citing unnamed sources, that private equity firm Advent International and Stripe made a joint offer to acquire PayPal in a transaction that would value the payments company at north of $53 billion.
Lores said Tuesday the company doesn't comment on market speculation or potential M&A discussion.
"Our board and management team are open and have a clear responsibility to objectively evaluate every opportunity that is presented to us, compare it with our own plan and choose the options that creates more value," Lores told analysts. "Today, because of all the work that we have done over the last three months and because of the status of the business, we have a very clear view of the value that we can create in the coming years."
Price: $58.46, Change: $+2.39, Percent Change: +4.26%
