PayPal earnings: guidance and results
PayPal's next results are expected on October 27, 2026. Watch whether branded-checkout growth improves while investment affects margins.
What has PayPal guided for 2026?
Transaction margin shows the strength of the payments engine. It is the money left from payment activity after direct processing costs and credit losses, but before expenses such as marketing and administration. A shop that collects $100, spends $55 on delivery and processing, and has $45 left before rent has created something like transaction margin. PayPal expects $15.6 billion of transaction margin for the year, or $14.5 billion excluding interest on customer balances. Removing interest gives a clearer view of payment performance because that income depends on interest rates and customer account balances.
Management expects non-GAAP non-transaction operating expenses to grow 7.0% to 8.0%, with an effective tax rate of 18.0% to 20.0%. It also expects adjusted free cash flow of $6.0 billion, plans $6.0 billion of share repurchases and expects $1.0 billion of capital spending. The test is whether checkout improves enough to support these plans while investment runs ahead of savings.
| Period guided | Low | High | Date given | |
|---|---|---|---|---|
| Transaction margin $ | Year to Dec 2026 | 15,600 | 15,600 | Jul 28, 2026 |
| TM$ ex. interest on customer balances | Year to Dec 2026 | 14,500 | 14,500 | Jul 28, 2026 |
| Non-GAAP non-transaction operating expenses | Year to Dec 2026 | 7.0% | 8.0% | Jul 28, 2026 |
| Non-GAAP effective tax rate | Year to Dec 2026 | 18.0% | 20.0% | Jul 28, 2026 |
| Non-GAAP EPS | Year to Dec 2026 | 5.38 | 5.38 | Jul 28, 2026 |
| Adjusted free cash flow | Year to Dec 2026 | 6,000 | Jul 28, 2026 |
What this means. The company gives two transaction-margin figures because one includes interest earned on customer balances and the other leaves that interest out, even though both include lending.
What are PayPal's last eight quarters showing?
Revenue rose year over year, while operating income fell. Operating margin contracted 171 basis points to 16.4%. Net income and diluted EPS also declined because transaction expenses and other operating costs grew faster than revenue.
| Jun 2026 | Mar 2026 | Dec 2025 | Sep 2025 | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 8,682 | 8,353 | 8,676 | 8,417 | 8,288 | 7,791 | 8,366 | 7,847 |
| Operating income | 1,427 | 1,488 | 1,511 | 1,520 | 1,504 | 1,530 | 1,441 | 1,391 |
| Net income | 1,104 | 1,113 | 1,437 | 1,248 | 1,261 | 1,287 | 1,121 | 1,010 |
| EPS, diluted | 1.25 | 1.21 | 1.53 | 1.30 | 1.29 | 1.29 | 1.11 | 0.99 |
What this means. Free cash flow includes PayPal's lending business, so it also counts cash from lending customers money, not just cash from payment services.
What should PayPal watchers watch next?
The first checkpoint is Q3 earnings on October 27. Investors will compare revenue and EPS with expectations, but the more important evidence will be branded-checkout growth, customer engagement and the effect of investment on margins. Management expects savings to become more material in the fourth quarter, so later reports must show whether costs fall without starving the business of investment.
The long-term test is simple: checkout growth, customer engagement, savings achieved and continued loan-sale funding must improve together. PayPal’s newer ideas may matter later, but the next chapter will be decided first by whether the company can repair its core business while paying for the repair.