PayPal Shares Fall as Q4 Earnings & Revenues Miss Estimates

Core Insights - PayPal Holdings reported Q4 2025 non-GAAP EPS of $1.23, missing the Zacks Consensus Estimate of $1.29, but showing a 3.4% year-over-year increase [1][9] - Following the earnings report, PayPal shares fell approximately 18% on the NYSE due to lower-than-expected revenue growth and a decline in payment transactions per active account [2][9] Revenue Performance - Net revenues reached $8.68 billion, a 3.7% year-over-year increase, but fell short of the Zacks Consensus Estimate of $8.77 billion [3] - Total Payment Volume (TPV) was $475.14 billion, up 8.5% year-over-year, while transaction margin dollars grew 2.5% to $4.03 billion [4] - Transaction revenues accounted for $7.82 billion (90.1% of net revenues), increasing 3% year-over-year, while Value Added Services revenues rose 10.2% to $857 million [5] Active Accounts and Transactions - Total active accounts increased by 1.2% year-over-year to 439 million, with total payment transactions reaching 6.75 billion, a 2% increase [6] - However, payment transactions per active account decreased by 4.8% to 57.7 [6][9] Operating Expenses and Margins - Operating expenses for Q4 were $7.17 billion, up 3.5% year-over-year, with a transaction expense rate of 0.89% [7] - The transaction margin shrank by 50 basis points to 46.5% [7] Financial Position - As of December 31, 2025, cash, cash equivalents, and investments totaled $14.8 billion, an increase from $14.4 billion as of September 30, 2025 [8] - Long-term debt stood at $10 billion [8] Future Guidance - For Q1 2026, PayPal anticipates a mid-single-digit decline in non-GAAP EPS and a slight decline in transaction margin dollars [11] - For the full year 2026, non-GAAP EPS is expected to range from a low-single-digit decline to slight growth, with adjusted free cash flow projected to exceed $6 billion [11][12]