PayPal’s Q2 Beat, Solid FY26 Guidance Reflects Turnaround Momentum Says Analyst

PayPal Holdings Inc (NASDAQ: PYPL ) reported its second-quarter (Q2) results ahead of expectations and raised its full-year outlook.

Here are the key analyst takeaways: Needham analyst Mayank Tandon reaffirmed a Hold rating on the stock.

Macquarie Equity Research analyst Paul Golding maintained a Neutral rating and price target of $62.

Check out other analyst stock ratings.

Needham: PayPal’s Q2 beat and raised outlook indicate "further stabilization in branded checkout and continued momentum across Venmo, PSP, and financial services" resulting from the company’s transformation plan, Tandon said in a note.

While the company’s revenues grew 5% year-on-year to $8.68 billion, non-GAAP earnings contracted 1% year-on-year to $1.38 per share, with both figures topping consensus estimates of $8.47 billion and $1.28 per share, respectively, he added.

The analyst highlighted other metrics from PayPal’s Q2 results: TPV (total payment volume) grew 10% year-on-year to $486.4 billion, ahead of Needham’s $470.2 billion estimate.

Venmo TPV grew 14% year-on-year.

PSP volumes rose 13% year-on-year on mid-teens Braintree growth.

Active accounts remained flat at 439 million.

Monthly active accounts grew 1% year-on-year to 228 million.

Transaction margin of 44.9% topped Needham’s 44.1% estimate.

PayPal announced "solid" guidance for the full year, Tandon said.

Management raised TMD (transaction margin dollars) and non-GAAP earnings outlook to around $15.6 billion and $5.38 per share, respectively, while lifting its online branded checkout outlook, he added.

While declining to comment on the recent takeover speculations, CEO Enrique Lores said that the board "remains open and objective and would carefully consider any path that creates superior shareholder value versus the current plan, though its focus stays on executing on the transformation plan," the analyst further wrote.

Macquarie Equity Research: PayPal’s earnings quality improved.

Golding credits growth to Venmo, PSP, BNPL (buy now pay later) and credit, alongside lower losses and ongoing share repurchases.

Growth in transaction margin dollars continued to lag revenue growth due to mix headwinds and ongoing investments in checkout and BNPL, he added. "While near-term margins remain pressured by elevated reinvestment, stabilizing branded checkout trends and improving diversification of growth drivers provide early evidence that the transformation strategy is beginning to gain traction," the analyst further wrote.

PYPL Price Action: Shares of PayPal had risen by 0.39% to $58.55 at the time of publication on Wednesday.

Read Also: PayPal Raises Outlook After Strong Quarter, Says Turnaround Is Well Underway Image: Shutterstock