Slug: paypal
Date: 2026-10-06
Industry: Digital Payments / Fintech
Accent: #003087
Status: Public (NASDAQ: PYPL). Audited annual figures in the 2025 Form 10-K; quarterly figures from the Q2 2026 Form 10-Q and earnings release (8-K Ex. 99.1, unaudited). Transaction margin dollars (TM$), non-GAAP EPS and adjusted free cash flow are company-defined non-GAAP measures.
| Metric | Value | Label | Source |
|---|---|---|---|
| TPV Q2 2026 | $486.4B, +10% (9% FXN); 6.8B payment transactions (+8%) | FACT | Q2 release |
| Revenue Q2 2026 | $8,682M (+5%; 3% FXN); transaction revenue $7,832M; OVAS $850M | FACT | Q2 release; 10-Q |
| Transaction revenue share | ≈90% ($7,832M / $8,682M) | INFERENCE | 10-Q |
| TM$ Q2 2026 | $3,900M (+1%); ex-interest on customer balances $3,619M (+3%); transaction margin 44.9% | FACT (non-GAAP) | Q2 release |
| Interest on customer balances | $281M Q2 2026 (vs $318M) | FACT | Q2 release |
| Take rate | Transaction take rate 1.61%, down 7 bps | FACT | Q2 call |
| Transaction expense rate | 90 bps of TPV Q2 2026 (mix shift to Braintree); 0.89% in 2025 | FACT | Q2 call; 10-K |
| Transaction loss rate | ~7 bps of TPV Q2 2026 | FACT | Q2 call |
| Operating income Q2 2026 | GAAP $1,427M (16.4% margin); non-GAAP $1,507M (−8%) | FACT | Q2 release |
| Growth by product Q2 2026 (FXN) | Online branded checkout +2%; Venmo TPV +14%; PSP +13%; Pay with Venmo +44%; BNPL +26%; debit + tap to pay >60%; branded experiences +6% | FACT | Q2 call |
| Accounts | 439M active (+0.3%); 228M monthly active (+1%); TPA ex-PSP +7% | FACT | Q2 release; call |
| Venmo engagement | Debit Card MAAs +50%+; Debit + Pay with Venmo users >9× ARPA of P2P-only; group ~doubled | FACT (company claim) | Q2 call |
| FY2025 | Revenue $33.2B (US $18.9B, ≈57% INFERENCE); TPV $1.79T (+7%); 25.4B transactions (−4%); adj. FCF $6.4B; Venmo revenue ~$1.7B (+~20%); BNPL TPV >$40B (+20%+) | FACT | 10-K; Annual Report |
| FY2025 costs | Transaction expense $15,987M of $27,107M total opex (≈59% INFERENCE); T&D $3,103M; S&M $2,283M (advertising $867M); G&A $1,979M; transaction & credit losses $1,720M; customer support $1,704M; restructuring $331M | FACT | 10-K |
| Employees | ~23,800 at Dec 31, 2025 (~9,600 US) | FACT | 10-K |
| Balance sheet | $15.3B cash & investments; $13.4B debt (Jun 30, 2026); $1.5B buybacks Q2, $6.0B TTM; $0.14 quarterly dividend | FACT | Q2 release |
| 2026 guidance (Jul 2026) | TM$ |
FACT | Q2 call |
| Transformation | ≥$1.5B gross run-rate savings over 2–3 years; ~$400M identified by YE2026; $120–140M possible charge 2H26; remove 3 org layers | FACT | Q2 call |
| CEO change | Board appointed Enrique Lores (board chair, ex-HP CEO) Feb 2, 2026, effective Mar 1; Alex Chriss out; Jamie Miller interim | FACT; SECONDARY (AP: execution “not met board expectations”) | 8-K; AP |
| BNPL funding | Blue Owl funds to buy ~$7B US Pay in 4 receivables over 2 years; PayPal keeps underwriting and servicing | FACT | PayPal release |
| Merchant fees (US) | PayPal Checkout / Pay with Venmo 3.49% + fixed; standard cards 2.99% + fixed; Advanced cards 2.19% + fixed; Pay Later 4.99% + fixed; goods & services 2.99%; QR 2.29% + fixed | FACT | Fee page |
| Consumer fees | Venmo Instant Transfer 1.75% ($0.25 min, $25 max); standard transfer free | FACT | Venmo fees |
A checkout button that shoppers trust → a two-sided network (439M accounts, $1.79T moved in 2025) that earns a slice of every payment → the profitable branded button stalls while lower-margin processing and Venmo grow → a new CEO bets on credit, Venmo monetization and cost cuts.
The lesson is “take rate minus funding cost.” In Q2 2026 PayPal charged about $1.61 per $100 of volume and paid about $0.90 per $100 to the banks and card networks behind each payment, plus ~7¢ in losses (FACT). Branded PayPal checkout (3.49% + fixed fee) is the high-margin product but grew only 2%; Braintree (unbranded card processing for big merchants) and Venmo grew in the mid-teens. Volume grew 10%, but transaction margin dollars grew only 1%. That gap is why the board replaced CEO Alex Chriss in Feb 2026, and why Enrique Lores is pushing credit and pay later (growing at least twice as fast as the company), Venmo debit and Pay with Venmo (9×+ revenue per user vs P2P-only), and at least $1.5B in gross savings. Risks to teach: shoppers moving to other wallets, the funding-cost mix, lower interest income on balances as rates fall, credit losses as lending grows, and slow growth in active accounts (+0.3%).
# PayPal — research brief **Slug:** paypal **Date:** 2026-10-06 **Industry:** Digital Payments / Fintech **Accent:** `#003087` **Status:** Public (NASDAQ: PYPL). Audited annual figures in the 2025 Form 10-K; quarterly figures from the Q2 2026 Form 10-Q and earnings release (8-K Ex. 99.1, unaudited). Transaction margin dollars (TM$), non-GAAP EPS and adjusted free cash flow are company-defined non-GAAP measures. ## Label key - **FACT** — SEC filings (2025 Form 10-K, 2025 Annual Report, Q2 2026 10-Q, Q2 2026 earnings release, Feb 3 2026 CEO 8-K), Q2 2026 earnings call transcript posted on investor.pypl.com, PayPal newsroom releases, PayPal US merchant fee page, Venmo fee page - **SECONDARY** — reputable press (AP News on the CEO change; Modern Retail on OpenAI’s Instant Checkout pullback) - **INFERENCE** — teaching ratio computed from FACT figures (labeled; not a reported metric) ## Primary sources (FACT) 1. Q2 2026 earnings release (Jul 28, 2026): https://www.sec.gov/Archives/edgar/data/1633917/000163391726000080/pypl2q-26earningsrelease.htm 2. Q2 2026 earnings call transcript: https://s205.q4cdn.com/875401827/files/doc_financials/2026/q2/PYPL-2Q-26-Earnings-Transcript.pdf 3. Q2 2026 Form 10-Q: https://www.sec.gov/Archives/edgar/data/1633917/000163391726000082/pypl-20260630.htm 4. 2025 Form 10-K: https://www.sec.gov/Archives/edgar/data/1633917/000163391726000024/pypl-20251231.htm 5. 2025 Annual Report: https://www.sec.gov/Archives/edgar/data/1633917/000119312526145735/d45512dars.pdf 6. CEO appointment (8-K Ex. 99.1, Feb 3, 2026): https://www.sec.gov/Archives/edgar/data/1633917/000119312526035860/d68718dex991.htm 7. Blue Owl BNPL receivables agreement (Sep 24, 2025): https://newsroom.paypal-corp.com/2025-09-24-PayPal-Announces-a-Multi-Year-Relationship-for-US-Buy-Now-Pay-Later-Receivables-with-Funds-Managed-by-Blue-Owl-Capital 8. OpenAI + PayPal agentic commerce (Oct 28, 2025): https://newsroom.paypal-corp.com/2025-10-28-OpenAI-and-PayPal-Team-Up-to-Power-Instant-Checkout-and-Agentic-Commerce-in-ChatGPT 9. PayPal AI shopping explainer (Perplexity live, ChatGPT rolling out): https://www.paypal.com/us/money-hub/article/how-paypal-powers-ai-shopping 10. PayPal US merchant fees: https://www.paypal.com/us/business/paypal-business-fees 11. Venmo fees: https://venmo.com/legal/fees/ ## Secondary sources - AP News — PayPal replaces CEO Chriss with HP’s Lores (Feb 3, 2026): https://apnews.com/article/paypal-hp-lores-chriss-venmo-dorman-ai-5f613ba3c6fa408f13873f8fce9c3a2b - Modern Retail — What went wrong with ChatGPT’s Instant Checkout (Mar 2026): https://www.modernretail.co/technology/what-went-wrong-with-chatgpts-instant-checkout/ ## Key figures used on canvas | Metric | Value | Label | Source | |---|---|---|---| | TPV Q2 2026 | $486.4B, +10% (9% FXN); 6.8B payment transactions (+8%) | FACT | Q2 release | | Revenue Q2 2026 | $8,682M (+5%; 3% FXN); transaction revenue $7,832M; OVAS $850M | FACT | Q2 release; 10-Q | | Transaction revenue share | ≈90% ($7,832M / $8,682M) | INFERENCE | 10-Q | | TM$ Q2 2026 | $3,900M (+1%); ex-interest on customer balances $3,619M (+3%); transaction margin 44.9% | FACT (non-GAAP) | Q2 release | | Interest on customer balances | $281M Q2 2026 (vs $318M) | FACT | Q2 release | | Take rate | Transaction take rate 1.61%, down 7 bps | FACT | Q2 call | | Transaction expense rate | 90 bps of TPV Q2 2026 (mix shift to Braintree); 0.89% in 2025 | FACT | Q2 call; 10-K | | Transaction loss rate | ~7 bps of TPV Q2 2026 | FACT | Q2 call | | Operating income Q2 2026 | GAAP $1,427M (16.4% margin); non-GAAP $1,507M (−8%) | FACT | Q2 release | | Growth by product Q2 2026 (FXN) | Online branded checkout +2%; Venmo TPV +14%; PSP +13%; Pay with Venmo +44%; BNPL +26%; debit + tap to pay >60%; branded experiences +6% | FACT | Q2 call | | Accounts | 439M active (+0.3%); 228M monthly active (+1%); TPA ex-PSP +7% | FACT | Q2 release; call | | Venmo engagement | Debit Card MAAs +50%+; Debit + Pay with Venmo users >9× ARPA of P2P-only; group ~doubled | FACT (company claim) | Q2 call | | FY2025 | Revenue $33.2B (US $18.9B, ≈57% INFERENCE); TPV $1.79T (+7%); 25.4B transactions (−4%); adj. FCF $6.4B; Venmo revenue ~$1.7B (+~20%); BNPL TPV >$40B (+20%+) | FACT | 10-K; Annual Report | | FY2025 costs | Transaction expense $15,987M of $27,107M total opex (≈59% INFERENCE); T&D $3,103M; S&M $2,283M (advertising $867M); G&A $1,979M; transaction & credit losses $1,720M; customer support $1,704M; restructuring $331M | FACT | 10-K | | Employees | ~23,800 at Dec 31, 2025 (~9,600 US) | FACT | 10-K | | Balance sheet | $15.3B cash & investments; $13.4B debt (Jun 30, 2026); $1.5B buybacks Q2, $6.0B TTM; $0.14 quarterly dividend | FACT | Q2 release | | 2026 guidance (Jul 2026) | TM$ ~$15.6B (~$14.5B ex-interest); non-GAAP EPS ~$5.38; non-transaction opex +7–8%; ≥$6B adj. FCF; ~$6B buybacks | FACT | Q2 call | | Transformation | ≥$1.5B gross run-rate savings over 2–3 years; ~$400M identified by YE2026; $120–140M possible charge 2H26; remove 3 org layers | FACT | Q2 call | | CEO change | Board appointed Enrique Lores (board chair, ex-HP CEO) Feb 2, 2026, effective Mar 1; Alex Chriss out; Jamie Miller interim | FACT; SECONDARY (AP: execution “not met board expectations”) | 8-K; AP | | BNPL funding | Blue Owl funds to buy ~$7B US Pay in 4 receivables over 2 years; PayPal keeps underwriting and servicing | FACT | PayPal release | | Merchant fees (US) | PayPal Checkout / Pay with Venmo 3.49% + fixed; standard cards 2.99% + fixed; Advanced cards 2.19% + fixed; Pay Later 4.99% + fixed; goods & services 2.99%; QR 2.29% + fixed | FACT | Fee page | | Consumer fees | Venmo Instant Transfer 1.75% ($0.25 min, $25 max); standard transfer free | FACT | Venmo fees | ## Model read (teaching arc) **A checkout button that shoppers trust → a two-sided network (439M accounts, $1.79T moved in 2025) that earns a slice of every payment → the profitable branded button stalls while lower-margin processing and Venmo grow → a new CEO bets on credit, Venmo monetization and cost cuts.** The lesson is “take rate minus funding cost.” In Q2 2026 PayPal charged about $1.61 per $100 of volume and paid about $0.90 per $100 to the banks and card networks behind each payment, plus ~7¢ in losses (FACT). Branded PayPal checkout (3.49% + fixed fee) is the high-margin product but grew only 2%; Braintree (unbranded card processing for big merchants) and Venmo grew in the mid-teens. Volume grew 10%, but transaction margin dollars grew only 1%. That gap is why the board replaced CEO Alex Chriss in Feb 2026, and why Enrique Lores is pushing credit and pay later (growing at least twice as fast as the company), Venmo debit and Pay with Venmo (9×+ revenue per user vs P2P-only), and at least $1.5B in gross savings. Risks to teach: shoppers moving to other wallets, the funding-cost mix, lower interest income on balances as rates fall, credit losses as lending grows, and slow growth in active accounts (+0.3%). ## Do not invent - Market share of online checkout vs Apple Pay / Shop Pay (no primary figure used) - The name of the US credit partner bank (10-K says only “independent chartered financial institution”) - Share price, market cap, or M&A outcomes (management declined to comment on speculation) - Agentic-commerce volumes (not disclosed)