TLDR
- PayPal reports Q4 2025 earnings on February 3, with expected earnings of $1.29 per share on revenue of $8.77 billion, representing 4.8% revenue growth year-over-year
- The company’s branded checkout business is expected to slow to 2-3% growth in Q4 from 5% in Q3, facing pressure from competitors like Apple Pay and Stripe
- Analysts have downgraded the stock recently, with shares down 22% in three months and trading near 52-week lows at $52.69
- PayPal is investing heavily in AI-powered agentic commerce and checkout upgrades, but tangible returns aren’t expected until fiscal 2027
- Transaction margin dollar growth is projected to slow to 4% in fiscal 2026 from 6% in fiscal 2025 as operating expenses rise
PayPal releases its fourth-quarter 2025 results on February 3 before market open. Investors are watching closely to see if the payment processor can defend its market position.
The company expects earnings between $1.27 and $1.31 per share for the quarter. Analysts have settled on a consensus estimate of $1.29 per share.
Revenue projections sit at $8.77 billion. That marks a 4.8% increase from the same quarter last year.
PayPal’s stock has taken a beating recently. Shares dropped 22% over the past three months while the broader market rose 2.3%.
The stock now trades at $52.69, just above its 52-week low of $52.06. Compare that to rivals Visa and Mastercard, which have held up better during the same period.
Branded Checkout Business Faces Headwinds
The core issue weighing on PayPal is its branded checkout service. This digital wallet allows customers to pay across different merchant websites.
Growth in this segment is expected to slow to just 2-3% in Q4. That’s down from 5% in the previous quarter.
The slowdown stems from softer e-commerce trends and competition. Apple Pay and Stripe continue taking market share.
Wall Street analysts have responded with downgrades. Rothschild Redburn cut the stock to sell with a $50 price target. Daiwa Securities downgraded to hold with a $61 target.
Among 45 analysts covering PayPal, only 13 rate it a buy. Twenty-seven give it a hold rating and five recommend selling.
The company’s CFO Jamie Miller warned that branded checkout would grow a couple of points lower in Q4 compared to Q3. That guidance has come true based on current expectations.
Total Payment Volume is expected to reach $468.3 billion. That represents 7% growth year-over-year.
Transaction revenues should hit $7.93 billion, up 4.5% from last year. Revenue from value-added services is projected at $835.2 million, growing 7.3%.
Investment Strategy Creates Near-Term Uncertainty
PayPal is pouring money into AI-powered agentic commerce. These are shopping agents that help consumers make purchases.
The company is also upgrading its checkout integrations with merchants. But progress has been slow.
After 15 months of work, only 25% of merchants have moved to the new checkout experience. Just half of those are on the most optimized version.
Analysts don’t expect these investments to pay off until fiscal 2027 at the earliest. That creates a gap between spending and returns.
Transaction margin dollar growth tells the story. The metric is expected to slow to 4% in fiscal 2026 from 6% in fiscal 2025.
Operating expenses are rising at the same pace as transaction margins. Historically, they grew at half that rate.
PayPal is also dealing with other headwinds. Foreign exchange volatility affects results since a large portion of operations are international.
Tariff policy uncertainty adds another layer of risk. These broader economic pressures weighed on the quarter.
Active accounts should reach 440.3 million, up from 434 million last year. But payment transactions are expected to dip slightly to 6.607 billion from 6.619 billion.
The company beat expectations last quarter with earnings of $1.34 per share versus $1.21 expected. Revenue came in at $8.42 billion against $8.22 billion projected.
Despite that beat, shares fell 19% after the report. Investors focused on forward guidance rather than past results.
For full-year 2025, PayPal guided for earnings between $5.35 and $5.39 per share. That represents 15-16% growth.
The consensus estimate for 2025 earnings stands at $5.36 per share. Revenue is expected at $33.27 billion, up 4.6% year-over-year.
PayPal trades at a forward P/E of 9.07 compared to the industry average of 19.14. Visa trades at 24.02 times forward earnings while Mastercard sits at 27.66.
That cheap valuation hasn’t attracted buyers yet. The company holds a Zacks Rank of 4, indicating a sell recommendation.
BTIG maintained its neutral rating ahead of earnings. The firm noted that adjusted EPS growth is expected to slow to 8% in fiscal 2026 from 15% in fiscal 2025.
PayPal’s earnings surprise history remains strong. The company beat consensus estimates in each of the past four quarters by an average of 10.3%.
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