PayPal lifts 2025 profit forecast above estimates as turnaround picks up pace

The PayPal logo appears on a screen at the Nasdaq MarketSite, in New York's Times Square. (AP Photo/Richard Drew, File)

PayPal raised its full-year profit forecast above Wall Street estimates on Tuesday, as the digital payments giant’s push to revive growth in high-margin businesses such as Venmo and U.S. checkout begins to pay off.

Under CEO Alex Chriss, PayPal has shifted its focus to profitability rather than chasing top-line growth. The company is trying to regain momentum in parts of its business that lost steam after the pandemic-era e-commerce boom faded and competition intensified.

PayPal’s Venmo, a platform that has become virtually synonymous with peer-to-peer payments in the U.S., posted revenue growth of 20 per cent for the second quarter. The unit’s total payment volume growth accelerated to its highest rate in three years.

On a per-share basis, the payments firm now expects an adjusted annual profit in the range of US$5.15 to $5.30 versus its prior expectations of $4.95 to $5.10. Analysts on average had expected $5.10, according to estimates compiled by LSEG.

But PayPal’s shares fell 1.2 per cent before the bell after the company guided to a current-quarter profit that was in line with Street views and roughly flat from a year earlier.

PayPal expects third-quarter adjusted profit in the range of $1.18 to $1.22. At the mid-point of $1.20 per share, it matches Wall Street expectations.

Transaction margin dollars - the profit PayPal makes on each transaction after covering direct costs - grew seven per cent to $3.8 billion in the quarter.

The increase reflects an ongoing push to drive higher-margin volumes across the company’s branded checkout products and streamline costs tied to unbranded processing.

Adjusted operating margins expanded 132 basis points to 19.8 per cent.

Margins have been a key source of investor concern in recent years, amid fears that Big Tech rivals such as Apple Pay and Google Pay are chipping away at PayPal’s market share.

While the company long held a first-mover advantage in digital payments, that edge has diminished, though PayPal has previously pushed back against concerns that its market share is under pressure.

Spending holds up

Meanwhile, U.S. consumers have continued to spend despite a mix of economic pressures, including persistent inflation and the threat of new trade policies, easing concerns about a potentially sharp pullback in transaction volumes.

Analysts say some shoppers are also buying early to avoid expected price hikes from tariffs later this year.

That resilience has helped PayPal and major U.S. lenders sidestep early worries that trade tensions could weigh on spending in the second quarter, even as lower-income households show signs of strain.

Total payment volume - which tracks the total value of transactions handled by the platform - increased six per cent to $443.5 billion.

Adjusted profit came in at $1.40 per share in the three months ended June 30. That compares with $1.19 per share a year earlier.

PayPal’s second-quarter net revenue climbed 5% to $8.3 billion.

(Reporting by Manya Saini in Bengaluru; Editing by Maju Samuel)