PayPal Holdings, Inc. Q2 FY2025 earnings call

Strategic Focus - PayPal is transforming from a payments company to a dynamic commerce platform, laser-focused on anticipating and fulfilling customer needs across online, in-store, and AI agent shopping. ### Branded Experiences - Drove 8% currency-neutral growth in branded experiences TPV. Online branded checkout TPV (including PayPal, BNPL, and Pay with Venmo) grew 5% currency-neutral. BNPL volume grew over 20% with monthly active accounts climbing 18%. Venmo - Delivered strong results with revenue up over 20% and TPV up 12%, driven by product innovations and marketing campaigns. Omnichannel strategy - Debit card TPV across PayPal and Venmo grew over 60% with monthly active accounts up over 65%. ### PSP Business - Reset merchant relationships for long-term profitability, with Braintree TPV expected to accelerate in the back half of the year. ### Innovation - Agentic AI: Leading in agentic commerce experiences with partnerships. Ads: Launched off-site and storefront ads, expanding globally. Stablecoin PYUSD: Addressing cross-border payment pain points, with expanded availability on blockchains and collaboration across the ecosystem.

PayPal delivered its sixth consecutive quarter of profitable growth despite macro uncertainty. Transaction margin dollars grew 8% excluding interest on customer balances. Non-GAAP earnings per share increased 18% year-over-year. Total active accounts and monthly active accounts grew 2% in the quarter, with transactions per active account ex PSP growing 4%. Branded experiences TPV achieved 8% currency-neutral growth. Venmo saw revenue grow over 20% and TPV increase 12% in the quarter.

Third Quarter - Expected currency-neutral revenue growth at lower end of mid-single digits. TM dollars expected between $3.76 billion and $3.82 billion (4% growth midpoint), ex interest TM dollars increase ~6% midpoint. Non-GAAP earnings per share expected in range of $1.18 to $1.22. ### Full Year - Now expects TM dollars between $15.35 billion and $15.5 billion (5%-6% growth), ex interest TM dollars growth 6%-7%. Non-GAAP earnings per share expected $5.15 to $5.30 (up 11%-14%). Full year free cash flow projected ~$6 billion to $7 billion.

Macro Uncertainty - Poses challenges to business performance. ### Tariffs - Impacted volumes in branded online checkout, though starting to stabilize. ### Transaction Losses - Ticked up due to normalization of loss rates after strong year last year and new product implementation effects.

Q: Ramsey El-Assal asked about branded online checkout TPV deceleration and tariff headwind.

A: Alex Chriss said tariffs were a small headwind, and in July, it's seeing less pressure.

Q: Tien-Tsin Huang asked about Pay with Crypto and PayPal World.

A: Alex Chriss said PayPal World expands TAM with existing economics, and Pay with Crypto is expansion of TAM with attractive economics.

Q: Timothy Chiodo asked about branded checkout button placement in merchant negotiations.

A: Alex Chriss said conversations start with merchants' needs, and they're leaning into personalized experiences via payment API.

Q: Darrin Peller asked about European rollout of modern checkout initiatives.

A: Alex Chriss and Jamie Miller said Europe rollout is ongoing with acceleration expected, and non-U.S. growth is consistent.

Q: James Faucette asked about offline expansion road map.

A: Alex Chriss said PayPal aims to meet customers wherever they are, with omnichannel strategy showing growth.

Q: Harshita Rawat asked about PayPal World interoperability.

A: Alex Chriss said it's frictionless with CEO-to-CEO commitments.

Q: Sanjay Sakhrani asked about transaction margin dollar growth drivers and transaction losses.

A: Jamie Miller said TM dollars have drivers like branded checkout, PSP, etc., and transaction losses are normalizing with new products.

Q: Colin Sebastian asked about Fastlane rollout.

A: Alex Chriss said Fastlane is rolled out with strong adoption and upcoming multiprocessor rollout.

Q: Trevor Williams asked about consumer data access fees.

A: Alex Chriss said it's immaterial to PayPal.

Q: Dan Dolev asked about benefits of upgraded checkout experience.

A: Alex Chriss said cohorts show 1 point uplift and momentum continues.