PayPal Holdings, Inc. Q3 FY2025 earnings call

• PayPal is a stronger company than two years ago, with transaction margin dollar growth on pace for 6%-7% in 2025 vs negative growth two years ago. Revenue growth accelerated due to focus on profitable growth.
• Operationally, winning new customers, deepening engagement, reinvigorating underperforming parts, leveraging brands to innovate. Branded experiences TPV grew 8% currency-neutral. BNPL at 20% volume growth. Venmo revenue growth accelerated 10 points. Enterprise payments returned to volume growth.
• Initiating a dividend, continuing share buybacks, with strong free cash flow and balance sheet.
• Progress in strategic growth drivers: winning checkout, scaling Omni, growing Venmo, driving PSP profitability, scaling next-gen growth vectors like agentic commerce and PayPal World.

Brandedin experiences: TPV grew 8% on a currency-neutral basis. BNPL: Sustaining 20% volume growth quarter after quarter. Venmo: Revenue growth accelerated 10 points, TPV grew 14% in Q3, with monthly active accounts growing to nearly 66 million. PSP: Volume growth accelerated to 6% from 2% last quarter, contributing to transaction margin dollar growth.

• Raised full-year guidance for transaction margin dollars and non-GAAP EPS. Fourth quarter TM expected $4.02B - $4.12B. Full-year TM dollars $15.45B - $15.55B (5%-6% growth), excluding interest 6%-7% growth. Non-GAAP EPS $5.35 - $5.39 (15%-16% growth).
• Expect $6B in share buyback and adjusted free cash flow $6-$7B for full year.

• Macro trends causing deceleration in branded checkout. Service disruption in August impacting Germany leading to transaction loss provisions. Competitive intensity online.

Q: About agentic commerce, has it changed strategic priorities? What's the right to win? Can investments fund without sacrificing margins?

A: Agentic is an evolution of strategy to be available where consumers pay. Well-positioned with merchant services enabling integration once, consumer trust, and LLM partnerships. Investments in product, tech, co-marketing may be near-term headwind to growth.

Q: About branded, deceleration in fourth quarter and path to acceleration?

A: Fourth quarter saw macro deceleration in US and Europe. Broader framework has consistent mid-single digit growth, with progress in growth initiatives like Buy Now, Pay Later and Pay with Venmo, and US growth at higher rates. Focus on scaled initiatives and broader addressable market.

Q: On BNPL, lay of the land, who are you gaining share from?

A: BNPL has 21% MA growth in Q3, TPV growing over 20%, NPS 80. Well-positioned with brand, global scale, expanding footprint, moving into in-store, and upstream presentment for better customer experience.

Q: On exit growth rate and impact on 2026, investment impact on EPS?

A: Fourth quarter has impact from interest rate cuts, tougher comps in credit, and investments in growth initiatives. 2026 guidance not given, but color on fourth quarter transaction margin dollars and comps and investment in growth initiatives.

Q: On BNPL mix, loss rates, and comparability to competitors?

A: Most BNPL is pay for, pay monthly with average turn of 40 days. Economics on par or better than peers, with holistically driving stickiness and incremental usage of branded checkout.