PayPal Revenue Growth Reaccelerates as Cash Flow Rebounds
PayPal reported second-quarter net revenue of $8.68 billion, up 5% from a year earlier and a sequential acceleration after a decline in the first quarter.
PayPal Holdings (PYPL) posted net revenue of $8.68 billion in the second quarter of 2026, up 5% from a year earlier. Revenue rose 4% from the first quarter's $8.35 billion, reversing a 4% sequential decline in that period, even as the year-over-year growth rate slowed from the first quarter's 7% pace.
The quarter was the first reported under a new three-business operating model PayPal announced April 29, 2026, ahead of first-quarter results. The restructuring split the company into Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto, and came alongside the departures of executives Diego Scotti and Michelle Gill and a round of new appointments. The quarter's results were framed around the new structure for the first time.
Total payment volume grew 10% year over year, or 9% on a foreign-exchange-neutral basis, up from 11% reported growth (8% FXN) in the first quarter. Sequentially, TPV growth flipped to a 5% gain from a 2% decline in the prior quarter. Payment transactions grew 8% year over year, extending a recovery from declines of 5% in the third and fourth quarters of 2025.
Profitability metrics moved in the opposite direction. GAAP operating margin contracted 171 basis points year over year to 16.4%, and non-GAAP operating margin fell 248 basis points to 17.4%, both marking a third consecutive quarter of compression. Transaction margin as a percentage of revenue slipped to 44.9% from 45.6% in the first quarter and 46.4% a year earlier, the fourth straight quarter below its year-ago level. Active accounts grew just 0.3% year over year, decelerating from 1% growth in the first quarter and 2% growth a year earlier.
GAAP earnings per share fell 3% year over year to $1.25, a smaller decline than the first quarter's 6% drop to $1.21. Non-GAAP EPS fell 1% to $1.38, moderating from a 1% increase to $1.34 in the first quarter. Results included a widening drag from PayPal's strategic investment and crypto portfolio, which cut GAAP EPS by about $0.07 in the quarter compared with an $0.08 hit in the first quarter and a $0.01 gain a year earlier.
Operating cash flow rebounded to $2.0 billion, up 121% from a year earlier, after $1.1 billion in the first quarter that had been down 2% year over year. Free cash flow rose 157% to $1.78 billion from $0.9 billion in the prior quarter. Total debt climbed to $13.4 billion as of June 30 from $11.6 billion three months earlier, a roughly $1.8 billion sequential increase.
PayPal raised its full-year non-GAAP EPS guidance to approximately $5.38, up from a May 2026 forecast of a low-single-digit decline to slightly positive change, while reaffirming GAAP EPS guidance of a mid-single-digit decline for the year. The new non-GAAP guidance excludes potential second-half 2026 transformation-related charges, a caveat that did not appear in the May guidance.
For the third quarter, PayPal issued its first guidance of the sequence calling for a low-single-digit year-over-year decline in both GAAP EPS, against a $1.30 prior-year base, and non-GAAP EPS, against $1.34.