The payments company, which owns Venmo, reported revenue of $8.68 billion, up 5% year over year and ahead of the analyst consensus estimate of $8.47 billion. Adjusted earnings came in at $1.38 per share, topping estimates of $1.28, according to Benzinga Pro.

Total payment volume increased 10% from a year earlier to $486.4 billion, while payment transactions rose 8% to 6.8 billion. On a trailing 12-month basis, transactions per active account climbed 3% to 60.

Active accounts edged up 0.3% year over year to 439 million but declined by 200,000 from the previous quarter.

Profitability, however, softened. Operating margin narrowed 171 basis points to 16.4%, while adjusted operating margin fell 248 basis points to 17.4%.

PayPal generated $2 billion in operating cash flow and $1.8 billion in both free cash flow and adjusted free cash flow during the quarter.

As of June 30, the company held $15.3 billion in cash, cash equivalents and investments, compared with $13.4 billion in debt.

The board declared a quarterly dividend of 14 cents per share, payable Sept. 25. PayPal also returned $1.5 billion to shareholders by repurchasing about 33 million shares during the quarter.

“Our transformation is well underway, and we’re executing with discipline on our priorities to deliver durable, profitable growth over the long term,” CEO Enrique Lores said. The company said branded checkout continued to stabilize, while Venmo and Braintree delivered mid-teens payment volume growth.

PayPal also outlined plans to simplify its organization and reduce costs. The company expects to generate at least $1.5 billion in gross run-rate savings over the next two to three years through organizational simplification, operational optimization and broader adoption of artificial intelligence.

During the conference call, Lores said a cohort of highly engaged consumers accounts for the majority of the company’s payment volume. He said PayPal has simplified its operating model around three core businesses, is rebuilding the consumer side of its network and is expanding Venmo beyond a peer-to-peer payments app into a broader money management platform.

PYPL Price Action: PayPal Holdings shares were up 3% at $57.75 during premarket trading on Tuesday, according to Benzinga Pro data.

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