PYPL Q2'26 Conference Call Notes

Three things from PayPal Holdings's call, starting with: The sleeper: PayPal is quietly pivoting from a payments company to a consumer lending platform

Three things that matter from PayPal Holdings (PYPL) in its Q2’26 call:

1. The sleeper: PayPal is quietly pivoting from a payments company to a consumer lending platform: Financial services already represents ~20% of transaction margin and is growing double-digit, with management explicitly stating it will become ‘the largest driver of future transaction margin growth,’ yet Street models still treat this as a payments story.

2. Branded checkout ‘stabilization’ at 2% growth masks a concerning Europe deterioration: U.S. improving sequentially while Europe continues to drag despite 12-18 months of promised fixes; management admitted ‘slower growth in the travel vertical’ and ‘muted growth in Europe’ for Q2 after claiming improvement.

3. The $1.5B cost savings program is already being pre-spent on ‘growth investments’: Management pulled forward investments in Q2 before savings materialize in Q4, effectively spending money they don’t have yet while non-transaction OPEX jumped 8% vs guided 3%.

Disclosure Quality: C+ | Financial Quality: C

Track PYPL’s promise history and grade trend: callsheetdaily.com/tickers/pypl

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Delta Sheet

• ▼ Revenue: $8.35B (+7% YoY spot, +5% FX-neutral) → $8.65B (+5% YoY spot, +3% FX-neutral) (200 bps deceleration)

• ▼ Non-GAAP EPS: $1.34 (+1% YoY) → $1.38 (-1% YoY) (Swing to negative growth)

• - Transaction Margin $ ex-interest: +3% YoY → +3% YoY (Flat sequential)

• - Online Branded Checkout TPV: +2% FX-neutral → +2% FX-neutral (Stabilized but no acceleration)

• ▲ Venmo TPV Growth: +14% YoY → +14% YoY (Maintained momentum)

• ▲ Braintree TPV Growth: Mid-teens → Mid-teens (Sustained strength)

• ▲ Buy Now Pay Later Growth: +23% YoY → +26% YoY (+300 bps acceleration)

• ▲ Pay with Venmo Growth: +34% YoY → +44% YoY (+1000 bps acceleration)

• ▼ Non-Transaction OPEX Growth: +8% YoY (vs guided mid-single) → Guided +7-8% full year (Elevated spending continues)

• ▲ Free Cash Flow (Adjusted): $1.7B quarterly → $1.8B quarterly (Modest improvement)

• - Monthly Active Accounts: 225M (+1% YoY) → 228M (+1% YoY) (Anemic growth continues)

• ▲ Transactions per Active (ex-PSP): +6% YoY → +7% YoY (+100 bps acceleration)

• ▼ Transaction Take Rate: 1.62% (-6 bps YoY) → 1.61% (-7 bps YoY) (Continued compression)

• ▼ Operating Income (Non-GAAP): $1.5B (-5% YoY) → $1.5B (-8% YoY) (Deteriorating profitability)

• ▼ Europe Performance: Softer performance continuing → Travel vertical pressure, ‘muted growth’ (Worsening despite investments)