PayPal Sees Earnings Growth as Firm Streamlines Businesses

PayPal Holdings Inc. predicted growth in earnings and transaction margins in coming years, as its new leadership continues to streamline the sprawling business. 

Adjusted earnings per share will increase by a percentage in the low teens by 2027 and by 20% over the longer term, PayPal forecast in an investor day presentation Tuesday. Transaction margin dollars — a key metric for the firm — are expected to climb by high-single-digit percentages over the next two years, potentially reaching 10% or more after that. The figure represents how much PayPal earns from each transaction it processes, after expenses.

“We called 2024 a transition year. We executed on exactly what we said we were going to go do,” Chief Executive Officer Alex Chriss said in an interview. “Now I think this is the first time they get to see a little bit into the future.”

Chriss spoke ahead of the firm’s investor day amid its pivot from a revenue growth strategy that generated zero or negative margins — an approach akin to “empty calories,” Chriss said — to one of sustained profitability. PayPal has been making progress on slimming the company, but earnings have been volatile over the past few quarters, with growth in the unbranded payment-processing business slowing at the end of last year.

Shares of the firm rose 3.6% at 8:45 a.m. in early New York trading.

San Jose, California-based PayPal offers consumer-facing products such as payments platform Venmo and merchant-focused services like its payment-processing business Braintree. It also has its own stablecoin, PayPal USD. 

Investors “still look at the company as these pieces of either acquisitions or products or things that we’ve done over the past, and they look at them individually,” Chriss said. “What I need them to see is we’re actually bringing it together.” 

The firm plans to unite all of its retailer-focused services onto one platform, called PayPal Open, it said Tuesday. Merchants will have access to all of PayPal’s company-focused offerings via the new one-stop shop.

Creating a commerce platform

“We are now creating a commerce platform that creates differentiated experiences that none of our individual competitors have when you bring the whole together,” Chriss said.

The firm also announced in a filing that current Chief Financial Officer Jamie Miller will take on the expanded role of chief financial and operating officer.

PayPal competes on a number of fronts with financial-technology providers. Stripe Inc., for example, is a rival in payment processing. Block Inc. also has a popular consumer-to-consumer payment platform, and firms such as Klarna Bank AB and Affirm Holdings Inc. have focused on buy-now, pay-later installment loans, which PayPal also offers.

PayPal considers itself to be ahead of the competition in cryptocurrency in particular, Chriss said. The company allows consumers to buy, hold and sell digital crypto via their PayPal and Venmo accounts and merchants can do likewise from their business accounts. 

“We just enabled hundreds of millions of users and tens of millions of merchants to be able to spend their crypto instantly for their everyday purchases,” he said. “I think that’s something that people don’t quite understand, and nobody else is doing that right now.”