PayPal Raises Full-Year Profit Forecast Despite Q3 Revenue Miss

PayPal (PYPL) reported third-quarter revenue that fell short of analyst expectations but raised its full-year profit guidance, offering a signal that its ongoing business transformation is beginning to bolster the bottom line. The company's shares fell 1.4% in pre-market trading following the Tuesday announcement.

Third-Quarter Financials

For the third quarter of 2026, PayPal posted revenue of $8.6 billion, a 2.4% increase year-over-year, which was below market consensus. However, non-GAAP earnings per share (EPS) came in at $1.45, exceeding analyst forecasts.

A key positive in the report was an improvement in credit quality. The company's transaction and credit losses narrowed significantly to $386 million, down from $483 million in the same period last year. Meanwhile, transaction fees, a core revenue driver, grew to $4.248 billion from $4.063 billion a year earlier.

Upbeat Guidance and Shareholder Returns

Looking ahead, PayPal provided an optimistic forecast, raising its full-year 2026 non-GAAP EPS guidance to $5.60. This revised outlook is above the market consensus of $5.39 per share.

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For the upcoming fourth quarter, the company projects an EPS of $1.43, also topping the average analyst estimate of $1.35. Alongside the earnings report, PayPal's board announced the initiation of a cash dividend of $0.14 per share.

Turnaround Strategy in Focus

The results come as PayPal executes a strategic overhaul under CEO Alex Chriss. The company has recently reorganized its structure into three main business units—Checkout, Venmo, and Consumer Financial Services—to enhance accountability and speed up decision-making.

Management is shifting its strategic emphasis from broad merchant acquisition to deepening engagement with its most valuable consumer segments. This involves promoting tools like its Buy Now, Pay Later (BNPL) products, Venmo payment features, and loyalty programs. The strategy is supported by a cost-saving plan targeting at least $1.5 billion in gross run-rate savings over the next two to three years, with the capital intended for reinvestment in high-growth priorities like Venmo and Braintree.